Crop Insurance

What is Crop Insurance?
Crop Insurance is a comprehensive yield-based policy meant to compensate farmers’ losses arising due to production problems. It covers pre-sowing and post-harvest losses due to cyclonic rains and rainfall deficit. These losses lead to reduction in crop yield, thus, affecting the income of farmers. In India, crop insurance is offered in the form of Pradhan Mantri Fasal Bima Yojna.

What is Pradhan Mantri Fasal Bima Yojna?
Pradhan Mantri Fasal Bima Yojna is a crop insurance scheme sponsored by the Government of India. The policy was launched in 2016. It aims to provide financial aid to farmers in case of crop loss or damage. Thus, it helps to reduce farmers’s stress and keep them motivated to continue with farming as an occupation.

The risks covered in the scheme include prevention of sowing or planting of seeds, damage to the standing crop due to non-preventable risks like drought, flood, landslide, etc. along with post-harvest losses. This policy can be purchased from a selected set of insurance companies like SBI General Insurance and HDFC Ergo General Insurance.

Types Of Crop Insurance

Crop insurance is categorised into 3 types:

Multiple Peril Crop Insurance: Provides financial coverage to manage risks arising from weather-related losses, such as a flood, drought, etc.

Actual Production History: Covers losses due to wind, hail, insects, etc. Also includes coverage for lower yield and compensates for the difference between the estimate and the real
Crop Revenue Coverage: This is based not only on the crop yield but on the total revenue generated from this yield. In case of a drop in crop price, the difference is covered by this type of crop insurance

What Crop Insurance Covers?
Following stages of the crop loss are covered under crop insurance: 

Localised calamities: It covers localised calamities and risks like hailstorm, landslide affecting isolated farms in the notified area

Sowing/Planting/Germination risk: Any problem in planting or sowing because of deficit rainfall or adverse seasonal conditions

Standing crop loss: Comprehensive risk insurance to cover yield losses because of non-preventable risks, such as dry spells, flood, hailstorm, cyclone, typhoon

Post-harvest losses: It covers losses for up to a maximum period of two weeks from harvesting

How Crop Insurance Functions?
Policy seeker can get his food crops, oilseeds, annual commercial crops insured under crop insurance by submitting the required documents and paying the premium accordingly but one must choose a policy after evaluating the risks and comparing the different policies and companies. Sum insured will be decided on various factors, such as the type of crop, location, and calamity years in that area and historical yield data.  In case of crop loss, the insured needs to intimate the insurance company or local agriculture department within 72 hours of calamity.
Claims under crop insurance are done on the basis of localised losses, post-harvest loss, mid-season calamity and widespread calamities. Hence, the pay-out will be calculated taking factors like weather and yield per hectare.

Eligibility Criteria 
Crop Insurance can be availed by the farmers including sharecroppers and tenant farmers provided they are growing the notified crops in the area
Non-Loanee farmers are also eligible to avail benefits under crop insurance upon providing land documents
Two more categories are identified in which the farmers can receive the perks. These are also called Types of Coverage Components and they are:

Compulsory Component: If farmers have applied for Seasonal Agriculture Operations (SAO) credit or loans from the financial institution for the notified crops, they will be covered compulsorily

Voluntary Component: Crop Insurance is option for those farmers who fall under non-loanee farmers. If they wish to, they can register and avail benefits from the government scheme