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Livestock Risk Protection
(LRP) Insurance
Livestock Risk Protection Insurance was designed by the Risk Management
Agency (RMA) to provide cattle producers with protection against downward
price movement. The prices per head used for insurance are indexed off
the Chicago Board of Trade. Due to the fluctuation of Board prices,
insurance prices will change slightly daily, any major market collapse
or increase will affect the insurance prices accordingly. If the Board
is “limit up” or “limit down” for two (2) consecutive
days, insurance sales will be suspended by RMA and will remain suspended
until RMA deems that Board prices have stabilized enough to satisfy
their insurance requirements.
There are two (2) LRP policies, one designed to cover cattle from birth
to 900 lbs and the other covers cattle from 1,000 to 1,400 lbs. Policies
cover a DECLINE in price only, not mortality. Feeder Cattle range from
birth – 900 lbs and up to 2,000 head per year can be insured. Fed
Cattle weigh from 1,000 – 1,400 lbs and up to 4,000 head per year
can be insured. Policies can also be endorsed with as few as one (1) head.
The policy period can be from thirteen (13) weeks to fifty-two (52)
weeks, depending on the producer’s approximate marketing period.
Steers, Heifers, Bulls, Brahma’s and Dairy Cattle are insurable.
LRP Insurance is also available in all Colorado and Nebraska counties.
You do not have to sell the cattle at the end of the policy period.
The policy covers a decline in price only, if at the end of the policy
period the price is less than the insured price, a check is issued to
the producer for the difference, irregardless of selling the cattle
or not. The cattle cannot however, be sold prior to thirty (30) days
before then end of the policy period. If insured cattle die during the
policy period no penalties will apply if the producer timely informs
the company of the deaths, the policy will then be adjusted accordingly.
The government subsidizes the policy at thirteen (13) percent; the producer
is actually paying eighty-seven (87) percent of the premium. Subsidies
are common in governmentally funded insurance programs, the Crop Insurance
program is another example of this. This policy is an affordable alternative
to purchasing a Board contract. Contact Sonnenberg Agency, LLC for a
quote or for additional information regarding the LRP program. |
