ECO – Enhanced Coverage Option.
This is a Federally Subsidized AREA RISK program that is available for a variety of crops. This sits “on top” of your underlying MPCI policy. The coverage “band” is from 95% – 86% of YOUR APH.
After you report your Acres for Crop Insurance this policy uses your APH’s, Projected Price, etc. to determine your liability.
Your loss is based on the Area you are in. For example, Cascade County Wheat in 2023 has a trigger yield of 53.0 bushels per acre. If the County harvests less then 50.35 bushels (53.0 x 0.95) then a loss will begin to pay out. If you have Revenue Protection this Policy follows those rules as well. See this article on RP for more info.
You and your neighbors could all purchase ECO. All of your Liabilities would be different because your Liability is based on your individual operation. However, if the County falls below 95% of the Trigger Yield then ALL of you would get paid. The amount you get paid would vary based on your individual liabilities, but the percentage of loss would be identical.
In other words – your operation could have a complete loss, get paid your full MPCI policy liability; but if the County – as a whole – harvests more then 95% of the Trigger Yield then you would not get paid any of the ECO policy.
Visa Versa – you could have a bumper crop, but the rest of the County does poorly and harvests less then 95% of the Trigger Yield….you would get paid on the ECO policy.
The Premium works a little differently then your MPCI Premium in regards to when it is due, and when a potential loss is paid out. Farmers are used to having their premium deducted from their losses, however, with ECO/SCO the premium is due the same time the underlying MPCI premium is due BUT the losses would not be calculated/paid until several month later as they need to gather ALL of the Production for your Area. This takes time.
SCO – Supplemental Coverage Option
If you are signed up with ARC (County or Individual) through FSA – then you can stop reading as you are not eligible for this program. If you are signed up for PLC then keep reading 🙂
If you understand how ECO works then you will understand SCO. The difference is that SCO goes from 86% – MPCI Coverage Level. If you are signed up for the 70% coverage level on your MPCI then your “band” of coverage would be from 70% – 86%. If you are signed up for the 60% coverage level on your MPCI then your “band” of coverage would be from 60% – 86%.
Think of ECO & SCO as covering your “deductible” in crop insurance with the understanding that it is an Area Risk plan.
Both ECO & SCO are Federally Subsidized. ECO’s subsidy is 44% and SCO’s subsidy is 65% (at the time of this article). ECO’s subsidy is less because it is so close to the loss at the 95% level. Whereas SCO doesn’t kick in until 86%.
Both programs are subject to your Crop/County Sales Closing deadline.
Both programs are Area Risk.
Both programs require much more discussion with your crop insurance agent before making a decision.
These are fantastic programs that work very well in helping you better manage your risk. I highly suggest working with your Crop Insurance Agent to get a better understanding of these programs as they are much more complex then described above. We are always available to discuss if your agent isn’t 🙂
406.453.1580 – ask for Mike
There are a lot of rules behind this program, so the above information is very high level. You will want to take a deeper dive into understanding the program before making a purchasing decision. Keep in mind the above information is for informational purposes only, and does not replace anything found in the Crop Insurance Handbook, Loss Adjustment Manual, RMA’s website, etc. Always consult the Crop Insurance Handbook, Loss Adjustment Manual, RMA’s website, etc. before making a purchasing decision. Any discrepancy between the above information and the policy is not intended. The information provided in this article does not supersede policy and procedure. Any changes to the policy and procedures may make this material obsolete.