A Description of Multiple Peril Crop Insurance - Cont.

The Base Price represents the price of the crop at the start of the growing season, and is established by RMA based on the latest market prices. The Price Election percentage allows the producer to further modify coverage by insuring the crop at a lower value than the Base Price. The producer may choose to insure production at any level from 60% to 100% of the Base Price for the crop. For example, a lower Price Election percentage may be selected if the producer wishes to insure only the cost of planting rather than the full value of the crop. The Base Price and the Price Election percentage are also used to determine the value of the crop for loss indemnification.

The following example reviews the steps in determining the liability, premium, and loss. The Producer Premium Percentage Factor in Step 2 is taken from a countrywide Table and represents the premium subsidy factor for the selected Coverage Level and Price Election percentage. The premium subsidy is discussed further in the next section.