Crop insurance is a vital part of the world’s agricultural industry and a key risk management tool for the modern farmer.  Despite their best efforts, farmers will often suffer because of drought or even excessive rainfall or hail and frost in some parts especially during harvesting. We cannot control weather patterns and therefore extreme weather conditions can hit a crop at any stage of development.  A farmer can only be at peace when the whole crop is harvested and safely in the store. Till then the farmer isn’t sure of the harvest. It is due to such uncertainties that farmers take insurance as a risk mitigation tool. Insurance gives a farmer some peace of mind that if extreme weathers prevails then he/she will be able to come back next season.

Insured Events

The insurance offered is mainly a multi-peril cover. The crop is covered for Yield Losses, arising out of any or a combination of the following weather perils:

  1. Excess Rains
  2. Drought
  3. Hail Damage
  4. Frost Damage

5  Fire

  1. Uncontrollable pests and diseases

To get insured

To get covered, a farmer will need to provide the insurance company with historical yield data, say for the 5- 10 years. This will establish the long-term average over the years. For example, most large-scale farmers in Moiben have produced on average 15bags/acre of wheat. Insurance will cover up to 65% of this average. This is referred to as the Yield Guarantee. Thus, if a farmer chooses a 65% Yield Guarantee, he will be covered up to 10 bags per acre. The price per bag is pre-agreed at the point of insurance and will not be altered at the point of harvest. This price should not be speculative.

Crop insurance is taken early enough to avoid the farmer or the insurer reading the season. Farmer should factor insurance as a cost of production and budget for it early. More and more farmers are insuring their crops and especially so, for the large farmers.

Crop Insurance and Credit Access

One way of protecting agricultural credit is through crop insurance. Banks will normally recover agricultural loans from farmers by asset recoveries (tractors, combines). Surely, a humane way of recovering these loans would be through crop insurance. The insurance company pays the bank directly after a bad season. The farmer maintains his creditworthiness and is able to access finances for the next season. Crop insurance makes farming a less risky venture and therefore attractive.

For more information on crop insurance, reach us on: and 0723531540/ 0703099156


by Fredrick Kinoti,                                                                                                            Agricultural Underwriter,                                                                                                  CIC General Insurance Ltd