In recent years, there has been an increase in the use of endorsements on corn crop insurance policies. The dominant base- or farm-level coverage remains Revenue Protection (RP). High crop margins corresponded with an increased use of margin-related endorsements. Large subsidy increases have encouraged the purchase of other endorsements.
Historical Perspective
Crop insurance endorsements have not followed the same path as far as development, implementation, subsidization, and adoption by producers (Turner et al. 2023). Supplemental Coverage Option (SCO) has been available since the 2015 crop year. It was designed to cover area (county-level) losses at levels between farm-level insurance and normal production with some deductible. Hence, it is referred to as “shallow loss” protection. Enhanced Coverage Option (ECO) has been available since the 2021 crop year. It covered a narrow band of losses between the SCO levels and normal production. For the 2026 crop year another coverage band was available with Margin Coverage Option (MCO). These types of endorsements are add-ons for normal underlying policies. A hybrid coverage option that can also be an endorsement is Margin Protection (MP), which has been available since 2015.
There was little use of SCO in South Dakota from 2015 through 2020. ECO use has been increasing steadily since 2021. The acres covered by SCO and ECO increased from 2021 through 2024, but with little increase in total liability or in the aggregate amount of dollars covered. MP use was low from 2018 through 2021. However, the expected margin rose to a high of almost $600 per acre for a typical corn yield in South Dakota in 2023, and producers responded by adding MP as an endorsement on over 500,000 acres with a liability of almost $600 million. MP was the endorsement driving total liability, which remained small relative to the underlying liability from policies (see Figure 1). The premium subsidy on endorsements historically favored SCO. The subsidy on ECO was increased for the 2025 crop year and producers responded by sharply increasing the use of ECO to almost 2.8 million corn acres. However, as it is shallow loss coverage, that represented less than $200 million in liability.
MCO was first available for the 2026 crop year. The subsidy level for 2026 increased for SCO and ECO. The subsidy for MCO was started at a high level also. The subsidy on MP was left unchanged. The high subsidy level resulted in high use of SCO and ECO. The overall use is blurred as a breakdown is not readily available for the number of producers using only SCO, SCO and ECO, or only ECO. However, the number of acres covered with at least ECO or MCO is close to the total acres insured. Thus, most producers considered or used an endorsement for 2026 because of the strong incentive to do so.
The endorsements are added to the underlying coverage. The most common farm-level coverage type for corn has been RP at the 75% yield-election level. Farm-level crop policies were used on 6.0 to 6.7 million acres of corn from 2021 through 2026. As some lower coverage levels and some yield-only insurance policies have been purchased through time, about 70 percent of corn revenue has been insured in aggregate from 2021 through 2026. The farm-level liability amount ranged from $3.3 to $4.5 billion during that time (Figure). The liability from endorsements ranged from $0.1 to $0.6 billion over the same period. In 2026 the endorsement liability total was $0.5 billion.
Considerations for the 2027 Crop Year
The deadline to add MCO or MP for corn and soybeans is September 30, 2026, for the 2027 crop year in South Dakota. These margin products use a price discovery period that ends in mid-September. The subsidy levels are unchanged for the products – remaining high for SCO, ECO, and MCO while lower for MP. With the subsidy continuing, the incentive for an endorsement will be strong. The band or range of coverage with ECO and MCO has been narrowed for 2027, which may limit its demand. The range of coverage for SCO has been widened for 2027, which may increase its demand. With the high premium subsidy rate producers may consider consistently using endorsements (see Table 1). Note that selecting ECO and SCO does not have to be done until March 15, 2027, for corn in South Dakota.
| Endorsement | What Triggers a Payment | Coverage Band | 2027 Subsidy |
|---|---|---|---|
| Margin Protection (MP) | County margin (price, yield & input costs) | 70%-95% (primary coverage) | Standard |
| Supplemental Coverage Option (SCO) | County yield or revenue | Underlying level to 90% | 80% |
| Enhanced Coverage Option (ECO) | County yield or revenue | 90% to 95% | 80% |
| Margin Coverage Option (MCO) | County margin (price, yield & input costs) | 90% to 95% | 80% |
Notes: MP cannot be combined with ECO or MCO on the same acres. ECO and MCO are mutually exclusive with each other. Source: USDA RMA program bulletins, 2026.
The preliminary levels suggest the expected margin that could be insured with MP will be like levels in 2022 and 2024, but less than in 2023. Preliminary estimates suggest that the expected margin that could be insured with MP will be like the levels in 2022 and 2024, but lower than in 2023. This is driven largely by the relatively high price of corn futures with a December 2027 delivery date. The different input prices for DAP, Diesel, Potash, Urea, and interest are all higher than last year at this time, and second only to the 2023 levels. For the 2023 crop year DAP, Diesel and Urea fell in price from fall 2022 to spring 2023. MP is the only crop insurance product or endorsement to provide interest rate risk protection.
Reference
- Turner, D., Tsiboe, F., Baldwin, K, Williams, B., Dohlman, E., Astill, G., Raszap Skorbiansky, S., Abadam, V., Yeh, A., & Knight, R. (2023). Federal Programs for Agricultural Risk Management. (Report No. 259). U.S. Department of Agriculture, Economic Research Service.
Funding Acknowledgement
This work is supported by the North Central Extension Risk Management Education Center, project award no. 16719 from the National Institute of Food and Agriculture, U.S. Department of Agriculture.
