The Supplemental Coverage Option (SCO) is a crop insurance option that provides additional coverage for a portion of your underlying crop insurance policy deductible. You must buy it as an endorsement to the Yield Protection (YP), Revenue Protection (RP), or Revenue Protection with the Harvest Price Exclusion (RPHPE), or Actual Production History (APH) policy.
SCO follows the coverage of your underlying policy. If you choose YP, then SCO covers yield loss. If you choose RP, then SCO covers revenue loss.
The amount of SCO coverage depends on the liability, coverage level, and approved yield for your underlying policy. However, SCO differs from the underlying policy in how a loss payment is triggered. The underlying policy pays a loss on an individual basis and an indemnity is triggered when you have an individual loss in yield or revenue. SCO pays a loss on an area basis, and an indemnity is triggered when there is a county level loss in yield or revenue.
The SCO Endorsement begins to pay when county average revenue falls below 86 percent of its expected level. The full amount of the SCO coverage is paid out when the county average revenue falls to the coverage level of the underlying policy.
SCO payments are determined only by county average revenue or yield, and are not affected by whether you receive a payment from your underlying policy. So it is possible for you to experience an individual loss but to not receive an SCO payment, or vice-versa.
If you elect SCO and ARC for the same crop on a farm, your SCO coverage for that crop on that farm will be cancelled. You must report the crop on that farm as covered by ARC on your acreage report or you will forfeit 20 percent of your SCO premium on that crop and farm to cover administrative expenses. However, your underlying policy will still be in effect.