Yield-based vs Acre-based plan
What's the difference between a yield-based and a acre-based plan?
If I'm a producer with a yield-based plan, I get compensation if insured peril(s) cause my yield to fall below the production guarantee.
What happens if I'm a producer with a acre-based plan? When does compensation get triggered?
Comments
I think you would insure a set # of acres. Say I have 10 acres of crop that are insured at a pre-determined price of 5$ per acre. There would be a deductible say of 2 acres. In the event of an insured loss the payout is MAX(# acres affected - deductible,0)*insured price.
Say there are 5 acres affected the payout would be MAX(5-2,0)5$ = 15$
If there was only 1 acre affected the payout would be MAX(1-2,0)5$ = 0$
Thank you, cornedov. That is a good explanation