Optimal Coverage Level Choice with Individual and Area Plans of Insurance Report as inadecuate




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We theoretically examine a farmer’s coverage demand with area and individual insurance plans as either separate or integrated options. The individual and area losses are assumed to be imperfectly and positively correlated. With actuarially fair rates, the farmer will fully insure with the individual plan and demand no area insurance regardless of the plans being separate or integrated. Under separate plans, free area insurance and the fair rate for individual insurance, area insurance replaces a portion of individual insurance demand. Under integrated plans, free area insurance, and the fair rate for individual insurance, the farmer over-insures using both area and individual plans.

Keywords: Agricultural risk ; area plans of insurance ; crop insurance

Subject(s): Agribusiness

Agricultural and Food Policy

Agricultural Finance

Crop Production/Industries

Demand and Price Analysis

Farm Management

Research Methods/ Statistical Methods

Risk and Uncertainty

Issue Date: Jan 14 2011

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/98803 Page range: 1-44

Total Pages: 44

JEL Codes: D81; G22; Q12; Q18

Series Statement: Selected Paper

Record appears in: Southern Agricultural Economics Association (SAEA) > 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas





Author: Bulut, Harun ; Collins, Keith J. ; Zacharias, Thomas P.

Source: http://ageconsearch.umn.edu/record/98803?ln=en







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