Look Beyond Base Coverage: Maximizing Your Crop Insurance Strategy
When it comes to protecting your farm, basic coverage is just the beginning. Volatile commodity prices, rising input costs, and unpredictable weather mean that even a small dip in yield or price can significantly impact your bottom line. Many losses occur in the “shallow loss” range — not severe enough to trigger full indemnities, but still painful to farm cash flow.
Fortunately, producers have several tools available to help close those gaps and strengthen their overall risk management strategy.
- Area-Based Revenue Plans: Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO)
- Title 1 FSA Programs: Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC)
- Crop & Livestock Income Protection (CLIP)
Understanding how these options work, and how they fit together, can help maximize your protection and long-term financial stability.
1. Area-Based Revenue Coverage: SCO and ECO
Area-based plans are designed to supplement your underlying crop insurance by covering a portion of your deductible. Instead of triggering losses based on individual farm results, these plans use county-level yield or revenue to determine payments.
Supplemental Coverage Option (SCO)
The Supplemental Coverage Option (SCO) is an area-based crop insurance endorsement that provides additional coverage on top of your underlying policy. SCO covers losses from your individual policy’s coverage level up to 86% at the county level.
The amount of SCO coverage depends on the liability, coverage level, and approved yield of your underlying policy. While it works alongside your base coverage, SCO differs in how losses are triggered — indemnities are paid when county-level yield or revenue falls below 86%, regardless of individual farm performance.
Enhanced Coverage Option (ECO)
The Enhanced Coverage Option (ECO) builds on SCO by offering even higher levels of protection. ECO covers losses from 86% up to 90% or 95%, making it the highest subsidized multi-peril crop insurance coverage currently available.
Like SCO, ECO is county-based, which can benefit producers whose yields and revenue closely align with county averages. Depending on your underlying policy, ECO can trigger an indemnity with as little as a 5% loss in yield or revenue.
Why Consider Area-Based Plans?
Area-based coverage can be especially valuable in years when prices soften or county yields fall below average. If crop insurance prices drop more than 5% between spring and fall, you’re in ECO territory.
In fact, corn prices have dropped from spring to fall three times in the past five years, and each of those declines exceeded 5%. SCO and ECO help protect against these shallow losses that often aren’t fully covered by base policies alone.
2. FSA Programs: ARC-CO and PLC
While SCO and ECO enhance crop insurance coverage, FSA programs provide a separate layer of income support based on prices and county revenue rather than individual production.
Agriculture Risk Coverage – County Option (ARC-CO)
Agriculture Risk Coverage – County Option (ARC-CO) provides area-based revenue and income support tied to county-level performance. Payments are triggered when actual county revenue falls below 90% of the benchmark revenue, which is calculated using historical yields and prices. Because ARC-CO is based on both yield and price, it can be especially valuable in years when the county experiences below-average yields, declining prices, or a combination of both.
Price Loss Coverage (PLC)
Price Loss Coverage (PLC) is designed to protect against sustained price declines rather than revenue losses. PLC payments are triggered when the national marketing year average price for a covered commodity falls below the effective reference price. Since PLC does not factor in yield, it can be a strong risk management tool in years when prices are under pressure, but production remains strong at both the farm and county levels.
Recent Changes to FSA Programs
Recent legislation, including the One Big Beautiful Bill Act, has significantly updated FSA programs, including:
- Raised PLC reference prices
- Increased PLC effective reference percentage to 88% of the ARC benchmark
- Raised the ARC-CO trigger to 90% from 86%
- Expanded the ARC-CO coverage band to 12% (90%–78%)
- For 2025, producers receive the higher of PLC or ARC payments
- Added up to 30 million base acres
- Increased the per-entity payment limit from $30,000 to $155,000
- Beginning in 2026, FSA and crop insurance decisions are no longer connected
These changes make ARC and PLC more impactful tools in a producer’s overall risk management plan.
3. Extended Farm Revenue Protection: CLIP
For operations managing multiple commodities or facing higher premium costs, broader income protection may be worth considering.
Crop & Livestock Income Protection (CLIP) is a newer federal crop insurance product designed to provide umbrella-style revenue protection. CLIP pairs with at least two qualifying Revenue Protection (RP) policies and helps optimize coverage in regions where individual RP premiums are higher.
CLIP allows producers to tailor coverage levels alongside their RP decisions and use a single product to protect multiple commodities. When yields decline or prices fall, this broader income protection can help stabilize the entire operation — not just individual crops.
Making the Right Coverage Decisions for Your Operation
No two farming operations face the same risks. Understanding how area-based coverage (SCO and ECO), FSA programs (ARC-CO and PLC), and whole-farm income protection (CLIP) work together allows you to build a strategy that fits your operation — not just the policy.
If you’re considering expanded coverage, now is the time to evaluate your options and position your farm for the upcoming crop years. Reach out to our team of crop insurance experts at First State Insurance Agency to discuss your coverage needs and find the best solution for your operation.
