Corn Rainfall Program Example

This example demonstrates how a Corn Rainfall claim is calculated.

A customer has 200 acres of silage corn they would like to insure. 

They can select coverage from options of $150, $175, $250 or $350/acre.

Three monthly precipitation options are available to choose from:
Option 1 - 20/40/40/0
Option 2 - 15/35/35/15
Option 3 - 0/20/40/40 

Finally, either a 125 or 150 per cent monthly cap for precipitation must be selected.  

 

Customer Calculation: 

Customer coverage selected is $250 per acre on 200 acres of silage = $50,000 total coverage

The customer was concerned about early rainfall and  selected weighting option 1 and monthly cap of 150 with coverage weighted across the months of May to July as: 20% (May) + 40% (June) + 40% (July) + 0% (Aug)

 

Payment calculation (shown in table below):

Weighted % of Normal for May = Measured Precipitation / Normal Precipitation x Monthly Weighting

= 60 / 80 = 75% of Normal in May

May weighting = 20%
75% x 20% = 15.0%

Repeat per cent of normal calculation for all months.

The sum of the monthly weighted % of normal = 76.3%

The payment rate for 76.3% of normal is 7.0% (see Payment Schedule)

May PrecipitationJune PrecipitationJuly PrecipitationAugust PrecipitationTotal
Measured Precipitation (mm)60.060.010.025.0
Normal Precipitation (mm)80.050.030.020.0
% of Normal 75.0120.033.3125.0
Monthly Weighting (%)20.040.040.0100
Weighted % of Normal15.0%48.0%13.3%0.0%76.3%

Total Claim

                = total coverage X payment rate

                = $50,000 X 7.0%

                = $3,500