South Dakota Crop Insurance Practice Exam

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In the context of YP, RP, and RPHPE, what type of unit structure is NOT permitted?

Basic Units
Enterprise Units
Whole Farm Units
Complex Units

The correct answer is: Complex Units

In the context of crop insurance policies like Yield Protection (YP), Revenue Protection (RP), and Revenue Protection with Harvest Price Exclusion (RPHPE), the type of unit structure that is not permitted is Complex Units. Complex Units combine various basic or enterprise units, making the calculation of coverage and premiums more complicated. The regulations governing the approval of unit structures for these policies are designed to simplify the process for insurers and insured parties, ensuring more straightforward assessments of risk and claims. On the other hand, Basic Units, Enterprise Units, and Whole Farm Units are allowed. Basic Units refer to a single crop within a specified area, which maintains a clear risk profile. Enterprise Units allow for grouping multiple basic units of the same crop in the same county, which can help diversify risk across a wider area. Whole Farm Units cover all crops on a farm under one policy, providing coverage at a farm level rather than by crop. Each of these permitted structures aims to facilitate clearer assessments of coverage and minimize complexities that could arise from too many overlapping or confusing unit definitions, which is why Complex Units are not an option.