50 Key Terms Every Crop Insurance Agent Must Know

Success on the specialty licensing exam requires a deep understanding of the language used by the Federal Crop Insurance Corporation (FCIC) and the Risk Management Agency (RMA). Before diving into complex policy structures, candidates must internalize the basic roles and foundational concepts that govern the industry. For a comprehensive overview of the licensing process, refer to our complete Crop exam guide.

• 1. Risk Management Agency (RMA): An agency of the USDA that operates and manages the Federal Crop Insurance Corporation.
• 2. Federal Crop Insurance Corporation (FCIC): A government-owned corporation that provides the underlying backing and reinsurance for crop insurance policies.
• 3. Approved Insurance Provider (AIP): A private insurance company that has been approved by the FCIC to sell and service federal crop insurance policies.
• 4. Multi-Peril Crop Insurance (MPCI): A broad-based insurance policy that covers a wide range of natural causes of loss, such as drought, excessive moisture, hail, and insects.
• 5. Actual Production History (APH): A record used to determine the amount of insurance coverage for a specific farm based on its historical yields.
• 6. Agricultural Commodities: Any plant or animal product produced on a farm that is eligible for coverage under the program.
• 7. Insurable Interest: A legal and financial interest in a crop that would cause the individual to suffer a loss if the crop were damaged.
• 8. Premium: The amount of money a producer pays for insurance coverage, often subsidized by the federal government.
• 9. Subsidy: The portion of the total premium paid by the FCIC on behalf of the producer.
• 10. Administrative Fee: A fee paid by the producer for each crop in each county to help cover the costs of administering the insurance program.

Understanding how yields are calculated is critical for determining the Approved Yield. Agents must be able to distinguish between different types of yields used in the APH calculation process. You can test your knowledge of these calculations with our practice Crop questions.

• 11. Actual Yield: The amount of a crop produced per acre on an insurable unit for a specific crop year.
• 12. Transitional Yield (T-Yield): An estimated yield provided by the RMA for producers who do not have enough years of actual production records.
• 13. Approved Yield: The yield calculated by the AIP and used to determine the coverage level, based on a combination of actual and transitional yields.
• 14. Assigned Yield: A yield assigned to a producer when they fail to provide required production reports.
• 15. Average Yield: The arithmetic mean of the yields in the APH database.
• 16. Base Period: The set of years (usually 4 to 10) used to establish the APH for a specific crop.
• 17. Production Report: A written record showing the producer’s annual production of a crop, used to update the APH.
• 18. Acreage Report: A report required annually that states the number of acres planted, the crop type, and the producer's share in those acres.
• 19. Zero Acreage Report: A report filed when a producer does not plant any of the insured crop in a specific county.
• 20. Share: The percentage of interest the producer has in the insured crop as an owner, operator, or tenant.

Modern crop insurance often protects more than just the physical yield; it also protects the producer's revenue. Agents must understand the mechanics of price discovery and coverage levels.

• 21. Coverage Level: The percentage of the approved yield or revenue that the producer chooses to insure (e.g., 50% to 85%).
• 22. Yield Protection (YP): A plan of insurance that provides protection against a production loss.
• 23. Revenue Protection (RP): A plan of insurance that protects against a loss of revenue caused by low prices, low yields, or a combination of both.
• 24. Projected Price: The price of the crop used to determine the premium and the initial guarantee, based on commodity exchange prices.
• 25. Harvest Price: The price of the crop at the time of harvest, used to calculate the final revenue guarantee in RP policies.
• 26. Catastrophic Risk Protection (CAT): The lowest level of coverage available, which is fully subsidized except for an administrative fee.
• 27. Deductible: The portion of the loss that the producer must bear before the insurance company begins to pay.
• 28. Indemnity: The payment made by the insurance company to the producer for an insured loss.
• 29. Replant Payment: A payment made to a producer to cover the cost of replanting a crop that was damaged by an insured peril.
• 30. Prevented Planting: A provision that provides a payment when a producer is unable to plant the insured crop due to an insured cause of loss.

The final stage of the insurance cycle involves the adjustment of losses and the determination of final payments. Precision in these terms is vital for exam scenarios involving claim calculations.

• 31. Notice of Loss: A written notice that the producer must provide to the AIP when a loss occurs or is suspected.
• 32. Appraisal: An estimate of the potential yield of a crop made by a loss adjuster before the crop is harvested.
• 33. Loss Adjustment: The process of determining the amount of damage and the indemnity payment due to the producer.
• 34. Abandonment: The act of giving up all rights to the crop, which is generally not permitted under crop insurance contracts.
• 35. Late Planting Period: A period of time after the final planting date during which the crop may still be planted, but with a reduced guarantee.
• 36. Final Planting Date: The last day a crop can be planted to receive the full insurance guarantee.
• 37. Practical to Replant: A determination made by the AIP as to whether it is feasible to replant the crop for harvest in the current year.
• 38. Good Farming Practices: The production methods generally recognized by agricultural experts for the area.
• 39. Salvage Value: The value of the remaining crop after it has been damaged.
• 40. Peril: A specific cause of loss, such as wind, fire, or flood.
• 41. Unit: The basic unit of land for which insurance is provided and for which a separate APH and indemnity are calculated.
• 42. Written Agreement: An individual contract between the producer and the FCIC that allows for insurance on crops or practices not otherwise covered.
• 43. High Risk Land: Land that has a higher than average risk of loss, often requiring higher premiums.
• 44. Limited Coverage: A level of insurance that provides more protection than CAT but less than the highest buy-up levels.
• 45. Contract Change Date: The date by which the FCIC must make any changes to the policy provisions for the next year.
• 46. Cancellation Date: The date by which a producer must notify the AIP if they wish to cancel the policy for the next year.
• 47. Termination Date: The date the insurance policy is terminated for non-payment of premium.
• 48. Debt: Any unpaid premium or administrative fee owed by the producer.
• 49. Ineligible: A status that prevents a producer from participating in the federal crop insurance program, often due to unpaid debt.
• 50. Direct Supervision: The requirement that certain tasks performed by an unlicenced assistant be overseen by a licensed agent.