---
title: the soil under the crop policy
canonical_url: https://ensurance.app/guide/the-soil-under-the-crop-policy
markdown_url: https://ensurance.app/guide/the-soil-under-the-crop-policy.md
subtitle: multi-peril crop insurance pays after drought and downpour; the soil works on both before the claim
category: nature-finance
---

# the soil under the crop policy

*multi-peril crop insurance pays after drought and downpour; the soil works on both before the claim*

Multi-peril crop insurance (MPCI) is the federal crop policy that pays a farmer when yield or revenue falls below a guarantee because of an unavoidable natural cause: drought, excess moisture, hail, freeze, wind, fire, insects, disease and more. Private insurers sell and service it. The federal government reinsures it and pays most of the premium.

Two of those causes, drought and excess moisture, account for about two thirds of what the program pays. Both are partly decided by the soil. The policy pays after either peril; the soil works on both before the season starts.

:::johnson
**the soil is the first layer under the crop policy** — it acts on drought and downpour before any claim. *Ensurance* funds that condition. The farmer keeps the policy for what still arrives.

[see the healthy soils agent →](/healthy-soils.ensurance?from=guide)
:::

![photo by Dan Meyers (@dmey503) on unsplash](https://images.unsplash.com/photo-1560493676-04071c5f467b?w=1200&fit=crop)

## what multi-peril crop insurance covers

The Federal Crop Insurance Corporation, run by USDA's Risk Management Agency (RMA), reinsures and subsidizes the program. Approved Insurance Providers, which are private companies, sell and service the policies under a Standard Reinsurance Agreement.

The crop provisions for corn and other coarse grains list the insured causes of loss:

- Adverse weather: drought, excess moisture, hail, frost or freeze, wind
- Fire
- Insects and plant disease, unless caused by insufficient or improper control
- Wildlife
- Earthquake and volcanic eruption
- Failure of the irrigation water supply, if an insured cause produced it

RMA states the boundary plainly. The program "covers losses that are unavoidable and due to naturally occurring events" and "does not cover losses due to negligence, or any failure to follow good farming practices." The policy assumes good farming. It insures the loss that good farming could not prevent.

## how the guarantee is set: yield and revenue protection

**Yield Protection** guarantees a quantity: the farm's actual production history (APH) yield times the coverage level the farmer chose, valued at the projected price.

**Revenue Protection** values the same guarantee at the greater of the projected or harvest price.

Iowa State Extension's worked example:

| input | value |
|---|---|
| APH yield | 175 bushels per acre |
| Coverage level | 80% |
| Projected price | $4.00 |
| Guarantee | $560 per acre |
| Revenue Protection guarantee if harvest price is $5.00 | $700 per acre |

The APH comes from the farm's own yield history. The rating does not directly price soil condition. A field's soil shows up in the guarantee only as far as it has shown up in past yields.

## the size of the program

| crop year | net acres | liability | premium | subsidy | indemnity | loss ratio |
|---|---|---|---|---|---|---|
| 2012 (drought) | — | — | — | — | $17.45B | 1.57 |
| 2022 (record indemnity) | — | $194.7B | — | — | $19.95B | 1.04 |
| 2024 | 542M | $192.3B | $17.30B | $10.43B (60%) | $15.95B | 0.92 |
| 2025 | 561M | $199.5B | $18.55B | $11.24B (61%) | $12.24B | 0.66 |
| 2026 (incomplete) | 572M | $210.0B | — | — | — | — |

The subsidy share rose to about 66% for 2026, after the FY2025 reconciliation law raised rates by 3 to 5 points. CBO's February 2026 baseline puts crop insurance at about $156 billion over ten years.

Nothing in this post argues for less of it.

## what drives the indemnities

USDA's Economic Research Service counts the causes. Since 2000, drought and heat averaged 41% of indemnities and were the leading cause in 14 of 25 years. Excess moisture averaged 27%. Together they are about two thirds of what the program pays.

| cause of loss | share of indemnities since 2000 | how much say the soil has |
|---|---|---|
| Drought and heat | 41% | Real. Organic matter and structure are tied to how much water a field holds (mechanism) |
| Excess moisture | 27% | Real. Cover and structure are tied to how fast water enters and when a field can be planted (mechanism) |
| Hail, freeze, wind | — | Little. These are weather; the soil sets little of them |
| Earthquake, volcanic eruption | — | None |

**The soil cannot stop a hailstorm or a hard freeze.** It can change how a field rides out a dry July or a flooded May. Those two causes are where most of the money goes.

## the soil answers both lead causes

Three pieces of evidence point the same way.

**Drought.** Kane and colleagues (2021) studied 754 rain-fed US counties. Each additional percentage point of soil organic matter was associated with about a 36% lower share of liability paid out under severe drought. The effect was smaller in clay soils. For how that works in the ground, see [drought-proofing starts in the soil](/guide/drought-proofing-starts-in-the-soil-not-the-reservoir?from=guide).

**Wet springs.** Won, Rejesus, Goodwin and Aglasan (2023) looked at 12 Corn Belt states from 2005 to 2016. A 1% increase in cover-crop adoption "translated to nearly $40 million in reduced prevented-planting-related indemnities," and the effect grew with multiyear use. Prevented planting is the payment when a field is too wet to plant in time.

**A field-level check.** A pilot analysis by the Meridian Institute and the University of Illinois, using 2019 claims across six Midwest states, found fields with cover crops and no-till were 24% less likely to receive a prevented-planting payment.

The same practice family, more organic matter and living cover, is tied to lower losses on both of the program's lead causes. That is the case for treating the soil as the first layer under the policy: one family of practices tied to lower losses on both lead causes, though no study has measured both.

## what the evidence does not show

Say the limits next to the findings.

- **Correlational, mostly county-level.** Kane and Won find associations across counties and states. They do not prove that a given field with more organic matter will file a smaller claim.
- **No single study measures both.** Kane ties organic matter to lower drought losses. Won ties cover crops to lower wet-field losses. No study in hand measures one practice lowering both from the same fields.
- **Practice rules still apply.** Cover crops must follow NRCS termination guidelines, or the next crop's insurability can be affected.
- **No funded soil is priced into a specific premium or APH today.** The rating does not directly price soil condition.
- **Condition takes years.** Organic matter and structure build over seasons. A cover crop planted this fall does not change next spring's guarantee, and the studies measure adoption over years.

## the first signs of recognition

Programs have started to pay for the practice, which is a step short of pricing the condition.

During 2021, the federal Pandemic Cover Crop Program gave $5 per acre in premium support for insured acres planted to cover crops: $59.5 million on 12.2 million acres. Iowa's Crop Insurance Discount Program, run by the state agriculture department with RMA, gives a $5 per acre premium reduction the following year for fall-planted cover crops on insured acres. Illinois and Indiana have run similar state premium benefits.

These are flat public payments for a practice, not a rating credit for soil condition, and not *ensurance*. They show a direction: the people who pay for crop losses have begun to treat the soil as part of the risk. For how mitigation does and does not reach a premium in general, see [does mitigation lower insurance premiums](/guide/does-mitigation-lower-insurance-premiums?from=guide) and [how insurance premiums are calculated](/guide/how-insurance-premiums-are-calculated?from=guide).

## the farmer keeps the policy

**Multi-peril crop insurance pays after drought or a wet spring. Healthy soil works on both before either arrives, and the evidence for each is separate. Fund the first layer; insure the rest.**

[*Ensurance*](/manual/ensurance?from=guide) is a way to fund that first layer: the organic matter, the cover, the structure of a named field or a farming region, paid for before the season by the people who depend on it. It does not pay claims, does not satisfy a crop-insurance or lender requirement, and does not change a guarantee. [What ensurance cannot do](/guide/what-ensurance-cannot-do?from=guide) lists the rest, and [ensurance vs insurance](/guide/ensurance-vs-insurance?from=guide) sets the two side by side.

The policy stays, above the soil, for what the soil cannot answer: hail, freeze, wind, and the year a drought outruns the best ground in the county. Federal crop insurance keeps doing that well.

See also [who pays to keep the soil on the land](/guide/who-pays-to-keep-the-soil-on-the-land?from=guide) and the [series hub](/guide/what-multi-peril-insurance-covers?from=guide).

## frequently asked questions

### what does multi-peril crop insurance cover?

Yield or revenue losses from unavoidable natural causes, including drought, excess moisture, hail, freeze, wind, fire, insects, disease and wildlife. It does not cover losses from negligence or a failure to follow good farming practices.

### do cover crops lower crop insurance premiums?

Not through the rating itself. Some public programs pay premium support for cover crops, such as Iowa's $5 per acre the following year. Those are practice payments, not a price for soil condition.

### does soil health reduce crop insurance losses?

The evidence points that way but is correlational: more organic matter goes with lower drought losses (Kane 2021), more cover crops with lower prevented-planting indemnities (Won 2023). No single study measures both.

## next steps

- **Fund the soil.** The [healthy soils agent](/healthy-soils.ensurance?from=guide) is live and funds soil condition through ensurance.
- **Own the land?** [Ecosystem income without selling](/solutions/landowners?from=guide&topic=multi-peril): instruments built toward ongoing income from what your soil already does. Keep the crop policy either way.

## sources

USDA Risk Management Agency, Good Farming Practices — scope of insured losses

7 CFR 457.113, Coarse Grains Crop Provisions — insured causes of loss

Iowa State University Extension, FM1853 (Yield and Revenue Protection) — guarantee example

USDA RMA, Summary of Business (November 2026 report; 2011–2020 and 2021–2024 editions) — acres, liability, premium, subsidy, indemnity, loss ratios

Congressional Research Service, IF12201 (October 2026) — subsidy rates after P.L. 119-21

American Farm Bureau Federation, Market Intel (February 2026), reading CBO's baseline — ten-year cost

USDA Economic Research Service, *Crop Insurance at a Glance* (2025) — cause-of-loss shares

Kane et al. (2021), *Environmental Research Letters* 16:044018 — soil organic matter and drought losses

Won, Rejesus, Goodwin & Aglasan (2023), *American Journal of Agricultural Economics*, via NC State University — cover crops and prevented planting

Meridian Institute and University of Illinois pilot, summarized by Environmental Defense Fund (2023) — cover crops, no-till and prevented-planting payments

USDA RMA, cover-crop FAQ — NRCS termination guidelines

USDA RMA (2022) — Pandemic Cover Crop Program results

Iowa Department of Agriculture and Land Stewardship (December 2025) — Crop Insurance Discount Program

---

## the series

1. [what multi-peril insurance covers, and what acts first](/guide/what-multi-peril-insurance-covers?from=guide) — **Read first:** the policy bundles the payouts; the land bundles the protection
2. [the soil under the crop policy](/guide/the-soil-under-the-crop-policy?from=guide) — Multi-peril crop insurance, and the ground that answers drought and downpour both
3. [the perils your policy leaves out](/guide/the-perils-your-policy-leaves-out?from=guide) — Named perils, open perils, and the exclusions the land works on
4. [one hillside, many perils](/guide/one-hillside-many-perils?from=guide) — Fire, then flood, then debris: hazards that arrive in a sequence the policy splits apart
5. [the first layer is the ground](/guide/the-first-layer-is-the-ground?from=guide) — Deductible, primary, excess, reinsurance, and the layer under all of them
6. [fund the primary layer, insure the rest](/guide/fund-the-primary-layer-insure-the-rest?from=guide) — How to pay for the condition that acts first, and keep the policy for what still arrives


**Companion series:** [risk has an address](/guide/risk-has-an-address?from=guide) — spatial risk: the pin, the footprint and the source, for an insurer's, a lender's or a town's whole book.