University of Illinois at Urbana-Champaign

Overview – Step 6

In addition to the program decision, the 2014 Farm Bill also created a new crop insurance program called the Supplemental Coverage Option (SCO) that will be available in certain counties beginning with the 2015 crop year.

  • SCO is only available for those program crops enrolled in PLC (or not enrolled in any program), it cannot cover any program crops enrolled in ARC-CO and is not available on any FSA farm enrolled in ARC-IC.

  • SCO is a crop insurance policy for which the Federal government subsidizes 65% of the premium cost of the policy.

  • SCO provides coverage that triggers payments when actual county revenues or yields fall below 86% of the expected county revenue or yield.

  • Coverage extends down to the level of the underlying crop insurance policy and within the deductible range for the producer’s underlying crop insurance (i.e., if the underlying policy is 75% revenue protection, SCO provides county revenue coverage from 86% down to 75%).

To be eligible to purchase SCO, the producer must purchase an underlying individual plan of insurance using revenue protection, revenue protection with the harvest price exclusion, or yield protection.

  • SCO mirrors the underlying crop insurance policy such that if the underlying policy is revenue protection, SCO provides supplemental county revenue coverage.

  • If the underlying policy is yield protection, SCO provides supplemental county yield coverage.

  • SCO cannot be purchased to supplement coverage with any other insurance programs.

SCO indemnities are triggered only when a loss is realized at the county level.

  • The size of the loss at the county level is then used to scale the payment to individual producers based on the total value of their insurance plan’s deductible.

  • If SCO payments are triggered in a county, all producers in that county who purchased SCO will receive an indemnity, however, the size of those indemnity payments will vary across producers.

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