The Supplemental Coverage Option (SCO) is a county-level revenue-based or yield-based optional endorsement that covers a portion of losses not covered by the same crop’s underlying crop insurance policy.
How Does It Work?
SCO follows the coverage of your underlying policy. If you choose Yield Protection, then SCO covers yield loss. If you choose Revenue Protection, then SCO covers revenue loss.
The amount of SCO coverage depends on the liability, coverage level, and approved yield for your underlying policy. SCO pays a loss on an area basis, and an indemnity is triggered when there is a county level loss in yield or revenue.
SCO payments are determined only by county average revenue or yield, and are not affected by whether you receive a payment from your underlying policy. So it is possible for you to experience an individual loss but to not receive an SCO payment, or vice-versa.
First, you must choose an underlying policy:
- Yield Protection
- Revenue Protection
- Revenue Protection with the Harvest Price Exclusion
Next, you choose SCO as an endorsement to the underlying policy. You must make this choice by the sales closing date for your underlying policy, and with the same insurance company.
Any crop on a farm that you elect to participate in the Agriculture Risk Coverage (ARC) program is not eligible for SCO coverage.
The Federal Government pays 65 percent of the premium. The exact premium cost depends on the crop, county, coverage level you choose, and the type of coverage you choose, such as Yield Protection or Revenue Protection.
SCO is a continuous option – it must be cancelled by the cancellation date. All applicable CCIP, Crop, and SP provision/dates from the underlying policy will apply to SCO.
SCO does not provide coverage for Prevented Planting or Replanting.
There is an additional administrative fee per crop/county for adding SCO.
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Product Booklet View pricing information, guidelines and details about the plan
- The SCO Endorsement begins to pay when county average revenue falls below 86 percent of its expected level (the percent is the same for all SCO policies).
- The full amount of the SCO coverage is paid out when the county average revenue falls to the coverage level of the underlying MPCI policy.
Example: MPCI Coverage Level - 75%
- The dollar amount of SCO coverage is based on the percent of crop value covered by calculating the difference between 86 percent and the MPCI coverage level.
Example 86% - 75% = 11% covered by SCO
- Determine the full amount of SCO coverage by multiplying the percent covered by SCO by the Expected Crop Value.
Example: 11% x $763.80/ac = $84.02/ac max SCO average
- For the example, the SCO policy can cover up to $84.02 of the amount not covered by the underlying MPCI policy.
SCO must be elected by crop. It is available in select counties for the following crops:
- Spring Barley
- Wheat Sorghum
The choice of counties selected for 2015 is based on the availability of county yield data from USDA’s National Agricultural Statistics Service (NASS), subject to the following criteria:
- NASS county yield estimates are available for at least 20 of the last 30 years.
- NASS county yield estimates are available for at least 8 of the last 10 years, with an average of at least 10,000 planted acres over those years.
- There are at least 50 or more farming entities for the crop in the county according to the most recent Census of Agriculture.
Will SCO Be Available for More Crops?
RMA will expand the program to more crops and counties as the program continues. RMA will be making greater use of crop insurance data to expand SCO coverage into more areas, more crops, and to make SCO coverage more practice-specific.