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What is Agriculture Insurance?
Agriculture insurance is the protection given to the agriculturists against damage caused to their properties against the named perils. Agriculture insurance is a risk management tool that provides farmers with financial protection against agricultural losses such as loss of crop or loss of lives of livestock etc.
Types of crop insurance policies in India:
The crop insurance is offered by Central Government, State governments, State owned insurance companies such as PSU and AIC & Private Insurance companies. State government and the central government play an important role in the crop insurance promotion by sending regular updates to the farmers regarding the last date of insurance enrollment as well as sending brochures in the regional languages for farmers to understand the coverage and need to take crop insurance.
There are 4 types of Crop insurance which are mentioned below:
- Pradhan Mantri Fasal Bima Yojana: This scheme was launched in the year 2016 by Prime Minister Narendra Modi for the benefits of farmers across the country. This scheme was formulated with the idea of One Nation- One Scheme and has replaced the earlier schemes such as National Agriculture insurance scheme and Modified national agriculture insurance scheme.
- Weather Based crop insurance scheme (WBCIS): The scheme was launched in the year 2016 and intends to protect against financial loss to the farmers resulting from adverse weather conditions such as heavy rainfall, unseasonal rainfall, temperature or humidity. The maximum premium payable under this scheme is 2% of the sum insured by the farmers. The claim under this scheme would be paid when the weather indices diverge from the guaranteed weather index, for a few notified crops.
- Coconut Palm Insurance Scheme (CPIS): This scheme is designed to cover the losses incurred by the coconut palm growers as a result of any natural calamity. The maximum claim amount that a coconut farmer can entail is input cost loss damage. The premium subsidies range from 50% to 75% for all the categories of farmers.
- Unified Package Insurance Scheme: This scheme aims to provide comprehensive coverage to the farmers by providing financial security to the farmers for their lives as well as insurance coverage for their crops. This scheme includes sections such as crop insurance, loss of life, accident insurance, student safety, household insurance, agriculture equipment insurance, and tractor insurance etc.
Farmer Insurance Policies in India:
Farmer insurance policies in India are classified broadly into two categories known as Crop insurance and Livestock insurance.
I. Crop insurance is designed to protect the financial interests of the farmers in case of loss of crop due to natural calamities such as floods and droughts. The impact of crop insurance on the agricultural sector in India is evident as the insurance helps the farmers to safeguard their financials without which they would be in debt.
Coverage & Highlights of Crop Insurance:
The highlights of the crop insurance are mentioned below:
- Prevented Sowing or Planting Risk: This section covers the losses incurred when the insured area is prevented from sowing or planting the crops due to deficit rainfall or adverse seasonal conditions.
- Standing Crop (Sowing to Harvesting): This section covers the losses occurring due to non-preventable risks such as Drought, Dry spells, Flood, Inundation, Pests and Diseases, Landslides, Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane and Tornado. This is a comprehensive cover that includes all the risks for the crops.
- Post- Harvest Losses: This section covers the losses to the crops after the harvest is done for a period of two weeks.. After the harvest the crops would be cut and dried in the sun and the losses arising out of cyclone rains and seasonal rains.
- Localized Calamities: This section covers the loss or damage resulting from the occurrence of localized calamities such as hailstorm, landslide, and Inundation affecting isolated farms in the notified area.
- Exclusions: The general exclusions under the crop insurance are losses arising out of war and nuclear risks, malicious damage and other preventable risks.
Steps to buy Crop Insurance in India:
Step 1: The first step is to visit the site of Pradhan Mantri Fasal Bima Yojana (PMFSB) and register as a farmer or login as a guest. The other way is to visit the website of any insurance company or the webpage of Ethika insurance broking.
Step 2: The second step is to register for an account using the details such as farmer details, residential details, farmer ID, Bank account details. After account creation the next step is to enter the details of the crop.
Step 3: The next step is to enter the crop details , sum insured, area of the crop and other details before proceeding for the premium payment. After the payment of premium the policy is valid for the aforementioned period under the policy. The premium for crop insurance can be calculated from the link of PMFBY.
FAQs of Crop Insurance:
What perils are covered under crop insurance in India?
Following are the perils covered under the crop insurance in India:
- Destructive weather such as hailstorms, rainfalls, droughts etc.
- Disease or pest attack
- Fire
- Flooding
- Earthquake
- Wildlife
What are the exclusions in crop insurance?
- Losses arising out of war and nuclear risks
- Malicious damage and other preventable risks that arise out of negligence of the farmer of labor employed by the farmer.
- Burning of crops due to public order
- Damage caused by birds or animals
- Harvested crops cut and bundled after the two week period
How is Pradhan Mantri fasal bima yojana different from earlier crop insurance schemes?
PMFBY scheme has the following advantages when compared with previous crop insurance schemes:
- Low premium contribution by farmers, the government would contribute 5 times more than the farmer.
- Insurance amount paid up to the sum insured without any reduction
- Post harvest loss coverage on all India basis
- Prevented sowing coverage
- Mandatory use of technology
- Localized risk coverage
- On account premium
How does the Government implement PMFBY?
The Central government in consultation with the state governments implement the PMFBY scheme in which the state and central governments bear the burden of the premium payment under the scheme.
How can farmers avail crop insurance schemes in India?
Farmers can avail crop insurance schemes in India by visiting the website of Ethika insurance or directly visiting the website of PMFBY and registering as a farmer and then following the above mentioned procedure.
What are the loan conditions for availing the crop insurance in PMFBY?
All the loanee farmers availing loans from Financial institutions must mandatorily take the PMFBY policy. Other farmers can take the policy on a requirement basis.
II. Livestock insurance is designed to provide financial compensation to the farmers in case of death or disability of the livestock due to any insured peril. Livestock is an integrated part of a farmer’s life with heavy dependence on it for various reasons. Farmers may depend on rearing of livestock and would be at loss if any unforeseen incident occurs resulting in death of the livestock.
Highlights of Livestock Insurance:
The highlights of the livestock insurance are mentioned below:
- Death: The policy shall cover the losses arising out of the death of the livestock due to fire, road accidents, electrocution, drowning, snake bite, strangulation, poisoning, and accidental external means. The policy can also be extended to cover the death of the livestock due to Act of God perils such as flood and earthquake. The policy can also be extended to cover the death of the livestock due to diseases or calving and during certain surgical operations.
- Disability: The policy covers the permanent disability of the cattle resulting in
- For Milch Cattle- Permanent and total incapacity to conceive, incapacity to yield milk.
- For Bull- Permanent and total incapacity to breed.
- Theft Cover: The policy covers the theft of cattle on submission of required documents. The claim would be paid up to a maximum of the sum insured under this section.
- Transit Cover: Under this section the death or disability of the cattle resulting from transit from one place to another place is covered subject to the transit being done as per the procedure mentioned under the plan.
In case of Bank loans, the sum insured would be the loan amount given to purchase the animal whereas in rest of the cases, the sum insurer would be the market value of the insured cattle.
Steps to buy Livestock Insurance in India
Step 1: The first step is to visit the site of the Department of animal husbandry and dairying and check for the eligibility. The other way is to visit the website of any insurance company or visit the webpage of Ethika insurance broking.
Step 2: The second step is to enter the details of the cattle such as age, breed, milch or bull, market value or sum insured etc and calculate the premium. In case of non-scheme animals the estimated premium rate would be 4% of the sum insured whereas for scheme animals the premium rate would be 2.25%.
Step 3: The livestock insurance should be bought when the farmer has a livestock rearing or cattle dependency. The final step is to pay the premium and get the RFID tag installed on the cattle for insurance purposes.
FAQs of Livestock Insurance:
What are the types of livestock insurance policies in India?
There are two types of cattle or livestock insurance in India:
- Milch cattle
- Bull
- Other livestock such as chicken, ducks etc.
What perils are covered in livestock insurance?
Death and disability due to any of the insured perils such as:
- Fire, road accidents, electrocution, drowning, snake bite, strangulation, poisoning, and accidental external means.
- Act of God perils such as flood and earthquake.
- Diseases or calving and during certain surgical operations.
What are the Government scheme for livestock?
The government schemes for livestock are offered only in certain districts as chosen by the government by the Ministry of Animal Husbandry and Dairying.
What are the exclusions in livestock insurance?
- Malicious or willful injury or neglect, overloading, unskillful treatment or use of animals for purposes other than stated in the policy without the consent of the insurance company in writing.
- Intentional slaughter of the animal
- War or allied activities and nuclear risks.
- Accidents while being transported by air or sea
What was the Difference between livestock and crop insurance?
Livestock insurance covers the cattle and other livestock against death and disability whereas the crop insurance covers the crops against insured perils. These two policies provide financial protection to the farmers.
Top Agriculture government insurance policies in India:
The top government agriculture insurance policies in India are:
- Pradhan Mantri Fasal Bima Yojana in which the premium is shared by the Central government, State Government and the farmers. The maximum premium would be 2% of the sum insured or the actuarial rate, whichever is less for the farmer.
- Livestock insurance scheme in which the premium would be borne by the farmers who get to avail subsidy in premium up to 50%. The maximum sum insured under the scheme would be the market value of the animal which would be decided by the beneficiary, authorized veterinary practitioner and insurance agent.
Top private Agriculture government insurance plans in 2023:
The top private agriculture insurance plans in 2023 are provided by the below insurance companies:
- Agriculture Insurance Company
- Cholamandalam MS General Insurance Company
- Reliance General Insurance Co. Ltd.
- Bajaj Allianz
- Future Generali India Insurance Co. Ltd.
- HDFC ERGO General Insurance Co. Ltd.
- IFFCO Tokio General Insurance Co. Ltd.
- Universal Sompo General Insurance Company
- ICICI Lombard General Insurance Co. Ltd.
- Tata AIG General Insurance Co. Ltd.
- SBI General Insurance
- United India Insurance Co.
Top Agriculture insurance plans in terms of claim settlement ratio:
The claim settlement ratio is the number of claims settled to the number of claims received by the insurance company in a particular year. The claim settlement ratio of the agriculture insurance of the insurance companies can be known from here.
