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Diversification Option
The Diversification Option is available for crops and varieties and cropping practices such as intercropping that are not insurable under core multi-peril Crop Insurance. To be eligible for this option, you must also have insured acres of traditional grains, oilseeds or pulses in the multi-peril program. A maximum of 30 per cent of total acres insured under the multi-peril program can be included under the Diversification Option.
Coverage levels, premiums and any claims paid for the crop grown under the Diversification Option are equal to the average coverage, premium and claims for your insured multi-peril acres.
Diversified annual crops that fail to establish by June 20 due to insurable causes may be eligible for a Diversification Establishment Benefit. A minimum of 10 acres or 10 per cent of the total eligible acres seeded to the insurable diversified crop must have failed to establish to receive a benefit per acre.
If your diversified crop has failed to adequately establish or has suffered damage before June 20, contact your customer service office. Eligibility requirements for the Establishment Benefit will be determined by an SCIC adjuster.
Diversification Calculation Example
You insure 1,000 acres of wheat and canola.
1,000 (total insured acres) x 30% (eligible for diversification coverage) = 300 eligible diversification acres
With your eligible 300 acres, you decide to grow 200 acres of buckwheat and 100 acres of dill.
Premium Calculation:
The total premium for 1,000 insured acres is $5,000
Average premium = $5,000 ÷ 1,000 acres = $5/acre
You pay the average premium for your diversified acres.
300 diversified acres x $5/acre = $1,500 diversification premium
Total Premium = $5,000 + $1,500
= $6,500 total premium
Establishment Benefit Calculation:
Of your 300 diversified acres, 100 do not establish. If the adjuster determines that the acres did not establish, the indemnity is calculated as:
100 acres x $35/acre = $3,500
Indemnity Calculation (in the event of the establishment claim above):
At the end of the year, you have a $30,000 claim on canola but no claim on your wheat.
Average indemnity = $30,000 ÷ 1,000 insured acres = $30/acre
You received a Diversification Establishment Benefit on 100 acres and did not reseed. Therefore, the indemnity will be paid on the remaining 200 diversified acres that were taken to harvest.
200 remaining diversified acres x $30/acre = $6,000 indemnity
Indemnity Calculation (in the event of no establishment claim):
You receive a $30,000 claim on canola but no indemnity on your wheat; therefore, the average indemnity is:
$30,000 indemnity ÷ 1,000 acres = $30/acre
300 diversified acres x $30/acre = $9,000 indemnity