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Generically speaking (crop specific differences). Speaking to 'program crops' (with coverage offered for the crop in your county, for example there is sugar beet insurance, and a sugar beet program, but not in my county (or state)). You buy your coverage for a certain yield and certain price level. If either is short, then you get a check. If not, you dont. Its really income insurance not crop insurance. There are programs for non program crops but you have to establish a yield and price level. For example... I had burley tobacco crop ins. in 2003. Insured 60% of my proven farm yield at 100% of the support price. Cost about $175 for 5000 pounds of tobacco target yield with a $1.80 a pound support price. Rain at transplanting, disease, weeds, and drought hammered my yield, only got 300# off my 2 acres. Coverage was about $5400. I got $580 for the crop and a $4900 check from federal crop ins. Government subsidises the insurance as it is cheaper than 'bail out' programs for disasters and is better for the individual in cases like mine where if you hadnt transplanted the day I did you wouldnt have gotten hit as hard. For non program crops its tougher. I would like to buy federal crop for hay. Its my primary business now. My yields are so far above the county average I could never collect. County average for alfalfa is 3.2 tons per acre and my yields are normally 7. Even in a 100 year drought this year they were over 3 tpa. Have to be below 1.8 tpi to collect. Timothy is worse as I'd have to go with a 1.8 tpa yield on grass hay. Even if I proved my own yields (which I can) this would be the only year I would have collected anything out of the last 12. There are some pilot programs for livestock. I'm watching these closely, seem like a good fit for my business.
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