Look Beyond Base Coverage: Maximizing Your Crop Insurance Strategy

When it comes to protecting your farm, basic coverage is just the beginning. Understanding the different safety net options available can help maximize your protection and financial stability. Expanding on base revenue coverage, there are two sets of options to consider:

  1. Title 1 through FSA: Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)
  2. Stacked Coverage on Crop Insurance: Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO)

Understanding the Differences

Here are four key differences between these coverage options:

  1. ARC/PLC cover base acres, while SCO/ECO attach to planted acres.
  2. ARC/PLC no premium due, enrollment deadline April 15th
  3. ARC/PLC pay in October 2026, whereas SCO/ECO pay in June 2026
  4. ARC and SCO cannot be combined, but you can add SCO and/or ECO with PLC

What is ECO and How Does it Fit In?

Enhanced Coverage Option (ECO) is an optional, area-based policy endorsement that covers a band from 85% to 95%. It can be purchased regardless of your ARC or PLC election and does not need to be bundled with SCO. However, ECO must be purchased at the same time as your underlying multi-peril crop insurance (March 15th). Indemnities are paid when county yields are released after production reporting deadline.

Why Consider ECO?

If crop insurance prices drop more than 5% between spring and fall, you’re in ECO territory. Historically, corn prices have dropped from spring to fall seven times in the past ten years, and six of those times the drop was greater than 5%.

Projected Program Payments

While ARC benchmark prices are at record highs, they follow years of rising input costs and declining crop prices, with margins often at or below breakeven. Lower prices and revenue could lead to over $5 billion in commodity program payments from ARC and PLC. However, most crops planted in spring 2025 won’t receive payments until fall 2026 – an 18-month gap from planting costs to federal support.

Breaking Down ARC-CO and PLC

  • Agriculture Risk Coverage – County Option (ARC-CO):
    • Provides area-based revenue and income support.
    • Payments occur when county-level revenue falls below 86% of the benchmark revenue.
  • Price Loss Coverage (PLC):
    • Based on price only, not revenue.
    • Pays when the national marketing year average price falls below the effective reference price.

Choosing the right crop insurance plan is essential for managing risk and ensuring your farm’s financial stability. Understanding the differences between ARC, PLC, SCO, and ECO can help you make informed decisions that best suit your operation. If you’re considering expanded coverage, now is the time to evaluate your options and secure the best protection for the upcoming crop years. Reach out to our team of crop insurance experts today to discuss your coverage needs and find the best solution for your farm.