Crop Insurance

Crop Insurance Overview:

Agriculture in India is easily one of the country’s major occupations. Approximately 52% of Indians depend on the crops that they yield for their livelihood. Agriculture contributes 16% to the overall GDP of the country. Unfortunately, agriculture in India can be a risky business for farmers because of the chances of natural disasters (floods, droughts etc.). The fluctuating prices of agricultural products are a source of worry too. For the sake of farmers in the country, the government has launched crop insurance to lighten the heavy risk associated with agriculture.

Agricultural producers (including ranchers, farmers and others) purchase crop insurance in order to protect themselves against the loss of revenue due to declines in the prices of agricultural commodities or from the loss of their crops due to natural disasters (such as floods, hail, pests, diseases, drought etc.). Crop-revenue insurance and crop-yield insurance are the two general categories of crop insurance.

Why is Crop Insurance required?

There have been shocking news of farmers taking grave measures due to the instability of crop yields in the news. The effects of such events like drought can be softened with crop insurance which will protect farmers from the harsh results.

Here is why Crop Insurance is a basic requirement that all farmers should adopt:

  1. To help stabilize farm incomes, especially in the years that disaster hits.
  2. To provide farmers with financial support and insurance coverage in the event of natural calamities, diseases and pests.
  3. To encourage farmers to implement progressive farming practices with better technology.

Features and Benefits of Crop Insurance:

The important features and benefits of crop insurance include:

  • The fact that the insurance will provide financial support in the unfortunate event of crop failure. It will thus be a critical instrument in the development of crop production.
  • Encourage farmers to adopt progressive farming practices and higher technology in Agriculture.
  • Crop insurance helps farmers maintain flow of agricultural credit.
  • On a larger scale, it is not just the insured farmer who will be benefitted from the crop insurance. The entire community will be directly and indirectly benefitted in the form of maintaining production & employment, taxes, generation or market fees etc. Further, the net accretion to economic growth will be affected.
  • Another important benefit is that crop insurance streamlines loss assessment procedures and also helps to build up accurate statistical base for crop production.

What’s covered, What's not under Crop Insurance:

Over the years, the list of things that are covered in crop insurance has evolved to benefit farmers. Depending on what policies that the farmer opts for, both the personal and property need of the farmer may be covered. Following is a list of what’s covered and what’s not under such policies:

  • Loss or damage to the property of the insured farmer
  • Damage or loss caused due to fire or natural disaster (including storm, flood, tornado, earthquake, cyclone etc.)
  • Coverage for personal accident. This includes the insured farmer and the farmer’s family members).
  • Cover for loss of pump set
  • Cover for damage/ loss of tractor
  • Coverage for damage/ loss caused by power failure

List of companies which provide Crop Insurance:

Following are the list of General Insurance Companies which offer Crop Insurance Schemes:

  • Tata AIG General Insurance Co. Ltd.
  • Reliance General Insurance Co. Ltd.
  • Cholamandalam MS General Insurance Co. Ltd.
  • Agriculture Insurance Company of India Ltd
  • IFFCO-Tokio General Insurance Co. Ltd
  • HDFC ERGO General Insurance Co. Ltd.
  • ICICI Lombard General Insurance Co. Ltd
  • Future Generali India Insurance Company Limited
  • Bajaj Allianz General Insurance Co. Ltd
  • Universal Sompo General Insurance Company Limited
  • SBI

Crop Insurance Claim process:

Framers must register themselves with the insurance provider company to begin with. It is necessary to register the marketing surplus at the sowing of crop in order to get crop insurance. The insurance company will then offer the appropriate coverage scheme. The coverage scheme includes market price from past or minimum support price guarantee.

The premium for any type of price insurance must be paid by the farmers. The government will help in the premium payment in the initial stage.

In case of market price falling: During the harvest period, in case the notified market price drops below guaranteed price, then the farmer will be compensated by the insurance company.

In case of damage: First, the yield data need to be received from the State/UT Govt. according to the prescribed cut-off dates. Then the claims will be run down and settled by IA. The individual Nodal Banks will then receive the claim cheques and claim particulars. This will be followed by the bank at the grass root level crediting the accounts of the individual farmers. The particulars of beneficiaries will be put up on the bank’s notice board.

The IA will devise a way to estimate the losses at Individual farmer level. DAC/State/UT will be consulted for this process and will be in context with the particular disaster such as flood, cyclone, landslide etc.

Crop Insurance FAQs (Frequently Asked Questions):

  1. What are the most popular insurance schemes that are available for farmers in India?
    • Crop insurance
    • Whether based insurance
    • Power failure insurance
    • Rainfall insurance/ Varsha Bima
    • Farmers insurance
    • Mango Insurance
    • Plant insurance
    • Poppy Insurance
    • Grapes Insurance
    • Potato Insurance
    • Wheat Insurance
    • Pulpwood Tree Insurance
    • Rubber Insurance
    • Coconut Insurance
    • Rabi Weather Insurance
  2. In India, when was crop insurance introduced?

    Crop insurance was introduced in India in the year 1985 when the seventh five year plan was announced. At the time, all the major crop production was covered by a scheme All-Risk Comprehensive Crop Insurance Scheme (CCIS). In 1999, the CCIS was replaced by National Agricultural Insurance Scheme. Private players entered the market in 2003.

  3. Which banks offer crop insurance?

    Following are the list of General Insurance Companies which offer Crop Insurance Schemes:

    • Tata AIG General Insurance Co. Ltd.
    • Reliance General Insurance Co. Ltd.
    • Cholamandalam MS General Insurance Co. Ltd.
    • Agriculture Insurance Company of India Ltd
    • IFFCO-Tokio General Insurance Co. Ltd
    • HDFC ERGO General Insurance Co. Ltd.
    • ICICI Lombard General Insurance Co. Ltd
    • Future Generali India Insurance Company Limited
    • Bajaj Allianz General Insurance Co. Ltd
    • Universal Sompo General Insurance Company Limited
    • SBI
  4. Is crop insurance known by any other term?

    Other poplar terms for crop/farmers insurance include:

    • Agriculture insurance
    • Farm Insurance
    • Weather based crop insurance
  5. 5. As a farmer, will the crop insurance cover personal accident if I decide to get it?

    Yes, not only will the farmer get cover for personal accident, but also the family members of the insured farmer. The insured farmer will also get cover for the following:

    • Loss or damage to the property of the insured farmer
    • Damage or loss caused due to fire or natural disaster (including storm, flood, tornado, earthquake, cyclone etc.)
    • Cover for loss of pump set
    • Cover for damage/ loss of tractor
    • Coverage for damage/ loss caused by power failure

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