Result Driven Impact

Halo Coverage: Crop Insurance Supplement for Total Loss

Backstory

Red River Farms, a 2,500-acre wheat and barley operation in the Pacific Northwest, has long relied on federal crop insurance to manage financial risk from unpredictable weather. However, due to rising premiums and cost constraints, the farm had only insured 60% of its expected crop value under its standard multi-peril crop insurance (MPCI) policy.

To better protect their profitability and long-term stability, Red River Farms secured Halo Coverage, allowing them to increase their coverage up to 90% of the crop’s value without the high cost of additional MPCI coverage.

  • INDUSTRY- Agriculture
  • ACRES- 2,500
  • TYPE OF YIELD- Wheat and Barley
Halo Coverage

Risk Description

Traditional MPCI coverage is vital but often leaves farmers with significant financial exposure, especially in total loss situations:

  • Total expected crop value: $3.2 million
  • MPCI coverage at 60%: $1.92 million payout•Remaining uninsured portion: 40% of the crop’s value ($1.28 million loss)
  • Halo Coverage limit: Additional 30% coverage, up to 90% of total value

Halo Coverage was designed to bridge this gap, covering an additional 30% of the crop’s value, ensuring the farm’s revenue remained intact in a catastrophic loss.

Incident

In June 2023, extreme heatwaves followed by an unseasonable cold snap devastated wheat and barley crops across the Pacific Northwest. Red River Farms experienced a near-total crop failure:

  • Persistent drought conditions during germination weakened plant growth.
  • Late-season frost destroyed what little crop remained, leaving the farm with 100% loss.
  • Harvestable yield: 0 bushels—the worst loss in the farm’s history.

Despite the MPCI policy paying out at 60%, Red River Farms still faced significant financial hardship with an uncovered loss of $1.28 million—a devastating hit to their revenue.

Resolution

Red River Farms filed claims under both their MPCI policy and Halo Coverage, triggering the following payments:

  1. MPCI Claim Filed:The farm received $1.92 million under their standard 60% coverage policy
  2. Halo Coverage Claim Filed
  • The total eligible payout under Halo Coverage (30%) was $960,000, bringing total coverage up to 90% of expected crop value.
  • Claim was reviewed and approved, Halo Coverage paid $960,000 to the farm

Claim Breakdown

  • Total Expected Crop Value: $3.2 million
  • MPCI Payout (60% coverage): $1.92 million
  • Halo Coverage Payout (30% additional coverage): $960,000
  • Remaining Out-of-Pocket Loss: $320,000

With Halo Coverage supplementing MPCI, Red River Farms was able to:

  • Recover 90% of expected revenue
  • Cover all fixed operating costs (equipment leases, land payments, labor expenses, etc.)
  • Avoid taking on debt or selling assets to offset the loss
  • Remain financially stable for the next growing season

Key Takeaways

Many farmers limit their crop insurance coverage due to cost, exposing them to significant financial risk in the event of total loss. Halo Coverage serves as a crucial supplement, increasing coverage beyond standard MPCI policies, protecting farmers from revenue shortfalls, and ensuring their long-term stability.

In this case, Halo Coverage provided an additional $960,000, ensuring Red River Farms could withstand a catastrophic loss and continue operations into the next season.

For farmers managing unpredictable risks,Halo Coverage provides financial certainty when traditional crop insurance alone falls short.

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