Cotton

Cotton planted for harvest as cotton lint is insurable if:

• The crop is grown on insurable acreage;
• Premium rates are provided by the actuarial documents;
• You have a share; and
• It is not colored cotton lint planted in an established grass or legume, or interplanted with another spring crop, unless allowed by special provisions or by written agreement.

You are protected against the following:

• Adverse weather;
• Earthquake;
• Failure of irrigation water supply;
• Fire;
• Insect damage and/or plant disease; unless you have insufficiently or improperly applied pest or disease control measures;
• Volcanic eruption; or
• Wildlife.

Coverage begins when the crop is planted and ends at the earliest occurrence of one of the following:

• Total destruction of the crop on a unit;
• Abandonment of the crop;
• Final adjustment of a loss on a unit; or
• January 31.

Approved Yield - Your actual production history (APH) yield, approved by the insurance company, and used to determine your production guarantee. The APH yield is based on up to 10 years of actual and/or assigned yields.

Harvest Price - A price determined in accordance with the Commodity Exchange Price Provisions and used to value production for revenue protection.

Projected Price - The price used to calculate your premium or indemnity. Only one price may be selected for all your cotton in a county.

Production Guarantee (per acre) - Number of pounds determined by multiplying your approved yield by the coverage level percentage you elect.

Revenue Protection - An insurance plan providing protection against loss of revenue due to production loss, price decline or increase, or a combination of the two.

Yield Protection - An insurance plan that provides protection against a loss of production only.

The guarantee is production measured in pounds of cotton. Insurance amounts are based on your production history. Your approved average yield is calculated from four to ten years of production records you give to your insurance agent. Coverage levels range from 50 to 85 percent of your approved yield. Crop insurance premiums are subsidized as shown in the following table. For example, if you choose the 65 percent coverage level, your premium share would be 41 percent of the base premium.

Catastrophic Risk Protection (CAT) coverage is fixed at 50 percent of your approved yield and 55 percent of the price election. CAT is 100 percent subsidized with no premium cost to you. There is, however, an administrative fee of $300 per crop per county, regardless of the acreage.

A claim can be filed whenever production falls short of the guarantee you select. The amount of a loss is determined by multiplying the production shortfall by the pre-selected price.

Assume an APH yield of 1,500 pounds per acre, 75 percent coverage level on 100 acres of cotton, selected price of $0.81 per pound, one basic unit, and 100 percent share.

Price used is for example only. Contact a crop insurance agent for current information.