CROP insueance: risks, losses, etc. 17 



of policy. The amount of insurance was fixed at the relatively low 

 figure of $T an acre and the insurance applied to a specified field area, 

 the crops on which might include any or all of the following grains — 

 wheat, flax, rye, oats, barley, and spelt. In case of total failure of 

 the crop on such area, the company agreed to pay the face value of the 

 policy, or $7 an acre. In the event of partial loss, the indemnity pro- 

 vided for was equal to the difference between the value of the crop 

 harvested on the field area insured and the face of the policy, it being 

 specifically stipulated that the entire area insured in a given policy 

 should be considered a single risk. Furthermore, the partial crop 

 was valued at prices stipulated in the policy, namely, wheat, $1; 

 flax, $1.75 ; rye, 70 cents ; and oats, barley, and spelt, 50 cents a bushel. 

 The insurance, therefore, even though written in terms of monej;', 

 covered yield rather than returns on a monetary basis. In other 

 words, the insured was protected in a measure against crop damage, 

 but not against a possible drop in the prices of the crop produced. 

 Adjustment of all partial losses was necessarily postponed until after 

 the insured crops had been thrashed. 



These first attempts at general crop insurance proved rather 

 disastrous for the companies that undertook them, owing, in part, to 

 the severe drought that occurred in large sections of the States 

 mentioned and, in part, to inadequate safeguards by the companies 

 against the assumption of risks after severe damage had already 

 taken place. The losses incurred under these contracts were to a 

 considerable extent repudiated by the companies. Inability to settle 

 in full was pled. In some cases fraud on the part of the insured 

 was alleged and many claims were tentatively settled by the return of 

 the premium collected. The outcome of this first attempt to provide 

 11 general crop coverage is much to be regretted. 



For two years following these experiments of 1917, no general 

 crop insurance, so far as the author is aware, was written in the 

 United States. During the last two years, however, the plan of 

 offering a crop insurance contract has been revived, at least two of 

 the larger fire insurance companies having written such contracts. 



One of these policies, which was written by one of the two com- 

 panies quite extensively during 1920, in effect guarantees the farmer 

 a specified income from each acre insured unless damage results from 

 fire, hail, wind, tornado, failure of the seed to germinate, or failure 

 on the part of the farmer properly to do his part in seeding, culti- 

 vating, or harvesting the crop. Losses or damage through the ele- 

 ments, including frost, winterkill, flood, and drought, and from 

 insects or disease are specifically covered by the policy. 



The amount of insurance to the acre written is based on the in- 

 vestment in the crop as determined by allowing a fixed amount for 

 each process in preparing for, cultivating, and harvesting the crop 



