If your business relies on regular rainfall, pasture, rangeland, forage insurance may help.
What is the pasture, rangeland, forage insurance program?
The pasture, rangeland, forage insurance program, often abbreviated as PRF, is a federal area-based program that protects perennial pasture, rangeland, or forage used to feed livestock from losses caused by drought and a drop in precipitation needed for the foraging crops. It is managed by the USDA Risk Management Agency and is available in the 48 contiguous states, excepting certain grids that cross international borders.
How does a PRF insurance program work?
It begins with something called the Rainfall Index. When you enter into the program, you have to choose at least two periods of two months, called index intervals, where precipitation is vital to the success of your business. The normal precipitation for the area is calculated using data from NOAA. Deviations from the normal amount are also calculated. If the precipitation falls beneath the expected normal for your grid, a loss payment is triggered.
Important things to note about PRF insurance.
Since this is area-based coverage, it does not use crop production data or your individual experience to determine payment. It relies solely on the rainfall data from your grid and acreage. You are also able to insure all or part of your acreage, giving you flexibility in your risk management plan. One thing to note with PRF insurance is that because a higher level of forage production is expected for haying land, the premiums may be higher than those for land insured for grazing.
PRF insurance is not drought insurance.
While it is possible that an indemnity payment may be triggered by a declared drought due to a drop in precipitation, PRF insurance is not drought insurance. It doesn’t cover excessive and abnormal heat or wind like drought insurance does. The declaration of drought by a town, county, or state does not automatically trigger a loss payment. Precipitation for your grid must be abnormal during your index intervals for payment to be given.
Why is PRF insurance offered?
PRF insurance was created to protect against the risk of loss due to lack of rainfall. However, it doesn’t cover droughts over an extended period of time, just during the intervals of coverage.
Crop-based business coverages to consider.
If your business relies on other crops, you may want to get a general crop insurance policy that may help protect your other products in the case of damage or loss to your fields. If you make use of pesticides or other chemicals, you will want to look into environmental insurance to help provide coverage in the event your business is linked to a spill or contaminant. In general, your business will probably need some basic coverages like general liability and workers’ compensation insurance to help keep you protected.
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