How is "coverage level" defined in crop insurance?

Coverage level in crop insurance is defined as the percentage of expected crop yield that is compensated in case of loss. This figure ultimately determines the financial protection that a farmer receives against potential losses due to various risks such as adverse weather conditions, pests, or diseases that may affect crop production.

For instance, if a farmer selects a coverage level of 70%, they will receive compensation for 70% of their expected yield if they experience a loss. This provides a safety net for the farmer, ensuring they can recover some financial stability in the event of crop failure.

Understanding the coverage level is crucial for farmers as it directly impacts their risk management strategy and financial planning. By selecting an appropriate coverage level, farmers can balance the cost of insurance premiums against the level of risk they are willing to take on in their operations.