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CATASTROPHIC
(CAT) |
Catastrophic (CAT) Insurance provides the minimum coverage amount on an MPCI policy. With CAT, you receive coverage on 50% of your approved APH at 55% of the established price ($3.35 for 2004). This insurance will provide against unavoidable causes of loss such as drought, excess moisture, flooding, hail, wind, fire, insects and disease. The cost for CAT coverage is $100.00 per crop per county. This insurance provides the minimum level of coverage which meets requirements for a person to qualify for certain other USDA programs.
Example of a loss situation: A wheat farmer has a 60 bu/ac guarantee APH. Unfortunately, due to drought and disease, he is only able to harvest 20 bu/ac. He has a CAT policy, which guarantees him 30 bu/ac. For 2004, the established price is $3.35, or $1.84 with the 55% price election. Since he harvested 10 bushels below his guarantee, he will receive $18.40 ($1.84 x 10 bushel loss) per acre.