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.