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Crop Insurance Coverage – Answering Your Questions

An excerpt from AgDM Newsletter August 2021: “Crop insurance coverage – frequently asked questions” by the Iowa State University Farm Management Field Specialists – Ag Decision Maker

Q: How many of Iowa’s corn and soybean acres are covered by crop insurance?
A: Iowa farmers planted 23 million acres of corn and soybeans in 2021. Approximately 90% of those acres have been insured using Revenue Protection (RP) multiple peril crop insurance.

Q: What should an insured farmer do once a crop loss is
A: 1. Notify the insurance agent within 72 hours of the discovery of damage, but not later than 15 days after the end of the insurance period.
2. Continue to care for the crop using good farming practices and protect it from further damage, if possible.
3. Get permission from the insurance company, also referred to as your Approved Insurance Provider (AIP), before destroying or putting any crop to an alternative use.

Q: When will farmers be receiving indemnity payments for their crop insurance losses?
A: As soon as you are finished harvesting, notify your insurance agent and an adjuster will be assigned to you. Insurance companies cannot defer payments to the next tax year, but claims adjusted late in the year may not be paid out until the following year.

Q: What is the maximum price that the harvest time indemnity price (average October futures price) can reach?
A: The maximum harvest indemnity price values for 2021 are twice the projected price; or $9.16/bushel for corn and $23.74/bushel for soybeans, respectively.

Q: Can indemnity payments be deferred for income tax purposes until 2022?
A: A farmer, if they are using the cash method of accounting for reporting taxes, can elect to defer crop insurance payments if the loss is due to yield loss and they normally sell more than 50% of their crop the year following harvest. They cannot defer any loss that is due to price loss. Farmers who are using the accrual method of accounting for reporting taxes cannot defer crop insurance payments.

Q: Will I be asked to provide proof of my bushels this year for crop insurance verification?
A: All multiple peril crop insurance users are subject to production verification on a random basis. If a claim that exceeds $200,000 is filed for an individual crop and policy, verification of production is automatically required by regulation. This also requires a three-year audit.

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