Department of Agriculture
Risk Management Agency Fact Sheet
Washington National Office — Washington,DC
Revised July 2024
Enhanced Coverage Option
- General Information
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The Enhanced Coverage Option (ECO) is a new crop insurance option that provides additional area-based coverage for a portion of your underlying crop insurance policy deductible. It must be purchased as an endorsement to the Yield Protection, Revenue Protection, Revenue Protection with the Harvest Price Exclusion, Actual Production History or Yield Based Dollar Amount of Insurance policy. ECO offers producers a choice of 95% or 90% trigger levels. Trigger means the percentage of expected yield or revenue at which a loss becomes payable.
- How ECO Works
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ECO follows the coverage of your underlying policy. If you choose Yield Protection or a yield-based policy, then ECO covers yield loss. If you choose a Revenue Protection policy, then ECO covers revenue losses.
The amount of ECO coverage depends on the liability of your underlying policy. However, ECO differs from the underlying policy in how a loss payment is triggered. The underlying policy pays a loss on an individual basis and an indemnity is triggered when you have an individual loss in yield or revenue. 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 has two trigger levels: 90 and 95 percent. ECO provides a band of coverage between the elected trigger level and 86%. If the county yield or revenue is reduced beyond the trigger level you will receive an ECO indemnity. If the reduction in yield or revenue exceeds the 86% threshold, you will receive an indemnity equal to the full insured liability.
- Availability
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ECO is available for the crops below in most counties where these crops are grown. Additional crops will be added in subsequent years based on producer interest and data availability.
Alfalfa Seed Forage Production Almonds*
Grain Sorghum Apples*
Grapes* Barley
Hybrid Corn Seed Blueberries*
Hybrid Seed Rice Buckwheat
Hybrid Sorghum Seed Burley Tobacco
Millet Canola
Oats Cigar Binder Tobacco
Peanuts Citrus**
Popcorn Corn
Rice Cotton
Rye Cotton - Ex. Long Staple
Safflower Cultivated Wild Rice
Sesame Dark Air Tobacco
Silage Sorghum Dry Beans
Soybeans Dry Peas
Sugar Beets Fire Cured Tobacco
Sugarcane Flax
Sunflowers Flue Cured Tobacco
Walnuts* Wheat *Starting with the 2025 Crop Year
**Where SCO is currently available in California and Arizona starting with 2026 Crop Year
- Coverage Example
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Suppose your corn crop has an expected value of $765.00 per acre (170 bushels at $4.50 per bushel). Assume you purchase a Revenue Protection policy with a 75 percent coverage level - this is the ‘underlying policy’. The underlying policy covers 75 percent (or $573.75) of the expected crop value and leaves 25 percent (or $191.25) uncovered as a deductible.
At this point, you have the option to buy ECO coverage. Since the underlying policy is Revenue Protection, ECO will also provide revenue protection, except that payments will be determined at a county level. The ECO revenue coverage is described in the following table. ECO yield coverage performs in the same manner.
Step ECO Coverage Calculation for 95% Area Trigger Level A ECO Endorsement begins to pay when county revenue falls below this percent of its expected level
95% B ECO Endorsement pays out its full amount when county revenue falls to 86 percent of its expected level
86% C Percent of expected crop value covered by ECO (A – B, or 95%- 86%)
9%
D Amount of ECO Protection (C x Expected Crop Value, or 9% x $765)
$68.85
The ECO Endorsement begins to pay when county average yield or revenue falls below 95 percent (or 90 percent, if that isthe trigger level you elect) of its expected level. The full amount of the ECO coverage is paid out when the county average revenue falls to 86 percent, as shown on step B in the table.
ECO payments are determined only by county average revenue or yield, and are not affected if you receive a payment from your underlying policy. So it is possible for you to experience an individual loss but to not receive an ECO payment, or vice-versa. You may also receive a loss on both the underlying policy and ECO.
The dollar amount of ECO coverage is based on the percent of crop value covered. In this example there are 9 percentage points of coverage - from 95 percent to 86 percent. Nine percent of the expected crop value is $68.85 (or 9 percent times $765.00). Thus, the ECO policy can cover up to $68.85 of the $191.25 deductible amount not covered by your underlying policy. You may cover a portion of the remaining amount of the deductible with other coverage such as the Supplemental Coverage Option (SCO).
Now consider an event wherein the actual county revenue falls to 89% of the expected value. This loss is 6 percentage points less than the trigger level elected (95% - 89% = 6%). This indicates a loss of 66.67% of the ECO coverage range (6%/ 9% = 66.67%). This loss is then applied to the amount of ECO protection to determine an indemnity of $45.90/ac (66.67% x
$68.85 = $45.90).
- Cost
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ECO provides coverage on a portion of your deductible where losses are more frequent, your premium will reflect that higher risk. The premium cost is shared between you and the government, where the government pays 65 percent of the premium for yield and revenue policies.
The exact premium cost will depend on the crop, county, coverage level selected, and type of coverage selected such as Yield Protection versus Revenue Protection. Additional variables, including the projected price and even the volatility of the applicable commodity market can also affect the amount of your premium. You should consult your crop insurance agent for detailed price quotes.
- How Do I Decide If I Should Buy ECO
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Federal law limits the authority for Federal Crop Insurance to insure individual farm yields at 85% coverage levels. If you need higher coverage levels for your farm, then ECO can offer coverage up to 95%, at a county level to enhance your total coverage. You should consult your crop insurance agent to determine what best meets your individual risk management needs.
- ECO with Farm Programs
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Unlike SCO, ECO coverage is unaffected by participating in Agriculture Risk Coverage (ARC) for the same crop, on the same acres. You may elect ECO regardless of your farm program election.
- ECO and Other Area-Based Insurance Plans
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ECO cannot be elected if you have a Margin Protection or an Area Risk Protection Insurance policy. The underlying policy for ECO cannot have the Hurricane Insurance Protection – Wind Index Endorsement. ECO coverage cannot attach to any acres that are insured by Stacked Income Protection Policy (STAX). Acres not insured under STAX may be insured under ECO. You can select SCO on all acres covered by ECO, but you are not required to elect SCO to purchase ECO.
- Where to Buy Crop Insurance
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All multi-peril crop insurance, including CAT policies, are available from private crop insurance agents. A list of crop insurance agents is available at all USDA service centers and on the RMA website at: www.rma.usda.gov/Information-Tools/Agent-Locator.
National Office
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USDA/RMA/Stop 0801/Room 2004-South
1400 Independence Ave. SW
Washington, DC 20250 - Email: FPAC.BC.Press@usda.gov
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This fact sheet gives only a general overview of the crop insurance program and is not a complete policy. For further information and an evaluation of your risk management needs, contact a crop insurance agent.
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The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at 202-720-2600 (voice and TDD). To file a complaint of discrimination, complete, sign and mail a program discrimination complaint form, (available at any USDA office location or online at www.ascr.usda.gov), to: United States Department of Agriculture; Office of the Assistant Secretary for Civil Rights; 1400 Independence Ave., SW; Washington, DC 20250-9410. Or call toll free at (866) 632- 9992 (voice) to obtain additional information, the appropriate office or to request documents. Individuals who are deaf, hard of hearing, or have speech disabilities may contact USDA through the Federal Relay service at (800) 877-8339 or (800) 845-6136.