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20-SCO

(Released June 2019) UNITED STATES DEPARTMENT OF AGRICULTURE

FEDERAL CROP INSURANCE CORPORATION

SUPPLEMENTAL COVERAGE OPTION 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 (Basic Provisions) and Crop Provisions for the insured crop, subject to the terms and conditions 

described herein. The Supplemental Coverage Option (SCO) provides coverage for a portion of the deductible of your underlying crop 

insurance policy. This Endorsement does not provide payments for prevented planting or replanting. The coverage provided by this 

Endorsement may not be combined with the Stacked Income Protection Plan (STAX) or the Agriculture Risk Coverage (ARC) program.

1. Definitions

Area loss trigger - The percent of expected area yield or 

revenue, as applicable, below which an indemnity is paid. 

The area loss trigger is 86 percent.

Coverage percentage - The percentage you choose that is 

used to calculate the dollar amount of insurance under this 

Endorsement. The maximum coverage is the difference 

between 86 percent and the coverage level selected by you 

and the coverage percent is multiplied by this amount to give 

you your dollar amount of insurance.

Expected area revenue - The expected area yield multiplied 

by the projected price. 

Expected area yield - The yield contained in the actuarial 

documents for the insured crop, type, and practice in the 

production area. The expected area yield is used to 

determine if an indemnity will be due.

Expected crop value - The value of the crop based on your 

approved yields and the projected price or price election, as 

applicable. For revenue protection underlying policies only, 

expected crop value may increase if the harvest price is 

higher than the projected price.

Final area revenue - The revenue determined by multiplying 

the final area yield by the harvest price, released by FCIC at 

the time specified in the actuarial documents. The final area

revenue is used to determine if an indemnity will be due for 

revenue protection underlying policies.

Final area yield - The yield for the insured crop, type, and

practice in the production area, as determined and released 

by FCIC at a time specified in the actuarial documents. The 

final area yield is used to determine if an indemnity will be

due.

NASS - National Agricultural Statistics Service, an agency 

within USDA, or its successor.

Payment factor - A factor that represents the production area

wide loss as compared to your supplemental coverage range. 

The payment factor is used to determine the amount of 

indemnity to be paid under this Endorsement.

Production area - The geographical area that the expected 

and final area yields are based on, designated generally as a 

county, but may be a smaller or larger geographical area as 

specified in the actuarial documents. 

Supplemental protection - The dollar amount of insurance 

provided by this Endorsement for each coverage level, type,

and practice.

Supplemental coverage range - The percent of your 

expected crop value that can be covered by this 

Endorsement. It is the difference between the area loss 

trigger and the coverage level of the underlying policy, 

expressed as a whole percentage.

Underlying policy - The Common Crop Insurance Policy, 

Basic Provisions (Basic Provisions) and Crop Provisions,

published at 7 C.F.R. part 457, to which this Endorsement is 

attached. 

2. Conditions of Insurance

(a) You must have an underlying policy, in force with us to 

elect coverage under this Endorsement.

(b) Premium and indemnity under this Endorsement may be 

reduced on acreage that has more than one insured crop 

in a single crop year, in accordance with section 15 of 

the Basic Provisions.

(c) You may select a coverage percentage, from 50 percent 

to 100 percent, when you elect coverage under this 

Endorsement. The default coverage percentage is 100 

percent.

3. Life of Endorsement

(a) This is a continuous Endorsement, in accordance with 

section 2 of the Basic Provisions.

(b) If at any time your underlying policy for the crop is 

cancelled or terminated, coverage under this 

Endorsement is automatically cancelled or terminated as 

of the same date.

(c) If you change the coverage level or plan of insurance of 

the underlying policy, this Endorsement will remain in 

effect and will provide supplemental coverage based on 

the coverage level and plan of insurance you selected for 

the underlying policy unless you cancel this 

Endorsement on or before the cancellation date.

4. Report of Acreage

(a) In addition to section 6(c) of the Basic Provisions, if ARC 

has been elected, or will be elected, for the crop on any 

land in the county in which you have a share, your 

acreage report must include:

(1) The FSA farm serial numbers assigned to land with 

planted acreage of the crop in which you have a 

share;

(2) Whether ARC has been elected for the crop for such 

acreage; and

(3) For acreage with an ARC election date later than the 

acreage reporting date, your intended ARC election.

(b) If we discover you have incorrectly reported any 

information required by paragraph (a) and the 

information determined to be correct results in: 

(1) Acreage that is insurable under this Endorsement 

that was reported as uninsurable, coverage under 

this Endorsement will not be provided for such 

acreage; or

(2) Acreage that is uninsurable under this Endorsement 

that was reported as insurable:

(i) Such acreage will be ineligible for any 

indemnity under this Endorsement because 
(2 of 4)

acreage cannot benefit from SCO and ARC;

and

(ii) You will still be required to pay 60 percent of the

premium due.

5. Insurable Acreage and Unit Division

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

insured by the underlying policy must be insured under 

this Endorsement, except this Endorsement will not 

insure:

(1) Acreage that is designated as covered by STAX; or

(2) Acreage on land identified by a FSA farm serial 

number for which ARC has been elected for the 

crop.

(b) In lieu of the provisions regarding units and unit division 

in the underlying policy, supplemental protection 

provided by this Endorsement will be based on all

planted acreage of the crop in the county insured by the 

underlying policy with the same coverage level, type, and 

practice:

(1) Supplemental protection will not be provided for 

acreage that is ineligible for coverage under this 

Endorsement, in accordance with paragraph (a); 

and 

(2) Paragraph (b) applies regardless of whether such 

acreage is owned, rented for cash, or rented for a 

share of the crop, including acres on which you are 

insuring another person’s share of the crop.

6. Supplemental Protection

(a) To calculate your supplemental protection for all planted 

acres of the crop in the county with the same coverage 

level, type, and practice that are insured by this 

Endorsement:

(1) Determine your supplemental coverage range by 

subtracting the coverage level of your underlying 

policy from the area loss trigger;

(2) Divide the liability of the underlying policy for those 

acres by the coverage level of the underlying policy 

to determine the expected crop value; and

(3) Multiply the supplemental coverage range from 

paragraph (1) by the expected crop value from

paragraph (2) and by the coverage percentage you 

selected to determine the supplemental protection.

(b) If there are multiple coverage levels, types, or practices 

for the insured crop in the county, your supplemental 

protection will be determined separately for the acres at 

each coverage level, type, and practice.

7. 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 underlying policy.

(b) Premium for this Endorsement is calculated by

multiplying your supplemental protection from section 

6(a) by the premium rate and any premium adjustment 

percentages that may apply.

(1) For revenue protection underlying policies, the 

projected price will be used to determine the

expected crop value in section 6(a)(2) when 

calculating the premium.

(2) All information needed to calculate the premium rate

is contained in the actuarial documents.

(c) The administrative fee for this Endorsement is

determined in accordance with the provisions in section 

7(e) of the Basic Provisions.

8. Causes of Loss

(a) This Endorsement provides protection against 

widespread loss of yield or revenue in the production 

area due to natural causes.

(b) Individual farm yields and revenues are not considered 

under this Endorsement when determining the final area

yield and final area revenue: 

(1) It is possible that your individual farm may 

experience reduced revenue or reduced yield and 

you do not receive an indemnity under this 

Endorsement.

(2) The notice provisions in section 14(b) of the Basic 

Provisions do not apply to this Endorsement.

(c) No indemnity will be due on acreage that we have 

determined has been damaged solely by causes not 

insured by the underlying policy.

9. Area Loss Triggers, Payment Factors, and Indemnity 

Calculations

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

(1) For revenue protection underlying policies, the final 

area revenue is less than the expected area yield 

multiplied by the higher of the projected price or 

harvest price and by the area loss trigger;

(2) For revenue protection underlying policies with the 

harvest price exclusion, the final area revenue is 

less than the expected area revenue multiplied by 

the area loss trigger; or

(3) For all other underlying policies, 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 is calculated

for each coverage level, type, and practice by:

(1) For revenue protection underlying policies:

(i) Multiplying the expected area yield by the 

higher of the projected price or harvest price;

(ii) Dividing the final area revenue by the result of 

clause (i);

(iii) Subtracting the percent from clause (ii) from the 

area loss trigger; and

(iv) Dividing clause (iii) by the supplemental 

coverage range to determine the payment 

factor

(2) For revenue protection underlying policies with the 

harvest price exclusion:

(i) Dividing the final area revenue by the expected 

area revenue;

(ii) Subtracting the percent from clause (i) from the 

area loss trigger; and

(iii) Dividing clause (ii) by the supplemental 

coverage range to determine the payment 

factor.

(3) For all other underlying policies:

(i) Dividing the final area yield by the expected 

area yield;

(ii) Subtracting the percent from clause (i) from the 

area loss trigger; and

(iii) Dividing clause (ii) by the supplemental 

coverage range to determine the payment 

factor.

(4) The payment factor is limited to a maximum of 

1.000.

(c) Indemnity is calculated by multiplying the supplemental

protection by the payment factor for each coverage level, 
(3 of 4)

type, and practice.

(d) Indemnities are calculated following the release by FCIC 

of the final area yield and harvest price.

(e) In lieu of the provisions in section 14(f)(1) of the Basic 

Provisions, we will pay your loss under this Endorsement 

within 30 days after FCIC releases the final area yield

and revenue.

10. Expected and Final Area Yields

(a) The data source used for the expected and final area

yields will be specified in the actuarial documents.

(b) Except as otherwise provided in this section, the data 

source used to establish the expected area yield will be 

used to establish the final area yield.

(c) If the data source used to establish the expected area

yield is not able to provide sufficient data to establish the 

final area yield because the data is no longer available, 

credible, or reflects changes that may have occurred 

after the expected area yield was established;

(1) FCIC will determine the final area yield based on the 

most accurate data available from subsection (g), as 

determined by FCIC; or 

(2) To the extent that practices used during the crop 

year change from those upon which the expected 

area yield is based, the final area yield may be 

adjusted to reflect the yield that would have resulted 

but for the change in practice. For example, if the 

production area is traditionally 90 percent irrigated 

and 10 percent non-irrigated, but for the current crop

year the production area is now 50 percent irrigated 

and 50 percent non-irrigated, the final area yield will 

be adjusted to an amount as if the production area

had 90 percent irrigated acreage.

(d) If the final area yield is established from a data source 

other than that used to establish the expected area yield, 

FCIC will provide notice of the data source and the 

reason for the change at the time the final area yield is 

published.

(e) If expected and final area yields are based on NASS 

data, the final area yield will be the most current NASS 

yield at the time FCIC determines the final area yield in 

accordance with the actuarial documents.

(f) The final area yield determined by FCIC is considered 

final for the purposes of establishing whether an 

indemnity is due and will not be revised for any reason.

(g) Expected and final area yields used under this 

Endorsement for a crop, type, and practice may be 

based on:

(1) Data collected by NASS, regardless of whether such 

data is published or unpublished; or

(2) Crop insurance data, other USDA data, or other data 

sources determined appropriate by FCIC.

(h) All expected and final area yields are established by 

FCIC and are matters of general applicability. Refer to

section 20(k) of the Basic Provisions.

11. Written Agreements

(a) This Endorsement is applicable to planted acres of the 

insured crop in the county that are insured under a 

Written Agreement.

(b) This Endorsement is available only when authorized by 

the actuarial documents for the crop, type, and practice 

in the county and cannot be made available through a 

Written Agreement.

12. Examples

The following are examples of the calculation of the premium, 

supplemental protection and indemnity of SCO for the plans 

of insurance that may be selected for the underlying policy. 

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 of corn in county X with an 

approved yield of 154.6 bushels per acre. The actuarial 

documents in county X show that the expected area yield is 

145.0 bushels per acre, the projected price is $4.00, and the 

expected area revenue is $580.00. From the actuarial 

documents in county X, Producer A elects the 70 percent 

coverage level for the underlying policy, which results in a 

liability for the underlying policy of $43,288 based on the 

projected price. The producer elects a coverage percentage 

of 100 for SCO.

The premium rate is based on the published volatility factor 

and for this example is 0.3240 for revenue protection

underlying policies, 0.2544 for revenue protection underlying 

policies with the Harvest Price Exclusion, and 0.1586 for all 

other policies. The subsidy factor for SCO is 0.65. 

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

releases a harvest price of $4.30, a final area yield for county 

X of 110.2 bushels, and a final area revenue for county X of 

$473.86. For the revenue protection example only, the liability 

for the underlying policy increases to $46,535.

Examples for revenue protection underlying policies:

Supplemental Protection calculation (for premium):

Step 1: Calculate the supplemental coverage range

Formula: Area loss trigger minus coverage level of the 

underlying policy equals supplemental coverage range

0.86 - 0.70 = 0.16 supplemental coverage range

Step 2: Calculate the Expected Crop Value

Formula: Liability of the underlying policy divided by the 

coverage level of the underlying policy equals expected 

crop value

$43,288 ÷ 0.70 = $61,840.00 expected crop value

Step 3: Calculate the Supplemental Protection

Formula: Supplemental coverage range times expected 

crop value times coverage percentage equals 

supplemental protection

0.16 x $61,840.00 x 1.00 = $9,894 supplemental 

protection

Premium calculation:

Step 1: Calculate the Total Premium

Formula: Supplemental protection times premium rate 

equals total premium

$9,894 x 0.3240 = $3,206 total premium

Step 2: Calculate the Subsidy amount

Formula: Total premium times subsidy factor equals 

subsidy

$3,206 x 0.65 = $2,084 subsidy

Step 3: Calculate the Producer Premium

Formula: Total premium minus subsidy equals producer 

premium

$3,206 - $2,084 = $1,122 producer premium

Supplemental Protection calculation (for indemnity):

Step 1: Calculate the supplemental coverage range

Formula: Area loss trigger minus coverage level of the 

underlying policy equals supplemental coverage range

0.86 - 0.70 = 0.16 supplemental coverage range

Step 2: Calculate the Expected Crop Value
(4 of 4)

Formula: Liability of the underlying policy divided by the 

coverage level of the underlying policy equals expected 

crop value

$46,535 ÷ 0.70 = $66,478.57 expected crop value

Step 3: Calculate the Supplemental Protection

Formula: Supplemental coverage range times expected 

crop value times coverage percentage equals 

supplemental protection

0.16 x $66,478.57 x 1.00 = $10,637 supplemental 

protection

Indemnity calculation:

Step 1: Calculate the Payment Factor

Formula: (Area loss trigger minus (final area revenue 

divided by (expected area yield times the higher of the 

projected price or harvest price))) divided by 

supplemental coverage range equals payment factor

(0.86 - ($473.86 ÷ (145.0 x $4.30))) ÷ 0.16 = 0.625

payment factor

Step 2: Calculate the Indemnity

Formula: Supplemental protection times payment factor 

equals indemnity

$10,637 times 0.625 = $6,648 indemnity

Examples for revenue protection underlying policies with the 

Harvest Price Exclusion:

Supplemental Protection calculation:

Step 1: Calculate the supplemental coverage range

Formula: Area loss trigger minus coverage level of the 

underlying policy equals supplemental coverage range

0.86 - 0.70 = 0.16 supplemental coverage range

Step 2: Calculate the Expected Crop Value

Formula: Liability of the underlying policy divided by the 

coverage level of the underlying policy equals expected 

crop value

$43,288 ÷ 0.70 = $61,840.00 expected crop value

Step 3: Calculate the Supplemental Protection

Formula: Supplemental coverage range times expected 

crop value times coverage percentage equals 

supplemental protection

0.16 x $61,840.00 x 1.00 = $9,894 supplemental

protection

Premium calculation:

Step 1: Calculate the Total Premium

Formula: Supplemental protection times premium rate 

equals total premium

$9,894 x 0.2544 = $2,517 total premium

Step 2: Calculate the Subsidy amount

Formula: Total premium times subsidy factor equals 

subsidy

$2,517 x 0.65 = $1,636 subsidy

Step 3: Calculate the Producer Premium

Formula: Total premium minus subsidy equals producer 

premium

$2,517 - $1,636 = $881 producer premium

Indemnity calculation:

Step 1: Calculate the Payment Factor

Formula: (Area loss trigger minus (final area revenue 

divided by expected area revenue)) divided by 

supplemental coverage range equals payment factor

(0.86 - ($473.86 ÷ $580.00)) ÷ 0.16 = 0.269 payment 

factor

Step 2: Calculate the Indemnity

Formula: Supplemental protection times payment factor 

equals indemnity

$9,894 times 0.269 = $2,661 indemnity

Examples for underlying policies other than revenue 

protection:

Supplemental Protection calculation:

Step 1: Calculate the supplemental coverage range

Formula: Area loss trigger minus coverage level of the 

underlying policy equals supplemental coverage range

0.86 - 0.70 = 0.16 supplemental coverage range

Step 2: Calculate the Expected Crop Value

Formula: Liability of the underlying policy divided by the 

coverage level of the underlying policy equals expected 

crop value

$43,288 ÷ 0.70 = $61,840.00 expected crop value

Step 3: Calculate the Supplemental Protection

Formula: Supplemental coverage range times expected 

crop value times coverage percentage equals 

supplemental protection

0.16 x $61,840.00 x 1.00 = $9,894 supplemental 

protection

Premium calculation:

Step 1: Calculate the Total Premium

Formula: Supplemental protection times premium rate 

equals total premium

$9,894 x 0.1586 = $1,569 total premium

Step 2: Calculate the Subsidy amount

Formula: Total premium times subsidy factor equals 

subsidy

$1,569 x 0.65 = $1,020 subsidy

Step 3: Calculate the Producer Premium

Formula: Total premium minus subsidy equals producer 

premium

$1,569 - $1,020 = $549 producer premium

Indemnity calculation:

Step 1: Calculate the Payment Factor

Formula: (Area loss trigger minus (final area yield divided 

by expected area yield)) divided by supplemental 

coverage range equals payment factor

(0.86 - (110.2 bushels ÷ 145.0 bushels)) ÷ 0.16 = 0.625

payment factor

Step 2: Calculate the Indemnity

Formula: Supplemental protection times payment factor 

equals indemnity

$9,894 times 0.625 = $6,184 indemnity