SCO and ECO: Two Crop Insurance Endorsements Worth Understanding

The acronyms SCO and ECO refer to add-on coverage options within federal crop insurance that increase protection beyond what a standard policy provides. They work differently than your underlying policy coverage, and that difference affects when and how you get paid.

Here's a breakdown of what SCO and ECO are, how they work, and whether they might make sense to add onto your policy.

What are SCO and ECO?

SCO (Supplemental Coverage Option) and ECO (Enhanced Coverage Option) are endorsements (add-ons) attached to an existing crop insurance policy. They increase the percentage of expected revenue or yield that is protected under the policy. 

• SCO is a county-based base coverage protection of up to 86% of expected revenue or yield.
• ECO is county-based protection even higher, protecting up to 90% or 95% of expected revenue or yield.
• These follow the protection plan your underlying policy has either revenue protection or yield protection. However, there must be a county-wide loss to trigger indemnity payments. When indemnities are triggered, they are paid at your individual crop value. 

The biggest difference between traditional crop insurance and SCO and ECO endorsements

Unlike your underlying policy, both SCO and ECO provide indemnity payments (the compensation paid when coverage is triggered) based on the county’s average revenue or yield, not your farm’s individual results. 

This means that the government: 

• Calculates the average performance for all insured acres of that crop in your county.
• If that county average falls below the selected coverage level, an indemnity is paid. 
• If it does not, no indemnity is paid, even if your farm experienced an individual loss. 

How SCO Works

Think of SCO as coverage that fills the gap between whatever % your underlying policy covers and 86% of expected county revenue or yield. The federal government covers 80% of the SCO premium, making it a cost-effective way to add a layer of coverage.

Here's a simplified example of how it layers on top of an existing policy:

• Your underlying policy might cover you at the 75% level, meaning you start receiving a payment when your individual loss drops below 75%.
• The gap between 75% and 86% is normally unprotected.
• SCO covers that gap, but only when the county also experiences a loss that drops below 86%.

How ECO Works

ECO functions similarly to SCO but offers a higher level of coverage and a bit more flexibility. ECO is designed to sit above SCO, covering the gap from 86% up to 90% or 95% of expected county revenue or yield, depending on what premium you select. 

Because of this broader protection band, ECO premiums are higher than SCO, but the government still subsidizes 80% of the premium for both coverage levels. 

Like SCO, ECO is based on county performance rather than individual farm performance.

SCO vs ECO: A Quick Comparison

Who Can Qualify for SCO and ECO Endorsements

SCO and ECO are available to producers who:

• Have a qualifying underlying crop insurance policy (such as Revenue Protection or Yield Protection)
• Are growing an eligible commodity. The list of eligible crops has been expanding in recent years, so even if you checked a few years ago and weren't eligible, it may be worth asking again
• Purchase the endorsement by the sales closing date for their primary policy

Why Producers Are Paying Attention

A few factors have made SCO and ECO especially relevant in recent years:

1. Commodity price volatility. When prices swing dramatically, even well-managed farms can face revenue shortfalls. County-level endorsements provide another layer when whole regions are affected.
2. Input cost pressures. With higher input costs, the margin for error is tighter than it used to be. Reducing the deductible gap — what you're exposed to between your policy coverage level and 86% or 95% — can make a real difference.
3. Expanding eligibility. More crops are becoming eligible for SCO and ECO, meaning more producers than ever have access to these tools.
4. Relatively low out-of-pocket cost. With the government covering an increased portion of the premium, the cost-benefit equation can be favorable — especially in years when county-wide events like drought or flooding affect broad geographic areas. It is the cheapest risk-management option on the market. 

SCO & ECO Work Best Against Widespread Events

SCO and ECO aren't for everyone. Because they're triggered by county-level performance, they work best as protection against widespread events rather than isolated farm losses. Since these are activated by county-level results, they function most effectively as safeguards against broad occurrences, not individual farm damages. 

That said, these endorsements can work very well in certain situations, so the decision really comes down to whether they make sense for your specific county and risk management needs.

Talk to Your Agent 

SCO and ECO crop insurance endorsements can be valuable tools, but they're not one-size-fits-all. The right combination of underlying policy, endorsement level, and farm program election depends on your specific crop mix, your county's loss history, and your risk tolerance.

Your Farm Credit team is here to help you think through the options. We offer free current policy reviews to help you better understand your existing coverage and explore how SCO and ECO may fit into your overall risk management plan. Reach out to your local crop insurance agent to find out if SCO, ECO, or both make sense as part of your coverage plan this year.

Crop insurance is sold and serviced by licensed agents. Coverage options and eligibility may vary by crop, county, and policy type. Consult your agent for details specific to your operation.

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