16-STAX-0021A

(Released November 2015) UNITED STATES DEPARTMENT OF AGRICULTURE

FEDERAL CROP INSURANCE CORPORATION

STACKED INCOME PROTECTION PLAN

COTTONSEED ENDORSEMENT

In return for your payment of premium for the coverage, this Endorsement will be attached to and made part of the Common 

Crop Insurance Policy, Basic Provisions and Stacked Income Protection Plan (STAX) Crop Provisions for the insured crop, 

subject to the terms and conditions described herein. This is a continuous endorsement. Refer to Section 2 of the Common 

Crop Insurance Policy.

Terms and Conditions

1. Applicability

(a) You must have the STAX Cotton Crop Provisions in 

force for cotton lint to elect to insure cottonseed 

under this Endorsement.

(b) You must elect this Endorsement in writing on or 

before the sales closing date for the crop year.

(c) All planted acreage of the crop in the county that is 

insured by the STAX cotton lint policy must be 

insured under this Endorsement.

(d) This Endorsement operates only in those counties 

where coverage is offered as specified in the 

actuarial documents. 

(e) Except when in conflict with this Endorsement, all 

provisions of the STAX cotton lint policy apply.

2. Definitions

Cottonseed endorsement price -The amount contained 

in the actuarial documents which is the dollar amount per 

pound at which you may insure cottonseed.

Conversion factor - A value representing the ratio of

cottonseed to cotton lint yield published in the Special

Provisions that represents our determination of the

number of pounds of cottonseed that is associated with

the expected area yield for cotton lint. 

Cotton lint - The fiber that is separated from the

cottonseeds by a cotton gin. 

STAX cotton lint policy - The STAX Crop Provisions 

that insures cotton lint to which this Endorsement is 

attached. 

3. Protection Factors, Coverage Ranges, Yields, and 

Policy Protection

(a) The protection factor, coverage range, and area loss 

trigger of this Endorsement will be the protection 

factor, coverage range, and area loss trigger

applicable to the corresponding type and practice of 

the STAX cotton lint policy.

(b) The expected area yield and final area yield of this 

Endorsement will be the expected area yield and 

final area yield contained in the actuarial documents 

for the STAX cotton lint policy.

(c) Your policy protection under this Endorsement for 

each type and practice is calculated as follows:

(1) Multiply the expected area yield by the

conversion factor;

(2) Multiply the result of paragraph (1) by the 

cottonseed endorsement price;

(3) Multiply the result of paragraph (2) by your

coverage range;

(4) Multiply the result of paragraph (3) by your

protection factor;

(5) Multiply the result of paragraph (4) by the

number of acres; and

(6) Multiply the result of paragraph (5) by your share 

in such acres.

4. Report of Acreage

(a) You are not required to file a separate report of 

acreage when you elect this Endorsement. 

(b) Your policy protection for cottonseed will be 

determined from the accepted acreage report for the 

STAX cotton lint policy.

5. Annual Premium and Administrative Fee

(a) You will owe a separate annual premium and

administrative fee for this Endorsement, in addition to

any amount owed for the STAX cotton lint policy.

(b) The additional premium amount for this coverage will 

be determined by multiplying your policy protection 

under this Endorsement by the applicable premium 

rate.

6. Causes of Loss 

(a) This Endorsement provides protection against 

widespread loss of yield in a production area due to 

unavoidable natural causes.

(b) Causes of loss that are not insurable under the STAX 

cotton lint policy will not be insurable under this 

Endorsement.

7. Area Loss Trigger, Payment Factor, and Indemnity 

Calculations

(a) An indemnity is due under this Endorsement if the 

final area yield is less than the expected area yield

multiplied by the area loss trigger.

(b) If an indemnity is due, the payment factor for this 

Endorsement is calculated by:

(1) Dividing the final area yield by the expected area 

yield;

(2) Subtracting paragraph (1) from the area loss

trigger; and

(3) Dividing paragraph (2) by the coverage range to

determine the payment factor.

(c) Indemnities under this Endorsement are calculated 

by multiplying the policy protection by the payment 

factor.

8. Examples

The following are examples of the calculation of the policy 

protection and indemnity of the STAX cottonseed 

endorsement. Your information will likely be different and 

you should consult the actuarial documents in your 

county and the policy information. The following facts are 

for illustration purposes only and apply to each of the 

examples.

Producer A farms 100 acres in county X and has a 100 

percent share in those acres. The actuarial documents in 

county X show that the expected area yield is 525 pounds

per acre, the conversion factor is 1.40, and the 
cottonseed endorsement price is $0.08. From the 

actuarial documents in county X, Producer A elects a 90

percent area loss trigger and a 20 percent coverage 

range for his cotton lint policy. Producer A selects a 

protection factor of 110 percent for his cotton lint policy. 

At the end of the insurance period, for county X, FCIC 

releases a final area yield for county X of 399 pounds. 

Example of policy protection and indemnity:

Step 1: Calculate the Policy Protection

Formula: Expected area yield times the conversion 

factor times the cottonseed endorsement price times 

coverage range times protection factor times acres

times share equals policy protection

525 pounds x 1.4 x $0.08 x 0.20 x 1.10 x 100 x 1.00

= $1,294 policy protection

Step 2: Calculate the Payment Factor

Formula: (Area loss trigger minus (final area yield

divided by expected area yield)) divided by coverage 

range equals payment factor

(0.90 – (399 ÷ 525)) ÷ 0.20 = 0.700

Step 3: Calculate the Indemnity

Formula: Policy protection times payment factor 

equals indemnity

$1,294 times 0.700 = $906 indemnity