Catastrophic crop insurance
Encyclopedia
Catastrophic crop insurance (CAT) — A component of the federal crop insurance
program, originally authorized by the Federal Crop Insurance Reform Act of 1994 (P.L. 103-
354). CAT coverage compensates farmers for crop yield losses exceeding 50% of their
average historical yield at a payment rate of 55% of the projected season average market
price. CAT coverage requires that a farmer realize a yield loss of more than 50% and only
makes payments on losses exceeding the 50% threshold. Producers pay no premium for
CAT coverage, but except for cases of financial hardship must pay an administrative fee of
$300 per crop. A producer has the ability to purchase additional insurance coverage (or
buy-up coverage) beyond CAT coverage, but must pay a premium, partially subsidized by
the government.
program, originally authorized by the Federal Crop Insurance Reform Act of 1994 (P.L. 103-
354). CAT coverage compensates farmers for crop yield losses exceeding 50% of their
average historical yield at a payment rate of 55% of the projected season average market
price. CAT coverage requires that a farmer realize a yield loss of more than 50% and only
makes payments on losses exceeding the 50% threshold. Producers pay no premium for
CAT coverage, but except for cases of financial hardship must pay an administrative fee of
$300 per crop. A producer has the ability to purchase additional insurance coverage (or
buy-up coverage) beyond CAT coverage, but must pay a premium, partially subsidized by
the government.