We all carry insurance on
something: Our homes, our cars, maybe even a special vacation or a treasured
antique.
And, we all get bills in
the mail to pay premiums on those insurance policies. When disaster strikes,
and we have to use the policies we’ve paid for, we must first absorb part of
the loss as a deductible before aid is received.
Farmers are no different,
despite what farm policy critics might have you believe.
As with any line of
insurance, farmers receive crop insurance payments only when there are verified
losses and only after shouldering a chunk of those losses themselves through
deductibles.
More often than not, farmers
pay into the crop insurance system and don’t get indemnities at all. That’s why
it’s often said with crop insurance, farmers get a bill not a check.
An examination of recent
USDA figures shows farmers purchased 2,364,338 policies between 2015 and 2016.
Of those, there were 563,506 claims, meaning 1,800,832 policies were not
triggered.
In fact, if we look
further, we find that farmers spent $7.2 billion out of their own pockets for
insurance protection in 2015 and 2016. They also shouldered $13.6 billion in
losses as part of deductibles. Indemnities totaled $10.2 billion, meaning
farmers collectively put much more into the system than they got out.
This trend appears to have
continued in 2017, too.
In other words, a bill, not
a check. Exactly like insurance is supposed to work.
But farmers are not
complaining about helping fund their own farm policy. Crop insurance is not
about making money. It’s about managing risk and paying into a safety net that
kicks in when the worst happens so farmers can recover and continue to provide
safe and affordable food for U.S. customers.
Farmers are happy to pay
that bill.