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Grand Rapids, MI | Note first for the readers that we are discussing only CRC or RA with the Harvest Price Option, this would not apply for RA without the HPO.
KFFarm:
Mathematics tells us that the two methods of calculating you give are the same given your constraints. Assuming an increase in price, the only way to get a claim is to have a loss of bushels. It really doesn't matter whether you figure it the way you like or by increasing the guarantee and subtracting the actual production.
Personally I think it is a whole lot easier to figure the indemnity by taking the higher of the projected harvest price (the "spring" price) or fall harvest price for the guarantee then subtracting the fall revenue. This is also the way that the policy language reads,
This is from the Corn and Soybean Provisions for a Revenue Assurance policy:
"Fall harvest price option - A coverage option that allows you
to use the greater of the projected harvest price or the fall
harvest price to determine your per-acre revenue guarantee."
Edited by lorenk 9/6/2010 11:02
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Crop Insurance Question - Is this simple math right?
