Protect Against Market Volatility with LRP

Safeguard against a decline in market prices.

Livestock Risk Protection (LRP) from FBN^® Insurance

The livestock market can be highly volatile. Livestock Risk Protection is a risk management tool intended to protect against a price decline.

Livestock Risk Protection, also known as LRP, is a federally subsidized insurance program intended to protect producers against declining market prices. With LRP coverage from FBN, you can rest assured knowing you’re proactively safeguarding your financial future.

By providing a holistic risk management approach, insurance agents from FBN Insurance aren’t just working with you on LRP; they’re providing a complete risk management strategy customized to your unique livestock operation. Our agents are here to build a loyal, long-term relationship with you, ensuring stability and trust in times of market loss, mortality loss or unexpected peril.

Plus, many FBN Insurance agents are livestock producers like you. They understand the distinctive risks associated with livestock operations and are familiar with the specific challenges you may be facing, making them well equipped to help you design a strategy that works for your needs.

What Is Livestock Risk Protection?

Available to any U.S. livestock producer who owns fed cattle, feeder cattle or swine, an LRP policy covers the difference between the chosen coverage price and the actual ending value for their coverage at a specified end date. If the actual ending value is below the coverage price at the end of the insurance period, the producer will receive an indemnity payment for the difference.

LRP insurance provides flexibility, with coverage levels and insurance periods between 13 weeks and 52 weeks in length, allowing livestock producers to choose coverage that aligns with their production and marketing periods.

Coverage is also available on a per head basis, granting livestock producers additional coverage flexibility by not requiring all animals to be insured at once. (Note LRP does not insure against death loss or any other loss or damage to the producer’s animals.)

How Does the Livestock Risk Protection Application Process Work?

Livestock producers who are not already participating in LRP may complete an application at any time by working with an authorized crop insurance agent, such as a member of the FBN Insurance team. If a livestock producer is already covered with LRP, they must transfer by June 30 for the upcoming insurance year; no within year transfers are allowed.

Once the application is accepted, specific coverage endorsements can be purchased for up to 12,000 head of feeder or fed cattle that are expected to weigh up to 1,000 pounds at the end of the insured period. Keep in mind that the annual limit is 25,000 head per producer per year, which runs from July 1st to June 30th. Swine producers can purchase coverage for up to 70,000 head per endorsement and no more than 750,000 head annually.

Insurance does not attach until the producer purchases a specific coverage endorsement and is officially approved. Insurance coverage starts on the date the specific coverage endorsement was purchased.

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FAQs

How are indemnities determined?

If the producer-selected coverage price is greater than the actual ending value, the difference is multiplied by the number of head, target weight and share listed on the specific coverage endorsement.

How do I get paid if there is an indemnity due?

Once RMA releases the actual ending value and the producer-selected coverage price is greater than the actual ending value, the insurance company will send a claim form for you to review and sign and return within 60 days of the SCE end date, along with other requested documentation to the insurance company. Once the insurance company receives the claim form, they have to pay the claim within 30 days of receipt of the claim form. Other requested documentation includes a dated sales receipt with cattle weights.

Do I have to sell my animals to get an indemnity payment?

No. If there is a claim, you have to prove ownership of the animals through a purchase receipt, feed bills, veterinarian bills, animal pharmaceutical receipts or a third party letter of verification of ownership.

What if my animals did not weigh the target weight identified on the Specific Coverage Endorsement?

The target weight identified on the SCE is only an expected weight. If the animals weigh more than the target weight, there is no advantage or penalty. If the total weight of the animals covered are less than the weight category minimum, then the number of covered animals are adjusted and the “new” number of insured animals is used in the indemnity calculation.

If the weight category range is between 6 cwt and 10 cwt and the SCE target weight is 6.20 cwt., the average weight of the animals needs to be 6.0 cwt or greater to receive the full indemnity.

If the average weight of the animals covered falls below the weight category minimum, then subtract the total sale weight from the total weight category minimum (head x category weight minimum) and divide the results by the total target weight on the SCE (head x target weight) and round to the nearest head and subtract from the number of insured animals listed on the SCE.

• 100 head x 600 lbs = 60,000 lbs

• 100 head x 590 lbs = 59,000 lbs

• 60,000 lbs - 59,000 lbs = 1,000 lbs

• 1,000 lbs / 620 lbs = 1.6 or 2 head

• 100 head - 2 head = 98 animals in the final indemnity calculation

Strategically Manage Risk with FBN

Supported by a Farmers First® approach to everything we do, FBN Insurance offers a variety of coverage options to support you as you maintain and scale your ag operation. In addition to livestock risk protection, FBN Insurance also offers: