Types of Units
Once a farmer chooses the type of plan and level of coverage, he can choose how he wants to insure his crops. There are a few different ways to set up a crop insurance policy if you have more than one farm.
- Optional Units (OU) – Optional Units insure each surveyed section (FSN or section equivalent if no sections are available) separately. You can have a loss in one of your sections and not in another one of your sections, and still get a crop insurance payment
- Basic Units (BU)– Basic Units insures a farmer’s operation by share. Since the farms are separated by share and not section, a farmer can have more than one section combined together. Premiums for electing this type of unit structure are less than Optional Units, as the farmer is taking on more risk.
- Enterprise Units (EU) – Enterprise Units combine all sections and shares together. The farmer is taking on more risk, as individual section losses are not likely to collect claims, but there is an additional subsidy provided for doing this, making premiums less expensive. Enterprise units can be separated by irrigation practice, not following another crop and following another crop cropping practice, and type. If you farm in more than one county, you may also have the option of utilizing Multi-County Enterprise Units MCEU.
- Whole Farm Units (WU) – Whole Farm Units combine all crops in the county together into one unit.
Enterprise Unit and Multi County Enterprise Unit Qualifications
Enterprise Units are a great way to keep coverage high and still be cost efficient on premium. Because of the increased subsidy, a farmer must qualify for Enterprise Units before it applies.
- The crop must be planted in at least 2 sections (FSN or section equivalent if sections are unavailable). Intended and/or prevent plant acres do not count.
- At least 20 acres or 20%, whichever is LESS, of the total crop in the county need to be planted in each section. If there are more than 2 sections planted, they can be accumulated to meet the 20/20 qualification.
- A farmer who does not qualify will not receive the discount and either Basic or Optional Units will apply to his crop/county for the year.
The guarantee for enterprise units is reached by calculating the guarantee for each underlying unit (surveyed section, or FSN/Section Equivalent if surveyed sections are not available) planted to the crop, and then summing the underlying units together. The enterprise unit crop insurance guarantee is weighted to where a farmer plants his acres for the year. The more acres planted to one of the underlying units, the more it counts towards the final enterprise unit guarantee.
Multi-County Enterprise Units expands an Enterprise Unit policy to cover more than one county of a single crop. Just like regular EU, there are qualifications to be met.
- The MCEU crop must be planted in both counties
- One county must qualify for EU on its own, and the other county MUST NOT qualify for EU
- The coverage for both counties must be identical
- The counties must be contiguous
Keep in mind, enterprise unit qualifications are based on planted acres for the crop for the year, and are subject to change from year to year depending on where the crop is planted. Talk to your agent about your planting intentions and they can help you determine if you will qualify or not.