This guide breaks down Yield Protection (YP), one of the most widely used crop insurance policies. We’ll walk through what it is, how it works, and what it means for your farm, using examples at every step.

Yield Protection protects you against not having enough crop production. If your harvest comes in significantly below your historical average, YP steps in and helps cover the difference

Yield Protection only protects one thing: whether you had enough production.

• If commodity prices crash at harvest, YP does not cover that.
• If a drought cuts your yield in half, YP provides protection.
• If prices crash AND your yield is down, YP still only offers protection for yield loss, not the price drop

Yield Protection covers losses caused by natural perils that are beyond a farmer’s control. The following are examples of causes of loss that are covered under a standard YP policy.

Yield Protection (YP) insurance primarily covers major row crops, including corn, soybeans, wheat, cotton, grain sorghum, barley, canola/rapeseed, sunflowers, popcorn, rice, and, as of recently, flax

Your coverage level is the percentage of your APH you’re choosing to protect, ranging from 50% to 85%. The higher the coverage level, the more protection you have and the higher your premium.

Your APH is your farm’s 10-year average yield. It’s calculated using the average of your actual yields over the past decade (minimum 4 years). This is the foundation of your coverage. The higher your APH, the more protection your policy provides.

Corn yields over the last 10 years were:

160, 175, 190, 185, 170, 200, 180, 180, 195, and 165 bu/acre.

Your APH average is: 180 bu/acre.

The projected price is the price per yield or other measurement used to calculate the dollar value of your coverage. It is set once a year by the USDA in the spring, using an average of futures prices on the Chicago Board of Trade (CBOT) during a specific window of time.

For corn and soybeans in the Midwest, the projected price is set in February for the upcoming growing season. Once it’s set, it doesn’t change. It’s locked in for the entire crop year.

Your Yield Guarantee is the minimum number of bushels per acre your policy will protect you down to. It’s the floor. If your harvest falls below this number, you have a claim.

This means if our example producer harvests more than 135 bu/acre, there’s no claim. If they harvest less than 135 bu/acre, the insurance provides an indemnity claim.

The best way to understand Yield Protection is to walk through a scenario using a corn operation. Each scenario shows a different market situation and how YP responds to it.*

• APH: 180 bu/acre
• Coverage Level: 75%
• Projected Price: $4.50
• Acres: 500 acres

Before planting even starts, the YP policy establishes the yield guarantee based on APH and the chosen coverage level:

A summer drought hits the area hard. At harvest, the actual yield comes in at 100 bu/ac, well below the guarantee of 135 bu/acre. A claim has been triggered.

The indemnity is calculated by multiplying his shortfall in bushels by the projected price. YP uses the projected pricethat was set in the spring, regardless of what prices are doing now:

If a producer has a good year and produces above their yield guarantee, there is no claim and no payment. The insurance doesn’t trigger because his harvest exceeded his guaranteed floor. This is good news for a producer, as the insurance is a valuable risk management tool. It is typically better for an operation to have production that is above its insurance guarantee.

YP premiums are less expensive than RP premiums because the coverage is narrower. The additional cost reflects the fact that RP can respond to more types of loss. Factors that affect your YP premium include:

• Your APH
• Your coverage level (50–85%)
• Your county’s risk rating
• The projected price and volatility

Federal crop insurance premiums are subsidized by the USDA. Depending on your coverage level, the government typically covers 41–80% of the total premium. You only pay the remainder of the premium.

Standard YP policies generally include coverage if you are prevented from planting due to insurable weather conditions or if you are forced to replant. Prevented planting and Replant payments are always calculated using the Projected Price.