Supplemental coverage option

(a)

Availability of supplemental coverage option

Paragraph (3) of section 508(c) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)) is amended to read as follows:

(3)

Yield and loss basis options

A producer shall have the option of purchasing additional coverage based on— (A)(i)an individual yield and loss basis; or (ii)an area yield and loss basis; (B)an individual yield and loss basis, supplemented with coverage based on an area yield and loss basis to cover a part of the deductible under the individual yield and loss policy, as described in paragraph (4)(C); or (C)a margin basis alone or in combination with the coverages available in subparagraph (A) or (B).

(b)

Level of coverage

Paragraph (4) of section 508(c) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)) is amended to read as follows:

(4)

Level of coverage

(A)

Dollar denomination and percentage of yield

Except as provided in subparagraph (C), the level of coverage— (i)shall be dollar denominated; and (ii)may be purchased at any level not to exceed 85 percent of the individual yield or 95 percent of the area yield (as determined by the Corporation). (B)

Information

The Corporation shall provide producers with information on catastrophic risk and additional coverage in terms of dollar coverage (within the allowable limits of coverage provided in this paragraph). (C)

Supplemental coverage option

(i)

In general

Notwithstanding subparagraph (A), in the case of the supplemental coverage option described in paragraph (3)(B), the Corporation shall offer producers the opportunity to purchase coverage in combination with a policy or plan of insurance offered under this subtitle that would allow indemnities to be paid to a producer equal to a part of the deductible under the policy or plan of insurance— (I)at a county-wide level to the fullest extent practicable; or (II)in counties that lack sufficient data, on the basis of such larger geographical area as the Corporation determines to provide sufficient data for purposes of providing the coverage. (ii)

Trigger

Coverage offered under paragraph (3)(B) and clause (i) shall be triggered only if the losses in the area exceed 10 percent of normal levels (as determined by the Corporation). (iii)

Coverage

Subject to the trigger described in clause (ii), coverage offered under paragraph (3)(B) and clause (i) shall not exceed the difference between— (I)90 percent; and (II)the coverage level selected by the producer for the underlying policy or plan of insurance. (iv)

Calculation of premium

Notwithstanding subsection (d), the premium for coverage offered under paragraph (3)(B) and clause (i) shall— (I)be sufficient to cover anticipated losses and a reasonable reserve; and (II)include an amount for operating and administrative expenses established in accordance with subsection (k)(4)(F).

(c)

Payment of portion of premium by Corporation

Section 508(e)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(e)(2)) is amended by adding at the end the following new subparagraph:

(H)In the case of the supplemental coverage option authorized in subsection (c)(4)(C), the amount shall be equal to the sum of— (i)60 percent of the additional premium associated with the coverage; and (ii)the amount determined under subsection (c)(4)(C)(vi)(II), subject to subsection (k)(4)(F), for the coverage to cover operating and administrative expenses.

(d)

Effective date

The Federal Crop Insurance Corporation shall begin to provide additional coverage based on an individual yield and loss basis, supplemented with coverage based on an area yield and loss basis, not later than for the 2014 crop year.