Area Revenue Protection (ARP)
The ARP policy includes protection against a county wide yield loss found in AYP but also adds protection for loss of crop value due to a drop in price on the applicable board of trade. This policy uses the same projected price as the AYP policy and adds a harvest price. The harvest price is the average closing price of the same futures contract during a specified period of time during the harvest season. The producer elects a coverage level (up to 90%) which is multiplied by the expected county yield and the projected or harvest price (whichever is greater) to determine a trigger revenue. An indemnity is due if the final county revenue is less than the trigger revenue. The producer elects a protection factor between 80% and 120% which allows them to insure more or less than the county average revenue. That factor is multiplied by the expected county yield and the projected or harvest price (whichever is greater) to determine the dollar amount of insurance per acre which is used to determine premium and indemnities.
Area Revenue Protection (ARP) with Harvest Price Exclusion
The ARP-HPE policy provides protection against a county wide loss in yield, price or a combination of both. It is identical to the ARP policy with the exception that the trigger revenue and dollar amount of insurance are based solely on the projected price. The policy guarantee will not increase if the harvest price is higher than the projected price which could result in the county experiencing a bushel loss with no indemnity due. In effect, a higher harvest price offsets the production loss.