- Definition of Agricultural Insurance
- Importance of Agricultural Insurance
- Types of Agricultural Insurance Policies
- Various Agricultural Risks
- Insurance Terms
- Problems of Agricultural Insurance
Definition of Agricultural InsuranceGenerally, insurance is a form of risk management used to absorb the shock of unexpected loss. Agricultural producers have series of risks affecting the income and welfare of their households. These are mainly production risks in relation to weather conditions, pests and diseases and market conditions. Agricultural insurance can be defined as the agreement where one party (insurer) promises to pay another party (insured) of a sum of money in the event of suffering a specified agricultural loss or damage.
Importance of Agricultural InsuranceThe following are the importance of agricultural insurance:
- It help to give the farmers or investors peace of mind because the insurance policy will meet the financial consequences of certain risks.
- It inculcate savings habit in farmers as to prepare them for future.
- Insurance certificate can be used as collateral security to secure loans from commercial banks by farmers.
- It help to contribute to the invisible earnings of the country i.e. foreign exchange.
- Life insurance can be used as a means of preparing for old age of a farmer.
- Insurance makes fund available for investment in agriculture.
- Losses are controlled by agricultural insurance by reducing the frequency and severity of losses.
- Social benefits such as employment opportunities,job security and continued contributions to nation building are encouraged by agricultural insurance policy because business is kept alive as long as the financial consequences of certain losses are met by the insurance.
Types of Agricultural Insurance PoliciesThe types of insurance policies include the following:
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