Income Protection (IP)
Income Protection (IP) is designed to protect your revenues against a loss in production, declines in market prices, or both. Similar to Revenue Assurance (RA), but only available on enterprise units. Revenue is protected at the enterprise unit level, and your guarantee doesn’t increase if the market price increases. Both projected prices and harvest prices are futures-based.
Overview
Protects against reductions in your gross income caused by weather-related losses and certain other unavoidable perils, including low crop prices.
Protects against low prices, low yields, poor quality, late planting,1 replanting costs2 or when planting is prevented.
An alternative to yield-based crop insurance.
Limited availability.
Available on enterprise units only.
Benefits
Downside price protection only: Provides a guarantee based on the value of your expected crop.
Prices are set using the regional commodity exchange to more closely reflect your area’s price differences.
Provides income guarantees for operating loans.
Loss Triggers
Pays when actual revenue for the enterprise unit is less than the IP Policy’s revenue guarantee.
IP Example
Situation: High prices and low yields.3
Projected Crop Price: $2.23
Revenue Guarantee:
APH (180 bu.) x Level (.65) x Projected Price ($2.23) = $260.91/Acre
Harvest Price: $2.80
Yield: 90 bu./Acre
Value of Production: Yield (90 bu.) x Harvest Price = $252.00/Acre
Indemnity Payment: Protection ($260.91) – Production ($252.00) = $8.91/Acre
1Subject to crop policy provisions.
2Not available on all crop policies.
3All examples assume the policyholder has 100% share of the insured crop.
SERVICES
