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Crop Insurance









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What is Crop Insurance?

Crop Insurance is a type of protection which offers compensation to the losses incurred by the farmers due to production problems. A Crop Insurance covers pre-sowing and post-harvest losses due to a range of reasons like rain, flood, and other natural disasters. A Natural disaster could turn the life upside down for the farmers and leave them in a financial lurch, having crop insurance could be beneficial during that time. Indian government offers crop insurance to all the farmers in the form of Pradhan Mantri Fasal Bima Yojana.

Types of Crop Insurance

Crop Insurance can be categorized into three types:

  • Multiple Peril Crop Insurance: This covers losses incurred due to natural perils like flood, cyclone, drought and other weather related natural events
  • Actual Production History: It provides coverage against plant-related disease, insects that affect the crop resulting in production loss
  • Crop Revenue Coverage: It covers not only the crop yield but the revenue generated by crop yield. If the price of the crop falls due to a market condition, then the crop insurance covers the difference and compensates the loss.

Pradhan Mantri Fasal Bima Yojana

Pradhan Mantri Fasal Bima Yojana is a scheme launched by government of India in the year 2016 to safeguard the interests of farmers and keep the agrarian economy intact. It compensates the farmers in the event of a loss or damage. The policy has been framed keeping in mind the interest of farmers and advocates them to continue the occupation by covering their losses. 

The risk covered includes preventing plantation of seeds or sowing, losses incurred due to natural conditions like drought, flood, landslide and other natural disasters along with post-harvest losses. Farmers can purchase this crop insurance from SBI General Insurance and HDFC Ergo General Insurance.

Coverage of Crop Insurance

Crop insurance covers losses at different stages as given below:

  • Localized Calamities: It covers localised calamities and risks such as hailstorm, landslides adversely impacting the farm lands in isolated areas as specified
  • Sowing/Planting/Germinating: Any difficulties faced in the above process due to rainfall deficit or any other harsh weather conditions
  • Standing Crop Losses: It provides comprehensive coverage against non-preventable reasons such as flood, drought, flood, cyclones, and other natural risks
  • Post Harvest Losses: It covers losses for upto maximum two weeks after the harvest

How Crop Insurance works?

  • A farmer can get his food crops, seeds, commercial crops insured by submitting the necessary documents as required and paying a premium
  • Compare different types of policies and their premiums after evaluating the risks
  • The Insurance provider  will fix the sum insured after factoring in the type of crop, location, and calamity years in the area your farm is located and also the historical yield data
  • In the event of a crop loss, the policyholder must intimate the  insurance provider within 72 hours from the event
  • Claims are issued by the insurer on the basis of localised losses, post-harvest losses, and calamities. The payout from the claim will be calculated based on the weather conditions and yield per hectare


There are several reasons why you should apply

Exclusions in Crop Insurance

Following are the list of events which are excluded from the coverage scope of the crop insurance policy,

  • Losses from war and nuclear events
  • Negligence of the farmer
  • Malicious damage to take advantage of the insurance 
  • Damage caused by birds or animals
  • Bundling of harvested crops before threshing

Eligibility Criteria

  • Crop Insurance can be availed by farmers, sharecroppers, and tenant farmers 
  • Even non-loanee farmers can avail crop insurance by providing land documents
  • Farmers can also receive the benefit of crop insurance if they have availed coverage in the below two components:

Compulsory component – If the farmer has applied for Seasonal Agricultural Operations
(SAO) loans from financial institutions, they will be covered compulsorily

Voluntary Component – It is an option for non-loanee farmers. If they wish to avail the same, they can register and avail benefits


Claim Process

Claim for Crop insurance works in two ways,

Widespread calamities

In this event, when a widespread calamity hits the state, the insurance company will settle the claim as soon as government puts forth yield data. In this case, the company would directly settle the claim without even intimation from the policyholder.

Local Calamities

In the event of a local calamity, the insured must intimate the insurance company within 24 hours of the actual event. The insurance company will give directions on the way to settle the claim.


Documents required for Claim

  • Duly  Completed Claim Form
  • Land Registration Number or Patta
  • Land Ownership documents
  • ID Proof (Aadhar Card, Voter ID)
  • Bank Details
  • Sowing Declaration

If all the documents are in proper order, then the insurance company will settle the claim within 30-45 days before the end of the risk period for crops

In the event of local calamities, insurance companies conduct individual assessment of the insured area for calculating the losses at pre-sowing and post-harvest stages.

  • Food crops (cereals, pulses, and millets)

  • Oilseeds

  • Annual Commercial and Horticultural crops

  • For Kharif (all food grains and oil seeds crops), 2% of the Sum Insured

  • For Rabi (all food grains and oil seeds crops), 1.5% of the Sum Insured