Use of Crop Insurance by U.S. Farms Continues to Grow

Use of crop insurance by farmers has increased dramatically over the past two decades, as changes in the types of insurance available have boosted participation in the programs, according to the Economic Research Service (ERS).

The share of U.S. cropland insured has increased from less than 30% in the early 1990s to nearly 90%, or 299 million acres, in 2015. Passage of the Federal Crop Insurance Reform Act (FCIRA) in 1994 led to a spike in the use of crop insurance, reflecting the introduction of low-coverage, fully subsidized Catastrophic Risk Protection Endorsement (CAT) insurance and a temporary requirement that producers obtain insurance coverage to be eligible for other commodity support programs.

CAT insurance pays only 55% of the price of the commodity on crop losses in excess of 50%, and farmers have increasingly opted to purchase insurance with higher coverage levels—known as "buy-up" insurance—for greater protection against risk.

Premiums for buy-up policies are also subsidized, and these subsidies were increased in the 1994 Act and under the Agricultural Risk Protection Act (ARPA) of 2000. Buy-up policies are not fully subsidized like CAT insurance. In 2015 producers paid, on average, 38% of the total cost of buy-up policies. By 2015, buy-up policies covered 95% of insured cropland.