Enhanced Coverage Option ECO Insurance

The Enhanced Coverage Option (ECO) insurance policy option provides area-based coverage for a portion of the underlying crop insurance policy deductible.

Overview of Enhanced Coverage Option (ECO) Insurance Option:

Similar to the Supplemental Coverage Option (SCO), the Enhanced Coverage Option (ECO) is a crop insurance policy option that provides additional area-based coverage for a portion of the underlying crop insurance policy deductible.

It must be purchased as an endorsement to the Yield Protection, Revenue Protection, Revenue Protection with the Harvest Price Exclusion, Actual Production History or Yield Based Dollar Amount of Insurance policy. ECO offers producers a choice of 90% or 95% trigger levels. The term “trigger” refers to the percentage of expected yield or revenue at which a loss becomes payable.

How Does the ECO Insurance Option Work?

ECO follows the coverage of the underlying policy. If a producer chooses Yield Protection or a yield-based policy, then ECO covers yield loss. If a producer chooses a Revenue Protection policy, then ECO covers revenue losses.

The amount of ECO coverage depends on the liability of the underlying policy. However, ECO differs from the underlying policy in how a loss payment is triggered. The underlying policy pays a loss on an individual basis and an indemnity is triggered when a producer has an individual loss in yield or revenue. ECO pays a loss on an area basis, and an indemnity is triggered when there is a decrease in the county-level yield or revenue.

ECO has two trigger levels: 90% and 95%. ECO provides a band of coverage between the elected trigger level and 86%. If the county yield or revenue is reduced beyond the trigger level, the producer will receive an ECO indemnity. If the reduction in yield or revenue exceeds the 86% threshold, the producer will receive an indemnity equal to the full insured liability.

Quick ECO Endorsement Facts

  • ECO sales closing date matches the underlying individual coverage.

  • Separate premium and administrative fees for ECO by crop/county.

  • ECO’s subsidized rate is as follows:

    • 44% rate for revenue plans

    • 51% rate for yield plans

  • Producers may purchase the Supplemental Coverage Option (SCO) along with ECO.

    • Producers are not required to purchase SCO. They can leave a gap in coverage.

  • ECO is not impacted by Farm Program decisions, including Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC).

  • If a producer buys ECO, the producer may not:

    • Purchase Margin Protection (MP), Margin Protection with the Harvest Price Option (MP-HPO), Area Revenue Protection Insurance (ARPI), Hurricane Insurance Protection Wind Index (HIP-WI), or other area plans.

    • Apply ECO on acres that are already covered by Stacked Income Protection (STAX).