Live Asset Insurance

Grower's Live Asset Insurance vs. the Government Crop Insurance Program

How is Live Asset Insurance different than Crop Insurance?

Crop insurance provides “all risk” protection, but with significant limitations. Our policy is a “named perils” policy.

What is the difference between “all risk” and “named perils”?

“All risk” means that everything is covered except those things that are specifically excluded or limited by policy language. “Named perils” means only those named perils are covered, everything else is excluded.  

Does the crop insurance program insure more “crops” than Live Asset Insurance?

Yes.  Live Asset Insurance was specifically designed to insure only the plant, tree, shrub or vine, not the fruit, nut, vegetable, berry or spice that is produced by the Live Asset itself.

Does the Crop insurance insure more types of crops?

Yes. There are a significant number of annual plants that produce fruits and vegetables which we do not insure.

Can you give an example of plants that you do not cover?

Yes, a strawberry plant, a pepper plant, lettuce, cabbage, tobacco or carrots would be examples of annual plants that we would not insure in the ground, in a nursery or in a greenhouse setting. However, we would insure a perennial blueberry plant. A blueberry bush has more than one growing season even though it produces an annual “crop”. We also insure grapevines because they too, are a perennial, fruit producing plant which is eligible for our program.

Is Live Asset Insurance a Government/Tax-payer subsidized insurance policy?

No, the Live Asset Insurance carrier is an international “A” rated, private insurance company ranked as one of the top 25 insurance companies in the world for financial stability.

If someone has the government crop insurance program can they also buy Live Asset Insurance protection?

Yes. Our policy was specifically designed to be used as a “deductible buy-back” policy or to “wrap around” the available coverage provided by the Risk Management Agency-USDA Crop Insurance policy. Crop Insurance is subsidized by the taxpayers and should be considered a policy of “last resort”. Our private sector insurance policy is strictly voluntary, not subsidized by the taxpayers, carefully underwritten, and paid for by the individual policyholder. This is comparable to life insurance for your live assets.

Can you give an example of how your policy would work in relation to an RMA “Cat” policy?

The Governments “catastrophic” insurance policy, which costs the client a few hundred dollars, is only going to respond to a covered claim once the client pays close to 75% of the damage upfront, before the crop policy will respond to the claim. This 75% deductible can be insured by our policy. The “crippling” deductibles are one of the main reasons why we created our policy.

Can you provide a specific example?

Yes. If you were a nursery that grew perennials, and a freeze wiped out your $2,000,000 inventory, and you had only the “cat” coverage, you would have to self insure approximately the first $1,500,000, and then the Government would pay approximately $500,000 toward the claim.

You mentioned a “wrap around” policy, what does that mean?

“Wrap around” is similar to the “deductible buy-back” in that you would “wrap” our policy around the governments policy “unofficially” to make a more comprehensive insurance program for your business. We are, by design, not endorsed by RMA.

Can you give me an example of a “wrap around”?

Yes, the best example we know of is the “Vineyard” example. The government’s crop insurance program excludes vines. This leaves every vineyard in the country vulnerable to natural disaster and the economic loss that would result from an uncovered claim. The government’s policy covers the grapes and the raisins, but excludes the vines. We cover vines. This makes for a perfect marriage or “wraparound” of the two programs.

Are there other items the government does not cover like vines?

Yes, there are many. One example is Christmas Trees. For some reason Christmas Trees are not eligible for the government crop insurance subsidized program. There are tens of thousands of Christmas Tree farms across the country and we want to offer Live Asset Insurance to them all. In order to find out if your plant material is eligible for our program, please fill out the contact us information page.

Are there potential claim settlement problems with two insurance programs?

No. Our insurance is primary for the items that are listed as insured inventory on our policy. Our claims adjusters will work closely with any other claim adjuster on the loss to coordinate the information. Our nursery 2 million dollar freeze example has shown us that we will have no trouble taking a primary role in the claim settlement process with our Live Asset Insurance policy.

Is your policy expensive in relation to the government’s crop policy?

Expensive is a relative term. Is a $1,500,000 dollar deductible expensive? Would a $10,000 to $15,000 policy have been less expensive? Our rates are priced accordingly. Our pricing is approximately 50-75% less expensive than the government’s coverage on comparable limits of insurance. We are less expensive because we do not insure fruit, nuts, berries or vegetables and we are a “named perils” policy.

If first dollar coverage is important and the “named perils” of wind, freeze, hail, fire and flood, to name a few, will satisfy your fears, than please fill out the contact us information page.

Can you give a real life price example that illustrates your point?

Yes. The following are three recently issued 2009 Crop Insurance policies:

Case Study #1: Catastrophic Coverage Only

  • Nursery Grower with field grown inventories of $11,991,000 and containerized values of $802,000.
  • The total amount of (cat) insurance for field grown inventories is $3,297,525 and the containerized insured value is $220,500.
  • The cost of this policy to the government is $76,974.
  • The cost to the insured is $200.
  • The deductible which the insured must pay before the government gets involved in the claim is $9,274,925.

Solution: Our policy can be used as a deductible buy-back to eliminate the entire $9,274,925 self-insured amount (not including the $10,000 deductible) for approximately between $50,000 and $75,000.

Case Study #2: 50% Buy-Up Policy

  • Nursery Grower with field grown inventories of $11,775,150.
  • The total amount of buy-up coverage is 50% or $5,887,575.
  • The total cost of the policy is $128,843.
  • The subsidy amount is $86,325.
  • The cost to the insured is $42,548.
  • The deductible which the insured must pay in the event of a total loss is $5,887,575.

Solution: Our policy can be used as a deductible buy-back to eliminate the entire $5,887,575 self insured amount (not including the $10,000 deductible) for approximately $35,000 to $45,000.

Case Study #3”: 55% Buy-Up Policy

  • Nursery Grower with field grown inventories of $3,839,370 and containerized values of $2,512,873.
  • The total amount of buy-up coverage is 55% for a total of field grown $2,111,654 and containerized values of $1,392,080.
  • The total cost of the policy is $89,961.
  • The subsidy amount is $57,574.
  • The total cost to the insured is $32,447 (including a $60 administrative fee).
  • The deductible which the insured must pay in the event of a total loss is $2,859,109.

Solution: Our policy can be used as a deductible buy-back to eliminate the entire $2,859,109 self-insured amount (not including the $10,000 deductible) for approximately $20,000 to $25,000.

You know exactly what your deductible is if you have a loss. We believe the deductible (self-insured retention) needs to be included in the cost of the government’s policy.

We created Live Asset Insurance to supplement the government crop insurance program and to fill the gaps where coverage was not available. The following are areas where we felt we could help:

  • Cost of the deductible (self-insured retention)
  • The government’s limited enrollment schedule; our program is available throughout the year
  • Government excluded inventories like vines, Christmas Trees and many other items
  • Limitations of the government’s policy
  • Complicated claim handling procedures for multi-year crops
  • Extensive paperwork

    ATTENTION CROP BROKERS: Send your clients’ current crop insurance policy declaration pages to us so that we can discuss with you the various ways to cover them more comprehensively.

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