By Nick Paulson and Gary Schnitkey et.al
The Supplemental and Enhanced Coverage Option (SCO and ECO) insurance programs are receiving increased attention this year due, in large part, to the significant increase in subsidy rates. Prior analysis has shown increases in expected net benefits and reductions in downside risk that can be achieved by incorporating SCO and ECO into crop insurance coverage portfolios (see farmdoc daily articles from February 3, February 10, February 17, February 19, and February 24, 2026).
One strategy many producers may be considering for 2026 involves reducing the coverage level on their underlying farm-level policy and then adding SCO and ECO coverage. This article focuses on the comparison between a baseline coverage of 85% Revenue Protection (RP-85%) to an alternative coverage combination that includes 75% Revenue Protection, SCO, and ECO at the 95% coverage level (RP-75%+SCO+ECO-95%).
Insurance Coverage Comparison
The coverage provided by two crop insurance scenarios is illustrated in Figure 1. The RP-85% baseline covers losses for situations where actual farm revenue falls below 85% of the expected farm revenue guarantee. This is the maximum coverage level available for farm-level protection in the federal crop insurance program and basis risk is minimal. The RP-75%+SCO+ECO-95% alternative covers losses for situations where actual farm revenue falls below 75% of the expected farm revenue guarantee while SCO and ECO supplement the underlying coverage by protecting against losses where actual county revenues fall below 95% of the county’s expected revenue. The SCO and ECO coverage is capped, covering county-based losses up to 20% for this scenario (from 95% down to 75%), with the county loss percentage being applied to the farm’s liability to determine the payment.
Source : illinois.edu