New in 2021, the Enhanced Coverage Option (ECO) provides additional area-based coverage for a portion of the underlying crop insurance deductible. This is similar to the Supplemental Coverage Option (SCO).
ECO works alongside a Revenue Protection (RP), Revenue Protection with Harvest Price Exclusion (RPHPE), Yield protection (YP), Actual Production History (APH) or Yield Based Dollar Amount of Insurance policies. ECO coverage follows the coverage type of the underlying policy. If a producer elects Yield Protection (YP), then ECO covers yield loss. If a producer elects Revenue Protection (RP), then ECO covers revenue losses. Unlike an underlying policy, all losses for ECO are triggered on an area basis, meaning individual farm losses will not count towards an ECO claim.
When a producer wishes to add ECO to his policy, he/she elects a coverage band of either 86%-90% or 86%-95%. Although the plan type (yield or revenue) follows a producer’s underlying coverage, the percent of coverage elected for ECO remains independent. Both the ECO guarantees and claims are based on the area yields as set by RMA for the crop/county and not based on an individual producers yield or revenue losses.
An ECO indemnity is paid when there is a decrease in the county level yield or revenue. Since ECO payments are determined only by county average revenue or yield, and are not affected by whether you receive a payment from your underlying policy, it is possible for you to experience an individual loss but to not receive an ECO payment, or vice-versa.
Unlike SCO, ECO is not impacted by any Farm Program decisions at the FSA office. ECO is not available for purchase if you have an area plan of insurance, including ARPI or Margin Protection policies.