If a claim is paid it minimizes the loss rather than maximizing the profit.
When I put seed in the ground, pay property tax, pay to own and operate all of my equipment, pay for ag chemicals, pay for water rights (in some cases), pay my farm hands, and then have a field get knocked out, I guess I can't fathom how you see that as maximizing profits instead of minimizing losses. If a field WOULD have yielded 270 and sold at $7 corn, that's potential. It's not just profit. In a year when corn is at $3, and I'm paying $275 per bag (about half a bag per acre to plant it) out of pocket, then won't get paid back when I sell a year from now, it's about stopping my losses.
Consider yourself going to work every week, then not getting paid until the end of the year. Oh, and by the way, lay out a few hundred thousand dollars in investments towards land, equipment, fuel, labor wages, seed, fertilizer, and ag chemicals, so you're not just working for free, you're paying to work.
And then have your boss tell you at the end of the year you're not getting the wage you expected, but since it rained too much back in April last year (and ONE field flooded out), you're gonna be short 25% on your income this year. So as you're trying to sell your year's work to get back to zero, then have something left to count as income to keep the lights on at your house and keep your kids fed, now you're looking at a loss of $260,000.... But you paid insurance all year to make sure you don't get left homeless if one of your 4 fields floods out and takes 25% of your gross with it, so how much of that $260,000 are you still going to lose? But just like the those car insurance commercials where they talk about driving around in 3/4 of a car, if my insurance only wants to pay on my APH at the extension office, which is lagging way behind my actual average, since it includes 2012 when we lost almost all of our acres and a zero doesn't play nice in a rolling average, do I want insurance which pays based on my APH which might be 80-100bu/acre behind my actual average? If we paid out in 2013 on my APH, I'd have still lost $77,000 compared to my actual yields. That's still almost 30% on that field! And all the while, my kids have been eating, my payments on equipment and property tax payments on the land are coming out of my pocket, I'm paying my hired hands, and I'm paying for seed I won't harvest for a year and might not sell for a year after that... So should my crop insurance really only cover me for 70% of my crop? Should your car insurance really only repay you for 70% of your car? Do you really want your insurance to help you only get 70% out of the hole you dug all year?
Tell me again how I'm maximizing profits instead of minimizing my losses?
Living in the heart of corn country I have always been amazed a how hail hits only the very best corn.
Pretty simple there. On my low yielding corn acres - what little dry land corn I put in, if it gets damaged, I'll chop it for silage and still make about the same value as it would have brought at 50-80bu/acre, and if I file a claim on every year dry land corn takes damages, my premium is going to go up a lot. On my best performing fields, the lost grain actually makes a difference, so even if my premium goes up, the insurance is worth paying. Most folks ding their car in some way which they'd like to get fixed, but they ignore because it's not bad enough to off-set the cost of the premium increase if they filed to get it fixed. It's no different with crop insurance - if you total your car, I bet you file it. If you get a door ding in a parking lot, I bet you don't.
Hogs are doing real financial damages, and the numbers we play with are huge. Acres add up REALLY fast into really big dollar amounts, so it's not a joke when folks talk about keeping hogs out of the heartland where our nations food is made.
