What is the typical range of coverage levels for area risk protection insurance policies (ARPI)?

The typical range of coverage levels for area risk protection insurance policies (ARPI) is indeed between 70% and 90%. ARPI is designed to provide coverage based on the overall performance of a geographic area rather than an individual farm's performance. The coverage levels reflect the insurer's assessment of potential losses within that area.

This range is strategic for several reasons. Firstly, it balances the need for adequate protection against natural disasters or adverse economic conditions while also managing the risk for insurance providers. Insuring at levels above 70% can provide substantial protection for farmers, which is essential in ensuring they can recover from losses without facing overwhelming financial distress. Conversely, coverage levels reaching 100% are not typically available as they represent a completely insured scenario, which is impractical and poses significant risk for insurers.

By allowing coverage from 70% to 90%, ARPI policies enable farmers to secure a level of indemnity that can significantly mitigate risks while also reflecting realities of market conditions and mitigating insurer exposure.