This article discusses the importance of crop insurance plan but before delving into that, it is necessary to explain the terms. So, what is it? It is an insurance plan that is meant to protect farmers from different farming and agricultural risks.
Like other endeavors, farming is prone to different types of risks that could plunge farmers into huge debts. For instance, wildfire can destroy acres of crops causing loss worth millions of dollars. It also helps farmers try new technologies since they know that if these technologies fail, they(farmers) won’t be liable for the loss.
Now, here are some of the benefits of the insurance plan:
- It provides stability in income
• It minimizes debts
• It protects yield
• It provides awarenessIt provides stability in income
When there is no problem, farmers sell their proceeds and earn reasonable income but when there is a problem like a crop failure, the insurance provider pays them a stipulated percentage of their loss which also serves as income. So, this insurance plan provides stability of income.
It minimizes debts
Even when crop failure occurs, farmers are still able to pay the required percentage of their loans. So, with an insurance plan in place, crop failure will not plunge farmers into bigger debt. Imagine taking a huge loan to purchase the seeds of some crops with the hope of paying off the debt after harvesting and selling the grown crops and something happens and the crops all die off. You will not only fail to pay your debt, you will also lose your income too.
The worst part is that you may not even be able to purchase new seeds. The worst part is that failure to pay off the loan at the agreed time may either lead to the forfeiture of your farmland or increase in the interest you will pay on the loan. This is what insurance plan saves you from.
It protects yield
Insurance plan also protects farmers against production loss. Sometimes, for some reasons, the crops may not yield the amount of return projected by farmers. Without any insurance plan, it will be a problem, but a reliable insurance partner will compensate victims of such.
It provides awareness
Providers of insurance plans usually educate farmers on several ways to use forecast methodology to protect their crops from disasters or to minimize the impact of any disaster. The more knowledgeable farmers are, the more they are likely to protect their crops and entire farms from natural disasters.
Apart from the provision of awareness, some insurance companies even go a step further to provide technology-driven machinery for farmers to purchase on loan or to hire so as to be able to boost their yields.
It is also very important to state that many insurance companies provide insurance plans but their terms vary. So, it is better to contact several insurance companies to be able to compare terms. If not, how will you be sure you are getting a good deal?
You should ensure that you understand every clause before you sign the dotted lines. This is because some clauses may not be in your favor.