New Hurricane Endorsement Option for Crop Insurance

With a historically busy hurricane season (hopefully) about to wrap up, it’s a good reminder to evaluate crop insurance options for the coming season. There are some new things on the table from USDA worth consideration.

The agency has rolled out its “Hurricane Insurance Protection Wind-Index (HIP-WI) Endorsement,” which can be attached to your Common Crop Insurance, Policy Basic Provisions, and Crop Provisions for the insured crop. The coverage can be combined with the Supplemental Coverage Option and the Stacked Income Protection Plan, when acreage also is insured by a companion policy.

What Does It Do?

The HIP-WI endorsement provides coverage for a portion of the deductible (up to 95% of the expected crop value) of your underlying insurance policy that is not otherwise covered when the insured county or a county adjacent to it is within the area of sustained hurricane-force winds from a named hurricane according to the National Oceanic and Atmospheric Administration (NOAA). The coverage applies in that case whether your farm has damage or not.

Counties highlighted in yellow are eligible for the protection.

What Does it Cost?

An administrative fee and premium for the crop covered by each HIP-WI Endorsement will be due in addition to any administrative fee(s) and/or premium(s) of the underlying policy. However, the HIP-WI administrative fee may be waived if you qualify as a limited resource farmer, a beginning farmer/rancher, or a veteran farmer/rancher.

Premium for HIP-WI is calculated by multiplying the hurricane protection amount by the premium rate and any premium adjustment percentages that may apply. All information needed to calculate the premium rate is contained in the actuarial documents of the policy.

“What I like about this coverage, and what growers like, is it is scalable,” says Regina Thomas, Senior Vice President of Farm Credit of Central Florida. “You can buy it all or 10%, 20%, or 50%. Whatever fits your budget.

“Let’s say the value of your cotton crop is $100,000. If you opt to purchase the underlying coverage on your cotton crop at ‘50% Buy Up’, your coverage would be $50,000 and the deductible would be 95% of the remaining 50% or $47,500. You take the maximum Hurricane Insurance Protection Wind-Index Endorsement with $47,500 liability.  Should a hurricane with sustained winds of 74 mph or higher hit your county or an adjacent county, your payout would be the total insured value of your hurricane policy at $47,500. Your farm does not need to be subject to damage to receive the payment. You are only eligible for this payment one time per year.”