Drought Help Guide
Drought Protection pays growers for a lack of rainfall that can damage crops. Simple coverage provides three coverage options: Level I ($5/acre), Level II ($10/acre), and Level III ($15/acre). Each level guarantees a different amount of rainfall. Payouts start if cumulative rainfall is below this level, and increase the lower the rainfall amount. Advanced coverage allows growers to get coverage for any dollar amount and any cumulative rainfall amount of their choosing.
Key Terms
Rainfall Coverage
If the amount of rain in the coverage period is less than this amount, the coverage will pay out.
Coverage Period
The time period over which rainfall will be measured.
Maximum Coverage per acre
The highest total amount that can be paid per acre. This is $100 for Level I, II and III coverage but growers can get higher or lower coverage amounts through the Advance Quote functionality
Acres
You can cover any number of acres, from zero up to the full number of acres at risk.
Common Questions
Do I need to submit any acreage reports?
No. There is no need to submit any paperwork for the number of acres planted. The coverage payout amount is determined by the rainfall amounts in your coverage period. At the end of the coverage period payment is made automatically with no need for additional adjustment or paperwork.
How will you know if there was actually drought damage to my crop?
Because the coverage is based on rainfall amounts at your specified location, there is no verification of how much damage was done. Your policy simply calculates your payout according to the total amount of rainfall during the coverage period.
Why do you measure rainfall using National Weather Service grids?
Rainfall can occur over distinct areas of your property over different times throughout your planting season. By looking at rainfall reports for a larger area, we are able to more accurately represent the total rainfall risk over all of your acres, which may be spread out over multiple sections. This is ideal for agricultural use when compared to relying on a single weather station. A single weather station only shows what rain fell in a specific 2 or 3 inch area while the gridded rainfall value represents the average rain that fell over a multi-square mile area. Rainfall values are reported each day for each grid by the National Weather Service using all of the surrounding weather data (ground weather stations, satellite and radar readings) to create a daily value for each grid.
How are premiums calculated?
Premiums are calculated largely on the likelihood of loss. If the coverage you are pricing would have resulted in a loss only once in the last ten years it will be less expensive than coverage that would have resulted in a loss in 8 of the past 10 years.
If you have priced coverage that seems expensive given your financial risk, examine the historical payouts. Is the contract showing that it would have paid out in years when you did not have a loss? If so, try adjusting elements of the coverage such as the rainfall thresholds and the deductible until it only shows payouts in problem years. If you want help building ideal coverage, please contact your agent or a Climate Corporation representative.
Examples
If you specify:
- Location: Farmer City, IL
- Coverage Period: July
- Acres: 100
And click get quote, you will see three drought protection options. Level I is $5 per acre, Level II is $10 per acre and Level III is $15 per acre. Each Level corresponds to a different Rainfall Coverage Level. An example of these three levels is:
- Level I Rainfall Coverage level: 1.57" (37% of normal precipitation)
- Level II Rainfall Coverage level: 2.31" (55% of normal precipitation)
- Level III Rainfall Coverage level: 2.88" (68% of normal precipitation)
If you purchase Level II and the total rainfall amount between 7/1/2010 and 7/31/2010 is 1.15" (half way between 2.31" and normal), then the resulting payout would be $50 per acre (because 1.15" is half way between 2.31" and 0", the coverage pays out half of $100, the Max Coverage per acre).