Premium subsidies for insurance policies have increased for 2026, especially for the Supplemental Coverage Option (SCO) and the Enhanced Coverage Option (ECO), and so many farmers are considering adding these options on top of their Revenue Protection (RP) policy. SCO and ECO are deductible coverage – they cover losses that are normally part of the RP deductible. For example, if you have 80% RP coverage, the first 20% of losses below your expected revenue are your deductible. RP indemnities only begin once losses exceed your 20% deductible. SCO and ECO each cover a different part of this RP deductible. SCO covers losses from 86% down to your RP coverage, while ECO covers losses from 95% (or 90%) down to 86%, where SCO coverage begins. Thus, RP plus SCO and 95% ECO implies a 5% deductible, while using 90% ECO instead implies a 10% deductible. Note that RP, SCO, and ECO all use the same Chicago Mercantile Exchange futures prices to calculate revenue, but SCO and ECO use county yields, while RP uses individual yields. As a result, SCO and ECO are sometimes called county policies or county coverage to differentiate them from RP (and Yield Protection) which are called individual policies.
Adding SCO and ECO on top of RP combines individual RP coverage with SCO/ECO county coverage to lock in 95% (or 90%) of expected revenue as the insurance guarantee. Also, SCO can now be combined with the ARC election for program (base) acres, further increasing interest in SCO. In Wisconsin in 2025, 30.5% of corn acres and 20.7% soybean acres were covered with ECO, and 2% of corn and soybean acres with SCO. With lower premiums and no prohibition against combining SCO and ARC, I expect SCO and ECO sales to increase.
Recommendation
Farmers who currently use RP with high coverage levels (80% or 85%) should consider reducing their RP coverage to 75% or 80% if they add SCO and 95% ECO. Because county policies are lower cost than individual RP coverage, many farmers will likely find that they can achieve a 95% or 90% revenue guarantee at lower total cost when adding ECO and SCO by slightly lower RP coverage.
I published a research paper in 2008 that analyzed a similar proposed policy (called supplemental deductible coverage). I found that the optimal RP coverage when combined with supplemental deductible coverage decreased as much as 5 or even 10 percentage points from the optimal RP coverage when using RP alone. A recent FarmDOC article reached the same conclusion for SCO and 95% ECO: 75% or 80% RP coverage level maximized expected net returns to insurance for farmers in many Illinois counties when combined with 95% ECO and SCO. I anticipate that this is also the case for many Wisconsin counties. If a farmer is currently using RP alone with an 80% or 85% coverage level, they should consider reducing their RP coverage to 75% or 80% if they add SCO and 95% ECO.
Reminders
County coverage like SCO and ECO has a yield basis risk – insurance payments are based on county yields, but actual revenue depends on your yields. The more your farm yields follow the county average yield used for SCO and ECO, the more valuable it is to reduce your RP coverage level and to rely more on the county policy. Also, risk management is specific to individuals – what is best for one person is not necessary best for another because people differ in their willingness to bear risk. Farmers should find insurance coverage that is right for them and a good insurance agent can help them do that. Crop insurance agents sell the same federal policies, so when you choose an agent, you are choosing service – find an agent that you can work with. Lastly, March 15, 2026 is the sale closing date for crop insurance, so farmers must make their insurance decisions by then.
Insurance Costs in 2026
2026 insurance costs should decline for most farmers, even if they make no changes. First, premium subsidy rates have increased, reducing farmer insurance costs in 2026. The initial 2026 crop insurance price for corn is $4.62, down 1.7% from 2025, which lowers premiums, though the $11.09 price for soybeans is up 5.2% from 2025, which increases premium costs. Finally, the RP price volatility factors for 2026 are both lower than in 2025, which lowers premiums for both corn and soybeans.