Supplemental Coverage Option (SCO)

Supplemental Coverage Option (SCO) helps provide an additional layer of protection beyond your underlying crop insurance policy. By covering a portion of the deductible between your underlying coverage level and 90% of expected county revenue or yield, SCO helps reduce exposure to shallow losses. Because SCO is area-based, indemnities are determined using county-level data and may not reflect your
individual farm experience.

Sales Closing Reminders

Benefits of Supplemental Coverage Option

SCO helps bridge the gap between your underlying crop insurance coverage by providing an additional layer of protection against losses that may not be covered by your base policy.

Even when losses are not severe enough to trigger an indemnity under your individual policy, SCO may provide a payment if county revenue or yield falls below the trigger level.

SCO is federally subsidized at 80%, helping producers enhance their coverage at a lower cost than purchasing additional protection through higher underlying coverage levels alone.

How does SCO 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. However, SCO 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 you have an individual loss in yield or revenue. 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 is based on Production Area, which many times is equivalent to the county. However, it is important to remember that they can differ. Production Area for ECO/SCO/ARP: The geographical area that the expected and final area yields are based on, designated generally as a county, but may be a smaller or larger geographical area as specified in the actuarial documents.

Coverage Highlights

  • SCO coverage will mimic how the underlying policy works.
    •  If the underlying policy provides Revenue Protection, then the SCO will provide revenue coverage on an area-basis.
    • If the underlying policy provides Revenue Protection, then the SCO will provide revenue coverage on an area-basis.
  • The SCO liability (maximum payout) will be based on the expected crop value (the insured's APH) for the individual grower. 
  • Producers may reduce their SCO liability by a "coverage percentage" elected on or before the Sales Closing Date. The range is from 50% to 100%.
  • If allowed in the actuarial, separate supplemental protection is available for each practice, type, and coverage level.

Important Dates

Sales Closing Date:

  • Matches the Sales Closing Date of the underlying crop insurance policy.
  • SCO is considered continuous until it is canceled.

Indemnity Payments

  • ECO indemnities are generally issued during the summer following the Crop Year after Final County Yields and Revenues become available.

Purchase Information

  • SCO must be purchased with an underlying individual policy. They consist of: Actual Production History (APH), Yield Protection (YP), Yield Based Dollar Amount of Insurance, Revenue Protection (RP), and Revenue Protection with Harvest Price Exclusion (RP-HE).
  • SCO uses its own Administrative Fee ($30), as well as premium. The premium is subsidized at 65%. 
  • SCO may be selected when the Price Loss Coverage (PLC) or Area Risk Coverage (ARC) is elected at the Farm Service Agency (FSA).
  • High-Risk land insured under the underlying policy is insured under the SCO endorsement.

SCO Example with a Revenue Policy

Suppose a grower’s corn crop has an expected value of $765.00 per acre (170 bushels at $4.50 per bushel). Assume the grower buys a Revenue Protection policy with an 80% coverage level (this is the ‘underlying policy’). The underlying policy covers 80% (or $612.00) of the expected crop value and leaves 20% (or $153.00) uncovered as a deductible.

At this point, the grower has the option to buy SCO coverage. Since the underlying policy is Revenue Protection, SCO will also provide revenue protection, except that payment will be determined at an area-level, in this example the area is equivalent to the county. SCO revenue coverage is described in the table.

The SCO Endorsement begins to pay when county average revenue falls below 90% of its expected level. The full amount of the SCO coverage is paid out when the county average revenue falls to the coverage level of the underlying policy. In this example it is 80%.

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.

    Contact an NAU Country Representative today about signing up!