Base Price Modifier (BPM)

Protect your bottom line with Base Price Modifier (BPM)

The Base Price Modifier policy allows insureds the opportunity to increase the price election* under eligible plans.

• The eligible plans for corn, grain sorghum, soybeans, and wheat include buy-up coverage of Yield Protection (YP), Revenue Protection (RP), or Revenue Protection with the Harvest Price Exclusion (RP-HPE).
• The eligible plan for California tree nuts is buy-up coverage of Actual Production History (APH).

The combined value of the supplemental coverage under the BPM policy and coverage provided by the applicable underlying plan of insurance may not exceed the value of the APH multiplied by the applicable Multi-Peril Crop Insurance (MPCI) projected price or price election.

The price election selected at the time of application will not increase regardless of changes to the MPCI policy.

The unit structure under the BPM policy will be the same as the unit structure in effect for the crop(s) and county(ies) insured under the MPCI policy as shown on the Schedule of Insurance. Optional Unit structure may be selected on the BPM policy, if the unit structure of the underlying MPCI policy is Basic Units or Enterprise Units. This election must be made on the application.

*To determine the BPM price election, please refer to the BPM Price Election section in the BPM Manual.

Coverage exclusions

• High risk, unrated, or uninsurable acreage.
• Whole Farm Revenue Protection (WFRP), Catastrophic (CAT) coverage, and Area Revenue Protection Insurance (ARPI) plans.
• Acreage that is prevented from planting.
• Acreage insured by written agreement with the exception of Written Unit Agreements.
• Second or double crops as defined in the MPCI Policy.
• Double crop soybeans will not be excluded in counties where they are considered insurable under the MPCI Special Provisions of Insurance.
• Organically produced crops.

Indemnity calculation example

The BPM policy begins paying the supplemental amount per unit of measure when a covered production loss occurs and the production to count is less than the MPCI production guarantee based on the unit structure elected for the BPM policy. The BPM payable indemnity amount is calculated by taking the MPCI production guarantee for the BPM unit minus the MPCI production to count, times the BPM price election, times the insured share. If quality deficiencies have been determined due to an insured cause of loss, we will follow the MPCI Crop and Special Provision procedures to determine the net production to count.

An insured with corn at 160 bushel APH and a 100% share buys 75% coverage on an MPCI policy with Optional Units. The insured also buys a BPM policy at the price of $0.85 per bushel.

1. The MPCI production guarantee/acre is 120 bushels (160 bushel APH x 75% coverage level).
2. The insured harvests 105 bushels/acre, which is 15 bushels/acre below the MPCI guarantee (120 bushel guarantee – 105 bushels harvested).
3. The BPM indemnity payment/acre is as follows: BPM Indemnity:  120 – 105 = 15 bushels x $0.85 x 100% = $12.75 per acre.

BPM premium is calculated by multiplying the BPM liability by the BPM rate for the crop/county (rounded to the nearest whole dollar).

Coverage exclusions

• High risk, unrated, or uninsurable acreage.
• Whole Farm Revenue Protection (WFRP), Catastrophic (CAT) coverage, and Area Revenue Protection Insurance (ARPI) plans.
• Acreage insured by written agreement.
• Organically produced crops, unless authorized in writing by NAU Country.

Indemnity calculation example

The insured will receive an indemnity payment from the BPM policy in addition to the MPCI payment only when a yield loss occurs and the production to count is less than the MPCI production guarantee. The formula for calculating the BPM indemnity is as follows: MPCI production guarantee for the BPM unit minus the MPCI production to count, times the BPM price election, times the insured’s share.

An almond grower with a 3,000 pound APH approved yield and a 100% share buys 65% APH coverage with an established price of $4.00 per pound. The grower also buys a BPM policy at the maximum price available of $0.50 per pound.

1. The APH guarantee per pound is 1,950 pounds (3,000 x 65%).
2. The grower harvests 1,700 pounds per acre, which is 250 pounds per acre below the APH guarantee (1,950 guarantee – 1,700 harvested).
3. The indemnity payment per acre is as follows:
   • APH benefit:
     $4.00 x 250 pounds = $1,000 per acre
   • BPM benefit:
     $0.50 x 250 pounds = $125 per acre
   • Total benefit:
     $4.50 x 250 pounds = $1,125 per acre

BPM premium is calculated by multiplying the BPM liability by the BPM rate for the crop/county (rounded to the nearest whole dollar).