26 BULLETIN 1013. U. S. DEPARTMENT OF AGRICULTURE. 
In favor of the second plan, which guarantees income rather than 
yield, it may be said that the affairs of the farmer are adjusted on 
the basis of an expected income. Furthermore, the guaranteed in- 
come is presumably limited to such an extent that the farmer will 
invariably hope and expect to exceed it. He will, therefore, exercise # 
the same judgment in the adjustment of his various crops to prospec- 
tive demand as though he bore the entire responsibility for financial 
results. Objection to this plan is likely to come from the company 
rather than from the insured. 
SUMMARY. 
The ultimate form of crop insurance contract in all probability 
still remains to be devised. The writer ventures, however, by way 
of summary to emphasize the following principles as fundamental , 
to a sound plan for crop insurance : * 
1. The insurance must cover only such crop damage as will result 
in serious financial loss to the farmer. This means that only a reason- 
able amount of insurance an acre must be written. For establishing 
such reasonable amount the average yield and price for a series of 
past years is perhaps the best basis. It means, furthermore, that 
the acreage of a given crop, if not the entire farm, must be in- 
sured as a unit and adjustment made on the'basis of average yield of 
such acreage. The total loss of crop on one or a few acres out of 
a hundred is not a serious loss if the acreage as a whole gives average 
returns or a substantial part of such average. 
2. The insurance must cover any and all hazards which are beyond 
the farmer's control. Insurance which protects against certain 
hazards and leaves the insured exposed to total loss from otner 1 
hazards beyond his control is not real crop insurance. 
3. In no case must the insurance protect against loss from careless- 
ness or negligence on the part of the insured. Such protection would 
involve a moral hazard, the encouragement of which is against the 
best interest not only of the company but also of the insured and of 
public welfare in general. 
4. The premium, or cost of insurance, must bear a reasonable rela- 
tionship to the value of the protection that it purchases. This means 
that the expense item in the expenditures of the insurance organiza- 
tion must be held to a minor part of the premiums collected; that { 
profits, if the organization operates for profit, must be moderate; 
and that the bulk of the premiums must be available for the payment 
of current losses and in favorable years for additions to a reserve 
for the payment of future losses. 
5. The method of adjusting loss must be such that the insured will 
receive indemnity for crop damage in the amount or on the basis that 
