As the monsoon season is here, farmers across India brace themselves for the impact on their crops. Monsoon rains, while essential for agriculture, can also cause significant damage if they are excessively heavy or erratic.
This raises the question: can crop insurance provide coverage for damage caused by the monsoon?
What is covered under crop insurance?
Crop insurance is designed to protect farmers from financial losses due to crop damage or loss.
According to Rakesh Jain, CEO of Reliance General Insurance, crop insurance policies cover a range of risks that farmers face during the crop growing season.
These include:
Prevention of sowing or planting: If adverse weather conditions prevent sowing or planting, farmers can claim insurance for the financial losses incurred.
Damage to standing crops: This includes damage caused by unavoidable risks such as drought, flood, and landslides.
Given that monsoon can lead to floods and landslides, these events are typically covered under crop insurance policies.
Post-harvest losses: Damage occurring after the harvest due to specific risks is also covered.
However, it is important to note that crop insurance does not cover losses due to war, malicious damage, or preventable risks arising from the beneficiary's negligence.
Policies offering crop insurance
In India, the primary schemes providing crop insurance are the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS).
These schemes, introduced by the Ministry of Agriculture & Farmers’ Welfare, are implemented by the States and Union Territories through various insurance companies
PMFBY: This scheme provides comprehensive coverage against non-preventable natural risks.
RWBCIS: This scheme offers parametric coverage based on weather proxies, which means payouts are determined by predefined weather conditions rather than actual crop damage.
Who should buy crop insurance?
Crop insurance is vital for all farmers, including sharecroppers and tenant farmers, who grow notified crops in notified insurance units during the season.
"The coverage amount, known as the Sum Insured, is typically set at the beginning of the crop growing season. It is equivalent to the Scale of Finance for the crop, as determined by the District Level Technical Committee (DLTC) of the government for the season," Jain told CNBC-TV18.com.
Importance of crop insurance during monsoon
The monsoon season can bring about variability in weather patterns, including heavy rainfall leading to floods or insufficient rainfall causing droughts.
Crop insurance plays a crucial role in providing financial security to farmers against such unpredictable weather conditions.
By covering the risks associated with monsoon damage, crop insurance helps ensure that farmers are not left vulnerable to the financial repercussions of adverse weather.
Premiums
The rate of insurance charges payable by the farmer is very nominal given below:
| Types of Crop | Premium % |
| Kharif | 2% of Sum Insured |
| Rabi | 1.5% of Sum Insured |
(Source: Policybazaar)
Insurance companies offering crop insurance in India
Some of the insurance companies offering crop insurance in India are (as per Policybazaar):
- Tata AIG General Insurance
- Reliance General Insurance
- IFFCO-Tokio General Insurance
- Bajaj Allianz General Insurance
- SBI General Insurance
Source - https://www.cnbctv18.com
