CAT is minimum level yield insurance designed to protect against catastrophic losses in yields. CAT makes indemnity payments when a farm’s actual yield is below a yield guarantee.

Yield guarantee under CAT
CAT’s yield guarantee is 50 percent of the Actual Production History (APH) yield. Corn with a 150 APH yield would have a 75 bu. yield guarantee (see Figure 1).

 Figure 1. Per Acre CAT Yield Guarantee.

Indemnity payments under CAT
CAT makes indemnity payments when actual yield is below the yield guarantee. The payment equals the yield shortfall times the cat’s indemnity price. In the following examples, the CAT indemnity price of $1.16 for corn and $2.88 for soybeans are used. The price election for CAT equals 55% of the market price election for that of higher levels of MPCI coverage.

An example of indemnity payments is given for corn having a 150 bu. APH yield. The yield guarantee is 75 bu. For a 50 bu. actual yield, the yield shortfall is 25 bu. (75 bu. yield guarantee – 50 bu. actual yield). Multiplying the 25 bu. shortfall times the $1.16 indemnity price gives the indemnity payment of $29 per acre.

Indemnity payments increase for lower actual yields (see figure 2).

Based on information in Figure 1.

Options under CAT
There are no coverage options or endorsements availble under the CAT coverage. There is no coverage to provide indemnity payments for costs incurred to replant an insured crop. CAT policies are only allowed basic units. All acres of the insured crop in the county must be insured at the same level of coverage. You may have a different level coverage if it is for a different crop, or if the same crop is grown in a different county.

CAT premiums
CAT has no premium. However, farmers pay a $60 administration fee for each crop insured in a county.

Download Software
Insurance Payment Calculator: The Insurance Payment Calculator compares gross revenue under alternative insurance products. It allows users to see how insurance indemnity payments and gross revenue varies under differing harvest prices and yields

Adobe Acrobat Reader : This program is needed to view many of the documents you will encounter on the internet that has a file format ending in "pdf".

Other information
Iowa State University Extension, Catastrophic Crop Insurance, March 1999, http://www.exnet.iastate.edu/Publications/FM1852.pdf

Updated: April 1999, with revisions May 2000.

Some Information Provided by:  Gary Schnitkey, University of Illinois.

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