South Dakota Crop Insurance Practice Exam

How much must an insured pay per crop per county for all levels of coverage in excess of catastrophic risk protection each crop year?

1. $10

2. $20

3. $30

4. $40

The correct answer is: $30

For all levels of coverage in excess of catastrophic risk protection, an insured is required to pay a fee of $30 per crop per county each crop year. This fee is established to help manage the costs associated with providing additional coverage options beyond the basic catastrophic level. Catastrophic risk protection offers minimal coverage, primarily designed for situations in which a farmer experiences significant loss. However, farmers often choose to purchase additional coverage to better protect their investment. The fixed fee for excess coverage serves as an administrative mechanism, ensuring that farmers contribute a baseline amount for the enhanced benefits they receive through the more comprehensive insurance programs. This structured fee system helps stabilize the insurance program while also ensuring that insured parties have a financial stake in the decisions surrounding crop risk management. This understanding of the fee structure is essential for farmers in planning their insurance options effectively.