What Is It?
The Post-Application Coverage Endorsement, known as PACE, is an endorsement that can be added to your underlying insurance policy which will provide you with additional coverage in the event you utilize post-application nitrogen practice and are prevented from post-applying nitrogen due to adverse weather conditions. PACE can be purchased for non-irrigated corn (grain type, non-organic) in select states, including Ohio.
How Do I Sign Up?
At the sales closing date, you must elect PACE, select a PACE coverage level, provide the intended split of nitrogen to be applied pre-application and post-application as percentages of the total application (the sum of the percentages must equal 100 percent) and the intended total nitrogen application rate per acre. The pre-application amount must be at least 20 percent of your total nitrogen to be applied and not more than 75 percent of your total nitrogen applied to qualify for the PACE.
PACE can be purchased as an add-on to your Yield Protection (YP), Revenue Protection (RP), and Revenue Protection with Harvest Price Exclusion (RP-HPE) policies only. PACE may not be purchased with Area Revenue Protection Insurance (ARPI).
How Does It Work?
The insurable window for PACE is determined to approximate the V3-V10 growth stages based on growing degree day accumulation in your county, based on your planting date. PACE will indemnify if you do not post-apply any nitrogen and you can demonstrate that you were unable to post-apply nitrogen during the insured window.
You can elect PACE on some units and not others, but elect PACE on all acres that you use post-application practice. For example, if there are 100 insured acres in an insured optional or basic unit on the underlying insurance policy, and PACE is elected on that optional or basic unit, all 100 acres must be insured under this Endorsement.
PACE indemnifies based on your approved yield, share, PACE coverage level percent, and final PACE Loss Factor when you are physically prevented from post-applying nitrogen due to a covered cause of loss. Your final PACE Loss Factor depends on the amount of pre- and post-apply nitrogen. The lower the pre-apply nitrogen percent, the higher the preliminary PACE Loss Factor (and premium). In the event of a claim, your indemnity is equal to your approved yield X your share X PACE coverage level percent X the maximum of the projected price and harvest price X your final PACE Loss Factor X your affected acres.
For example, suppose approved yield is 200 bu./acre, projected and harvest price is $4.00, PACE coverage level percent is 90%, final PACE Loss Factor is 15%, share is 100%, and affected PACE loss acres is 100. Your PACE indemnity would be 200 x $4.00 x 90% x 100% x 15% = $108/acre, or $10,800.
In the event of a claim, PACE indemnifies based on your final PACE Loss Factor. The preliminary PACE Loss Factor is determined based on your declared pre-apply percent (the percent of nitrogen you plan to apply prior to or at planting). The preliminary PACE Loss Factor and premium rate increases as the declared pre-apply percent decreases. The planned quantities of nitrogen per acre pre-planting and post-planting are determined by multiplying the percentages by your total planned nitrogen. The total nitrogen planned is calculated not to exceed 1.2 times your approved yield for the purposes of PACE calculations. If you pre-apply more nitrogen than declared, then your claim may be reduced. Therefore, you should not purposely declare a lower pre-apply percent than you plan to apply.
For example, if your approved yield is 200 bu./acre, and your elected pre-apply percent is 60%, then you should pre-apply no more than 1.2 x 200 x 60% = 144 lbs./acre of nitrogen at or before planting. Suppose the preliminary PACE Loss Factor as published is 10% when pre-apply percent is 60%, and 8% when pre-apply percent is 65%. Suppose you actually pre-apply 156 lbs./acre. In the event of a claim, your final PACE Loss Factor will be recalculated in accordance with your actual pre-apply percent of 65% (156 / (1.2 x 200)), and thus your final PACE loss factor if you actually pre-apply more than declared will be 8% (not 10%), and your premium will not be reduced.
In the event that there is no claim, then there is not necessarily any restriction on the amount of nitrogen you may apply. Overapplying nitrogen prior to or at planting, however, may reduce the amount of your claim in the event of a claim.
You can have a claim on both PACE and your underlying insurance policy. Your total indemnities paid will not exceed 100% of the value of your crop. Therefore, PACE will not pay out more than the deductible on your underlying insurance policy. For example, if the coverage level on your underlying crop is 85%, then PACE will not pay out more than 15% of the value of your crop when you also have a claim on your underlying insurance policy. The premiums for PACE are calibrated to these caps so you will not overpay premium.