Revenue Protection (RP) policies cover two types of loss: yield losses from natural causes (including drought, hail, wind, frost, excessive moisture, insects, and disease) and revenue losses caused by a drop in the harvest price below the projected price.
The producer selects a percentage of their average yield to insure, typically from 50% to 75%, and up to 85% in certain areas. Both the projected price and harvest price are set at 100% of the amounts determined by the Commodity Exchange Price Provisions, using daily settlement prices from specified futures contracts.
The total amount of insurance coverage is based on the greater of the projected or harvest price. If the combined harvested and appraised production, multiplied by the harvest price, is less than the insured amount, the difference is paid out as an indemnity.
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