Frequently Asked Questions
High-Risk Alternate Coverage Endorsement (HR-ACE)
May 16, 2016
When a HR-ACE is elected on a policy containing high-risk and non-high-risk land, two additional coverage policies are created – one insuring the high-risk land and one insuring the non-high-risk land. For the purposes of this document, the policy which insures the high-risk land will be called the high-risk policy, and the policy which insures the non-high-risk land will be called the base policy.
Q: What is the HR-ACE? Is it different from the current High-Risk Land Exclusion?
A: The HR-ACE is an endorsement to the Common Crop Insurance Policy (Basic Provisions) that provides more options to producers who farm both high-risk and non-high-risk land. In addition to those options currently available, a producer can select the HR-ACE, separate the high-risk land from the non-high-risk land, and insure them on separate additional coverage policies. The coverage on the high-risk policy must be of a lower coverage than the base policy but higher than the Catastrophic Risk Protection (CAT) level. For example, if a producer purchases 75/100 coverage on the base policy, the endorsement would allow the producer to purchase 65/100 on the high-risk policy. Prior to this endorsement, under the High-Risk Land Exclusion, a producer’s high-risk land could not be insured at a different additional coverage level, but could only be excluded from the policy and insured at CAT or not insured at all.
Q: What coverage plans may the HR-ACE be elected with?
A: The HR-ACE may be elected with yield protection (YP), revenue protection (RP), and revenue protection with harvest price exclusion (RP-HPE), but the following restrictions apply: If the base policy has RP, the high-risk policy may have RP with a lower level of coverage or YP with the same or lower level of coverage. If the base policy has RP-HPE, the high-risk policy may have RP-HPE with a lower level of coverage or YP with the same or lower level of coverage. If the base policy has YP, the high-risk policy must have YP with a lower level of coverage.
Q: When must HR-ACE be elected, and can it be chosen by crop?
A: The HR-ACE must be elected by the sales closing date. The decision to elect the HR-ACE is made separately for each crop it is available for.
Q: Where and what crops are eligible for the HR-ACE?
A: The HR-ACE is available for corn, soybeans, wheat, and grain sorghum in counties with a high-risk classification in Arkansas, Illinois, Indiana, Iowa (excluding the 35 counties that fall into the Prairie Pothole National Priority Area), Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska (limited to counties east of Holt County), Ohio, and Tennessee.
Q: What unit structure does the HR-ACE allow?
A: When the HR-ACE is elected, the high-risk policy may only have basic, optional units, or enterprise units. In order to be eligible for an enterprise unit under HR-ACE, the insured must elect and qualify for an enterprise unit or enterprise units by practice on the base policy. Enterprise units by practice are not allowed under the HR-ACE; therefore, when elected and the producer qualifies all acreage insured under HR-ACE would be in one enterprise unit and non-high risk acreage would be insured under the base policy with an enterprise unit or enterprise units by practice. The base policy may elect any unit structure it qualifies for.
Q: Is the HR-ACE a continuous endorsement?
Q: If elected, does the HR-ACE apply to an added county?
A: Yes, if the added county election has been selected and the HR-ACE is elected on the designated county.
Q: What options and endorsements are available for the HR-ACE?
A: Any options and/or endorsements elected on the base policy must also be elected on the high-risk policy, with the exception of a whole farm unit election and enterprise units by practice.
Q: Does added land qualify for HR-ACE?
A: Yes, if the HR-ACE is timely elected, added land that is high-risk land would automatically be added to the HR-ACE. If the HR-ACE was not elected by sales closing date, then added high-risk land would not qualify for HR-ACE for that crop year.
Q: Are replant and prevented planting coverage the same under the high-risk policy as they are with the base policy?
A: Yes, these coverages are identical.
Q: Does the producer have to provide separate production and acreage reports? Are separate production records required for the high-risk policy and the base policy?
A: Yes, the HR-ACE requires separate acreage and production reports, as well as production records for the high-risk land covered by the high-risk policy and the non-high-risk land covered by the base policy.
Q: Must separate APH databases be established for the high-risk land on the high-risk policy?
A: Separate APH databases are currently required for each T-Yield Map Area. If the high-risk land were not part of a T-Yield Map Area, the APH database containing such acreage would have to be separated, and separate APH databases would have to be maintained for the high-risk acreage under the high-risk policy.
Q: If there is more than one high-risk classification in the county, will the high-risk land be on one high-risk policy or multiple high-risk policies?
A: Only one high-risk policy is allowed per crop per county, and all high-risk land within the county must be insured by this policy, regardless of how many high-risk classifications there are. For example, if a producer has land with AAA, BBB, and CCC classifications, all land with these classifications will be written under one high-risk policy. The acreage in each classification must be reported on a separate line on the Acreage Report.
Q: What written agreements are available for high-risk policies?
A: Two types of written agreements are allowed for a high-risk policy:
a) One that lowers the rate from the published high-risk rate, but not so much that the rate is lowered to that which is used in the county for non-high-risk land. If the rate is lowered to the level used for non-high-risk land in the county, then this land will be considered non-high-risk, and the HR-ACE will no longer apply.
b) One for unrated land for that crop in that county, as long as the written agreement meets the following requirements:
1) The county has to have the crop listed as an insurable crop in the county at standard rates; and
2) The written agreement contains rates on the crop in excess of standard rates for the county.
Q: Does added land and new crop/practice/type/T-Yield map area (crop/P/T/TMA) procedures (including simple average (SA) T-Yields) apply to the HR-ACE policy?
A: Yes, added land and new crop/P/T/TMA procedures apply to the high-risk policy. If added land or new crop/P/T/TMA APH databases under HR-ACE qualify for use of SA T-Yield, the SA T-Yield will be calculated using the approved APH yields of the existing high-risk land APH databases on the high-risk policy. However, cropland acreage limitations are determined on a county basis. When determining whether the cropland acreage limitations are exceeded, all cropland added to the operation in the county for the crop year, high-risk and non-high-risk, are considered.
This gives 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.
For more information, contact RMA Public Affairs.