Crop Insurance

Why Should I Buy Crop Insurance?
..it makes good economic sense !

By Dr. Laurence M. Crane, NCIS

Insurance is a simple concept, a complex subject. The concept of joining together to provide affordable protection against staggering economic loss is simple; understanding the large number of insurance plans, products, and competing options to choose from is complex. Thus it is sometimes easy to become confused, discouraged, or worse to do nothing at all. This article outlines the basic principles of insurance and highlights some of the popular misconceptions of crop insurance that lead to poor decisions and/or inaction.
By definition insurance is the means of protecting against unexpected loss. Everyone has insurance; either you buy insurance from an insurance company, or you insure yourself. When you self-insure there are no premiums to pay, but in the event of a loss you pay the full amount. In other words, with self-insurance you have a policy with a 100 percent deductible. The easy answer then to, “Why should I buy crop insurance ?” is: It is better than the alternative. The more complex answer would be that in most cases it makes good economic sense.
To understand why buying crop insurance makes good economic sense and is prudent risk management, one needs to understand the basic principles of insurance.

Principles of Insurance ...Pooling of Risks

Insurance is the pooling or combining of enough small unpredictable risks so that the losses over time for the combined group become statistically predictable. The basis of any insurance is the law of large numbers. This basic law of mathematics means that as the number of exposures or participants increases, or as the size of the pool increases, the average results become more stable. Hence, what is a risky, uncertain, and burdensome possibility for an individual becomes in the combined pool a measurable, relative constant, and manageable event that can be statistically estimated.
By paying a proportionate share of the loss for the group as a whole, it is possible for an individual to avoid a loss that, if borne alone, potentially could cause major financial problems or complete business failure. The relatively small premium paid by the individual is considered the expense of avoiding the full adverse effects of the particular risk being insured.
Want to find out more about Crop Insurance? Contact any one of the following Mercer Landmark, Inc. Crop Insurance Agents:

Rick Mollenkopf
Convoy Branch
419-749-2226

Suzy Smalley
Chatt Branch
419-363-3391

Tracy Flore
Coldwater Branch
419-678-2369