What agricultural insurance is
Agricultural insurance protects farmers against losses they can hardly influence: drought, frost, hail, floods, animal epidemics. In Russia it exists in two forms:
- with state support — under Federal Law No. 260-FZ of 25 July 2011, where the budget pays part of the premium;
- without state support — on the terms of a particular insurer's policy wording.
Agricultural insurance is voluntary: the law does not oblige farmers to insure, but the terms of subsidised insurance are strictly set by law.
What can be insured
- the harvest of agricultural crops;
- perennial plantings and their harvest;
- farm animals;
- commercial aquaculture (fish farming).
For crops, the law lists the natural events eligible for subsidised cover, including drought, dry winds, frost, winterkill, damping-off, hail, ice crust, spring floods, waterlogging, strong and hurricane winds, wildfire and mass spread of pests. For animals — infectious diseases, natural disasters, fire, power supply failures and unlawful acts of third parties. The exact list of risks is fixed in the contract.
The law also provides for insuring crops and plantings against a natural emergency (a declared emergency situation) — with a lower sum insured and a lower premium.
How state support works
The subsidy is paid into the insurer's account at the farmer's request. As a rule it equals 50% of the premium charged, provided the rate does not exceed the cap rate used to calculate the subsidy. If the rate is higher, the subsidy is 50% of the sum insured multiplied by the cap rate. For small businesses in the Russian Far East the rate is higher under certain types of contracts.
For a contract to qualify for state support it must meet the requirements of Article 4 of Law 260-FZ. The main ones:
| Condition | Legal requirement |
|---|---|
| Sum insured for crops and plantings | At least 70% of the insured value; under the emergency programme — 35% to 50% |
| Crop deductible | Fixed, 10% to 30% of the sum insured for each crop; under the emergency programme — 10% to 20% |
| Animals and aquaculture | Sum insured at least 70% of the insured value; fixed or aggregate deductible of no more than 30% |
| Deadline for crops | No later than 15 calendar days after sowing or planting ends |
| Term for animals | At least one year |
| Payment | The contract must be in force and the farmer must have paid its share of the premium |
An insurer offering state-supported cover must be a member of the single association of agricultural insurers — the National Union of Agricultural Insurers (NSA). Insurance is carried out in line with the annual agricultural insurance plan.
What drives the price
- the crop, region and agro-climatic conditions;
- the set of risks — a full package or natural emergencies only;
- the sum insured and the deductible;
- the farm's yields in previous years and its claims history;
- for animals — species, herd size and the farm's veterinary status.
For subsidised contracts it pays to keep the rate within the cap: then the subsidy covers half of the actual premium.
Choosing an insurer
- For state-supported cover — a Bank of Russia licence and NSA membership.
- Specialists in your region who can quickly inspect fields or livestock.
- Clear rules for assessing losses and a clear list of weather documents required.
- Experience with your crop or animal species.
Compare companies under Insurance companies and request a quote via the request form.
Claims
- Notify the insurer within the deadline set in the contract.
- Do not resow or harvest damaged crops before the inspection: without an inspection report it is almost impossible to prove the loss.
- Obtain documents confirming the adverse weather event or the declaration of an emergency.
- Take part in the inspection and sign the report; keep records of areas, yields and costs.
A crop loss is usually calculated as the difference between the insured and the actual yield, minus the deductible. Disputes between legal entities and the insurer go through a pre-trial claim and the commercial (arbitration) court.
Common mistakes
- Missing the 15-day deadline after sowing — the contract will not get state support.
- Choosing emergency-only cover when the farm's main risk is local drought or hail, for which no emergency is declared.
- Harvesting or resowing before the insurer's inspection.
- No documented yield history for previous years.
- Machinery, warehouses and stored harvest left uninsured — they need commercial property insurance, and shipments of produce need cargo insurance.
