Enhanced Coverage Option (ECO)
ECO pays a loss on an area basis, and an indemnity is triggered when there is a decrease in the county level yield or revenue.
ECO HIGHLIGHTS
QUALIFICATION
Producers must purchase an individual buy-up policy (such as Revenue Protection) to purchase ECO.
FARM PROGRAM
ECO is not impacted by Farm Program decisions, including Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC).
COVERAGE RANGE
ECO coverage starts at 86 percent, offering two ranges: 95-86 percent
(9 percent) and 90-86 percent
(4 percent). Losses below 86 percent are not covered by ECO, but may be eligible for SCO under its terms.
BASE POLICY
Projected and harvest prices for ECO will match the individual coverage.
AREA LOSS TRIGGER LEVELS
Coverage is based on two area trigger levels: 95 and 90 percent. These represent the point at which an area loss becomes payable.
SUBSIDY
80% of the premium for yield and revenue policies.
SCO
​Producers may purchase the Supplemental Coverage Option (SCO) along with ECO.
CAUSES OF LOSS
ECO provides protection against widespread area loss of yield or revenue (as applicable) in the production area due to natural causes.
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No indemnity will be due on acreage that we have determined has been damaged solely by causes not insured by the underlying policy.
Indemnity Example
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Projected Price - $4.56
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Harvest Price - $4.20
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Expected Area Yield - 167
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Expected Area Revenue - max($4.56, $4.20) x 167 = $761.52
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Final Area Yield - 170
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Final Area Revenue - 170 x $4.20 = $714.00
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Area Loss Trigger - 95% (Coverage Range is 9%)
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Share - 100%
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Coverage Percentage - 100%
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Liability Underlying Policy- $250,000
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Coverage Level Underlying Policy - 75%
Step 1. Determine ECO Protection
*Expected Crop Value = Liability of Underlying MPCI Policy divided by Coverage Level ($250,000 / 75%)
*Coverage Range = 95% (Area Loss Trigger) - 86% = 9%
Expected Crop Value x Coverage Range x Coverage Percentage = ECO Protection
($250,000 / 75%) x 9% x 100% = $30,000
ECO Protection = $30,000
Step 2. Actual Loss Trigger
Divide the final area revenue by the expected area revenue (from actuarial documents) and shown above.
$714 / $761.52 = .9375
Step 3.
Subtract the result of Step 2 from the Area Loss Trigger chosen by the insured, with a result not less than zero or greater than the coverage range.
.95 - .9375 = .0124
Step 4. Payment Factor
Divide the result of Step 3 by the coverage range to determine the payment factor.
.0124 / .09 = .137
Step 5. Indemnity Payment
Multiply the amount of ECO protection from Step 1 by the payment factor (Step 4) to determine the indemnity.
.137 x $30,000 = $4,110
ENHANCED COVERAGE OPTION + ADDED INDIVIDUAL MODIFIER
(ECO + AIM)
EXCLUSIVE TO PROAG CUSTOMERS
WHAT IS ECO + AIM?
COVERAGE
DETERMINATION
The Added Individual Modifier (AIM) supplements your Enhanced Coverage Option (ECO) and underlying MPCI policy with additional coverage against a yield loss and/or revenue loss.
ECO indemnities are based, in part, on final county yields. When they come out with the final county yields during harvest, AIM extends the ECO coverage at harvest time to also include your individual harvest production for corn and soybeans.
At harvest time, the ECO policy uses county average yields released by RMA to determine any possible indemnities.
The AIM policy sets you apart from your neighbor and uses your individual harvested production to determine any possible indemnities.
The AIM policy coverage matches the underlying ECO for the coverage band level and liability associated with the chosen band.
AIM Indemnity Example
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Approved Yield - 150
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Guaranteed Revenue - max($4.56, $4.20) x 150 = $684
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Harvested Yield - 140
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Harvested Revenue - 140 x $4.56 = $638.40
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Projected Price - $4.56
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Harvest Price - $4.20
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AIM Loss Trigger - 95% (Coverage Range is 9%)
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Share- 100%
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AIM Coverage Percentage/ AIM Liability Factor - 100%
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Liability Underlying Policy - $250,000
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Coverage Level Underlying Policy - 75%
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ECO Expected Area Yield - 167
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ECO Expected Area Revenue - $761.52
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ECO Area Final Yield - 170
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ECO Final Area Revenue - $714
Step 1. Determine AIM Protection
*Expected Crop Value = Liability of Underlying MPCI Policy divided by Coverage Level ($250,000 / 75%)
*Coverage Range = 95% (Area Loss Trigger) - 86% = 9%
Expected Crop Value x Coverage Range x Coverage Percentage = ECO Protection
($250,000 / 75%) x 9% x 100% = $30,000
AIM Protection = $30,000
Step 4. Payment Factor
Divide the result of Step 3 by the coverage range to determine the payment factor.
.0167 / .09 = .185
Step 2. Actual Loss Trigger
Divide the Harvested Revenue by the
Guaranteed Revenue.
$638.40 / $684 = .9333
Step 5. Prelim Indemnity Payment
Multiply the amount of AIM protection
(Step 1) by the payment factor (Step 4) to determine the preliminary indemnity.
.185 x $30,000 = $5,566
Step 3.
Subtract the result of Step 2 from the AIM Loss Trigger chosen by the insured, with a result not less than zero or greater than the coverage range.
.95 - .9333 = .0167
Step 6. Indemnity Payment
To determine the final AIM indemnity, subtract the preliminary AIM indemnity (Step 5) by the result of the ECO indemnity (shown above).
*If greater than zero the lesser of the difference or liability will be the indemnity
$5,566 - $4110 = $1456