Enhanced Coverage Option (ECO)

ECO helps provide an additional layer of protection beyond your underlying crop insurance policy. By covering a portion of the deductible between 90% and 95% of Expected Revenue or Yield, ECO helps protect against shallow losses and offers the highest subsidized coverage level available. Because ECO is area-based, payments are determined using county or production area data and may not reflect your
individual experience.

Benefits of Enhanced Coverage Option

Offers up to 95% coverage, which is the highest subsidized multi-peril coverage available.

ECO is area-based, benefiting producers whose yield and revenue correlate
with the county.*

Can trigger an indemnity on only a 5% loss in revenue or yield (dependent on the underlying MPCI coverage plan).

ECO offers an 80% premium subsidy to help make higher coverage levels more affordable.

Purchase Information

  • Producers must purchase an individual buy-up policy to be eligible for ECO.
    • ECO is an endorsement to Yield Protection, Revenue Protection, Revenue Protection with Harvest Price Exclusion, Actual Production History, or Yield Based Dollar Amount of Insurance policy.
  • You may purchase the Supplemental Coverage Option (SCO) along with ECO.
    • Producers are not required to purchase SCO, and they can leave a gap in coverage.
  • ECO is not impacted by Farm Program decisions including Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC).

    Coverage Highlights 

    • ECO’s subsidized rate for revenue and yield plans is 80%.
    • ECO follows the coverage of your underlying policy:
      • A Yield Protection coverage means ECO covers yield losses.
      • Revenue Protection coverage means ECO covers revenue losses.
    • Projected and harvest prices for ECO will match the individual coverage.


     

     

    Important Dates

    Sales Closing Date:

    • Matches the Sales Closing Date of the underlying crop insurance policy.

    Indemnity Payments

    • ECO indemnities are generally issued during the summer following the Crop Year after Final County Yields and Revenues become available.

    ECO Restrictions

    If a producer buys ECO, they may not:

    • Purchase Margin Protection (MP), Margin Coverage Option (MCO), Margin Protection with Harvest Price Option (MP-HPO), Area Revenue Protection Insurance (ARPI), Hurricane Protection-Wind Index (HIP-WI), or other area plans.

    *Enhanced Coverage Option is based on Production Area, which many times is equivalent to the county. However, it is important to remember that they can differ.

    Indemnity Details

    • ECO Expected and Final Yields are based on RMA data, not producer yields.
    • ECO and individual coverage trigger independently, so it is possible for a grower to have:
      • An ECO indemnity, but no individual indemnity.
      • An individual indemnity, but no ECO indemnity.
      • No indemnities.

    ECO Indemnity Payments

    ECO payments are delayed because they are based on Final County Yields, not individual farm yields. It takes significant time for the USDA’s Risk Management Agency (RMA) to gather, verify, and finalize data from all producers within a county or area to determine if a county-wise loss has occurred to calculate the indemnity. 

    ECO Payment Timeline


    ECO on a Revenue Protection policy example:

    The Expected Area Yield is 200 bu./acre and the Projected Price is $5.00/bu.

    • The Coverage Range is:
      95% - 90% = 5%

    The producer has an Approved Yield of 210 bu./acre.

    • The ECO Amount of Insurance is determined as the Expected Crop Value (using the insured's APH) is multiplied by the Coverage Range:
      ($5.00 x 210 bu./acre) x 5% = $52.50/acre

    For illustrative purpose, suppose the Premium Rate is 45%.

    • Total Premium is calculated by multiplying the ECO Amount of Insurance and Premium Rate:
      $52.50/acre x 45% = $23.63/acre
    • Premium Subsidies are determined by multiplying Total Premium by the Subsidized Rate:
      $23.63/acre x 80% = $18.90/acre
    • Producer Premium is determined by subtracting the Premium Subsidy from the Total Premium:
      $23.63/acre - $18.90/acre = $4.73/acre

    The Harvest Price is $4.80/bu. and the Final Area Yield is 190 bu./acre.

    • Multiply these numbers to find the Final Area Revenue:
      $4.80/bu. x 190 bu./acre = $912/acre
    • The Loss Percentage is determined by taking the Loss Trigger (95%) less the Final Area Revenue divided by the Expected Area Revenue:
      95% - ($912/acre ÷ $1,000/acre = 3.80%)**
    • The Payment Factor is determined as the Loss Percentage divided by the Coverage Range:
      3.80% ÷ 5% = 76%
    • The Payment Factor is then multiplied by the ECO Amount of Insurance to determine the ECO indemnity:
      $52.50/acre x 76% = $39.90/acre

    **This value cannot be less than zero or greater than 5%.

    Yields, prices, and rating data are examples only.

    Contact an NAU Country Representative today about signing up!