Federal crop insurance covers loss of crop yields from many types of natural dangers like disease, excessive rainfall, insect damage, freeze, and drought. Depending on the policy, it can also provide protection against losses due to changes in market prices as well as coverage for replanting and/or the inability to plant a crop due to an insurable cause of loss.

The producer pays an insurance premium for a specific crop on specific acres on their property. Similar to a deductible, most policies require farmers to self-insure a portion of the risk. Producers can purchase policies that cover between 50%-85% of their average yield. If the producer has losses exceeding their self-insured portion, the insurance company will pay up to the percentage insured. For example, if a producer were to lose 50% of their crop and had 75% coverage, the insurance company would pay up to 25% of the total insured amount.

There are several key differences. First, producers purchasing federal crop insurance choose coverage levels by “unit” rather than by acre as with crop-hail. Second, a farmer cannot suddenly decide to buy a federal crop policy. Unlike crop-hail, federal crop coverage must be purchased prior to certain dates set by the federal government, which vary according to the county and the crop. Lastly, crop-hail coverage generally provides coverage from the first dollar of loss, although deductibles are offered, whereas federal crop coverage includes what amounts to a deductible, guaranteeing up to 100 percent of expected market price but never 100 percent of yield