An awareness campaign vehicle for promoting Pradhan Mantri Crop Insurance Scheme among farmers was launched by the District Collector of Tirrpur, Tamil Nadu recently. At regular intervals, there are awareness campaigns on crop insurance .

Crop Insurance is a comprehensive yield-based policy meant to compensate losses to farmers, arising due to natural calamities, pests, diseases, or other unforeseen events that damage their crops. It provides a safety net to farmers by compensating them for the loss of their crops or a significant reduction in yield. The primary objective of crop insurance in India is to mitigate the adverse impact of crop failure on farmers' livelihoods and to encourage them to adopt modern agricultural practices without the fear of catastrophic losses.

Crop insurance in India is typically implemented through various government schemes. The flagship crop insurance scheme in India is the Pradhan Mantri Fasal Bima Yojana (PMFBY), which was launched in 2016 to replace several older crop insurance schemes and make crop insurance more accessible and affordable for farmers. Crop insurance typically covers a range of crops, including food grains, oilseeds, horticultural crops, and commercial crops. The coverage extends to both kharif (summer) and rabi (winter) crops. In the event of crop loss or damage due to covered perils, the insurance company conducts a survey and assessment to determine the extent of the loss. Compensation is then provided to eligible farmers based on the assessment. Thus, it helps to reduce farmers' stress and keep them motivated to continue with farming as an occupation.

Farmers are required to pay a premium for crop insurance, but the Government subsidizes a significant portion of this premium to make it affordable for small and marginal farmers. The premium amount is based on factors such as the type of crop, location, and coverage level. Speak to Bimakavach experts for crop insurance in Karnataka or other regions of the India.

Features of Crop Insurance Policy

  • Provides financial support to farmers in the event of crop loss and damage resulting from covered perils
  • Provides financial protection against weather-related damages such as floods and drought.
  • Coverage for lesser yield is included, as is compensation for the difference between the estimate and the actual yield.
  • Tax exemption is provided on the premium paid by the farmers against the policy
  • In case of a drop in crop price, the difference is covered
  • Farmers are saved from taking loans from private lenders at higher interest rates
  • Encourages farmers to use contemporary and innovative agricultural practices that boost their income
  • Farmers can repay debts with crop insurance reimbursement.

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Who needs the Crop Insurance Policy?

Crop insurance policies are typically designed for individuals or entities involved in agriculture, specifically those who grow crops and rely on their harvests for income. Here are some examples of entities that would benefit from having this policy:

  • Large-scale commercial farmers
  • small-scale subsistence farmers
  • Share croppers -provided they are growing the notified crops in the area
  • Tenant farmers -provided they are growing the notified crops in the area
  • Non-Loanee farmers
  • Agricultural producers including nursery owners, and aquaculture operators
  • Agricultural cooperatives
  • Agribusinesses including seed producers, equipment manufacturers, and food processors

There are two other categories in which farmers could get benefits. These are known as types of coverage components, and they are as follows:

Compulsory component: Farmers who have applied for seasonal agriculture operations (SAO) loans or credit from a financial institution for the designated crops will be automatically covered.

Voluntary component: Crop insurance is optional for farmers who are not loanees. They can register for and benefit from the government scheme if they wish.

Why do you need a Crop Insurance Policy?

Agriculture is inherently risky, as it depends on factors beyond the farmer's control, such as adverse weather conditions, pests, diseases, or other unforeseen events. Crop insurance helps farmers manage these risks and stabilize their income, reducing the impact of unpredictable events. This stability is crucial for financial planning, covering operating expenses, repaying debts, and supporting their families. Farmers often invest significant resources in planting and cultivating crops, including purchasing seeds, fertilizers, equipment, and labor. Crop insurance safeguards this investment by providing financial support in case of crop failure.

Many agricultural lenders require farmers to have crop insurance as a condition for receiving loans or credit. This ensures that the farmer can repay the loan even in the event of a crop failure, reducing the lender's risk. Some crop insurance policies include coverage for quality or market-related losses. This ensures that farmers can meet contractual obligations with buyers and continue to access markets, even if their crops are damaged or compromised in quality. For commercial farmers and agribusinesses, crop insurance helps ensure the continuity of operations. It allows them to recover from losses quickly and continue their agricultural activities in subsequent seasons.

What is included in the crop insurance policy?

The coverages provided by a crop insurance policy may be categorized into the following categories -

  • Localized calamities

A crop insurance policy in India offers coverage for damages resulting from localized calamities, which are events that affect crops in notified regions or areas. These calamities can include hailstorms, floods, droughts, cyclones, unseasonal rainfall, and other natural disasters or adverse weather conditions. The policy outlines the specific calamities covered and the geographical regions where coverage is applicable. Coverage may vary based on the crop type, location, and the policy chosen. Post the covered incident, if the loss is found to be within the policy's coverage terms, the insured farmers receive compensation for the crop losses suffered.

  • Sowing/Planting/Germination risk

Crop insurance policies in India often include coverage for the initial stages of crop cultivation, such as sowing, planting, and germination. These stages are vulnerable to weather-related risks, including deficit rainfall or adverse seasonal conditions. The policy specifies the coverage terms, including the types of weather-related risks covered, the crops included, and the geographical areas where coverage is applicable. If adverse weather conditions, such as inadequate rainfall or unfavorable seasonal patterns, impact sowing, planting, or germination, and result in poor crop establishment, insured farmers can report their losses to the insurer. Insured farmers receive compensation for the losses incurred on the basis of the insured value of the crop and the extent of the damage.

  • Standing crop loss

This coverage extends to a range of non-preventable risks that can damage the standing crop, such as dry spells, floods, hailstorms, cyclones, and other natural calamities. The policy outlines the specific terms and conditions, including the types of risks covered, the crops eligible for coverage, and the geographical regions where coverage is applicable. In the event of crop damage due to any of the covered perils, farmers are required to report their losses to the insurer or government authorities within the specified time frame. Post necessary approval, the farmers receive compensation for the losses that are determined by factors such as the insured value of the crop and the extent of the damage.

  • Post-harvest losses

These policies may cover the damage or loss that occurs during storage, transportation, or processing of the harvested crop. However, they cover losses for up to a maximum period of two weeks from harvesting.

What is not included in the crop insurance policy?

Here are some common exclusions typically found in a crop insurance policy in India:

  • Losses due to nuclear waste, ionizing radiations, or radioactive contamination
  • Losses arising out of war and warlike situations
  • Malicious damage and other preventable risks originating from negligence by the farmer or his employed manpower
  • Burning of the crop on the order of a public authority
  • Damage caused by animals or birds
  • Damage due to bundling or heaping of harvested crops before threshing


The Incident:

Imagine the case of a group of small-scale rice farmers operating in a region of India that is susceptible to monsoon-related weather risks, including excessive rainfall and flooding. During one such monsoon season, the region experiences prolonged heavy rainfall, leading to waterlogging and flooding in the rice fields. Excessive moisture damages the crops, affecting the expected yield.

The Resolution:

The group wisely invested in a crop insurance policy sometime back. Facing financial strain due to the incident above, the group promptly filed a claim with their insurer. The insurer then sends assessors to evaluate the extent of the losses. The assessment confirms that a significant portion of the rice crop has been lost due to flooding. The insurer determines that the loss is covered under the policy terms, as it resulted from the specified weather-related perils. Finally, the insured farmers receive compensation from the insurance company to help recover their losses.

The above example illustrates how a crop insurance policy can be a valuable tool for protecting agricultural businesses from the financial impact of weather-related risks and promoting the stability of the agricultural sector.

Frequently Asked Question

  1. What type of farmers are eligible to be covered under the crop insurance schemes?

All farmers growing notified crops in notified areas as notified by the state government are eligible for availing crop insurance. Crops of loanee farmers are compulsorily insured, while non-loanee farmers can insure their crops at their option.

2. What are the documents required to initiate a claim process in a crop insurance policy?

The following documents are required-

  • Duly completed claim form
  • Land ownership documents
  • Aadhar card
  • Bank account details
  • Personal identification proof such as ration card, PAN Card, and/or voter card
  • Sowing declaration

3. How much time is taken by the insurer to settle claims

In general, the insurance company settles claims for seasonal crops within 30-45 days, if all relevant documentation has been provided to the company.

4. How does an insurance company settle claims in the event of widespread calamities?

In case of widespread calamities, the insurance company would initiate the claim settlement once the government puts forth the actual yield data. The company would directly settle the claim, without any further intimation from the policyholder.

5. How is crop loss ascertained in a specific area of land?

Individual assessments are usually carried out in the insured area to determine the loss during the pre-sowing and post-harvest stages, as well as for crop-cutting experiments.

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