South Dakota Crop Insurance Practice Exam

Which entity is NOT eligible to be insured under a crop-hail policy?

1. A bank or lending institution

2. A private farmer

3. A cooperative association

4. A government agency

The correct answer is: A bank or lending institution

A bank or lending institution is not eligible to be insured under a crop-hail policy because these policies are specifically designed to cover agricultural risks primarily affecting producers who have a direct stake in the farming operation and crop production. Crop-hail insurance is meant for entities that own or are responsible for the cultivation of crops, which aligns with private farmers and cooperative associations, as they are involved in the growing and harvesting of agricultural products. In contrast, while government agencies might have some involvement in agricultural programs, they typically do not engage in the physical production of crops, which is a primary criteria for eligibility under these policies. Thus, the focus of crop-hail insurance on individuals or entities actively farming means that non-farming entities, such as banks or lending institutions, do not qualify for this type of insurance coverage.