How It Works
A Drought Shield policy includes your choice of two Index levels; the upper Rainfall Index level at which payment begins, and the lower Rainfall Index level at which the limit of insurance is reached. The claim payment is then calculated based on the amount that the observed Rainfall Index is below your chosen upper level, subject to the limit of insurance. Therefore, if a $100,000 limit policy were purchased with an upper Index level of 0.90 and a lower level of 0.40, and the observed Index was 0.60 (60% of average rainfall), a claim payment of $60,000 would be paid (see table). Sample Policy
Actual claim payments are calculated using Rainfall Index increments of 0.01. Whether or not or to what extent a particular loss is covered depends on the facts and circumstances of the loss and the language of the policy as issued.Obtaining a Drought Shield insurance policy through Vortex is straight forward.
|Rainfall Index||Calculated Claim|
There are five simple steps:
Does Your Crop Insurance Provide Enough Coverage?
- Define your risk period. For instance, if you are concerned primarily with the pollination and grain filling periods, then June 1st through September 30th might be your preferred coverage dates.
- Choose the RMA grid that best represents your location of interest. All RMA grids are identifiable on the Vortex Insurance Agency website or call us directly and we will help you locate your grid.
- Choose the upper level of the Rainfall Index which would commence a claim, such as less than 0.80 (80% of average rainfall), and the lower level at which you need the policy to pay the limit of insurance, such as 0.50 (50% of average rainfall).
- Choose the limit of insurance needed. If you need $300 per acre of insurance coverage, and have 500 acres to insure, your insurance limit is $150,000.
- Bind insurance coverage by completing an Application and submitting your premium.
It’s that simple.
With constantly improving genetics, has the level of the Actual Production History (APH) Yield Guarantee for your county kept pace with your actual yields? What is the difference in the cost-per-acre between the lowest level of coverage and the upper level of coverage? How does that cost difference compare to the amount of additional insurance purchased? Choosing a lower level of crop insurance coverage and supplementing that with a Drought Shield insurance policy from Vortex may be a better choice!
A Drought Shield policy may be purchased to address differences between the RMA defined APH yield guarantee and your APH yield. If your farm’s APH is 180 bushels, why be limited by a 130 bushel level? A Drought Shield policy is available to provide additional coverage beyond that offered by the RMA.