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Nature of Insurance Insurance is a means to minimize the seriousness of a risk to an individual. A risk is the exposure of a person er a commodity to loss or injury. Any person can encounter the vari- ous risks to which he and his properties are exposed. To a farmer, the risks are more numerous, such as flocd. typhoon, lightning, pests, fire, theft, fall in price, and deterio ration in quality of stored products Nevertheless, some of these risks can be reduced by advanced planning. For instance, the destruction of crops by insects can be foreseen. Therefore, to prevent or minimize losses, appropriate insecticide is applied on the crop. But there are kinds of risks which occur very rap- idly without any warning. And in some cases even if there are warnings, farmera are helpless to prevent or control the damage. The risks which are beyond the control of farmers greatly affect their economic and social conditions. It is not only their incomes which are reduced but also they cannot pay their debts. As a result, they find it difficult to finance their farm activities with their extremely low inceme. The government has realized the serious implications of this situation on agricultural production and on the quality of life of the farmers and their families. Thus, it has introduced the program of crop insur- ance for the benefit of the small farmera and for the econoray as a whole.

Nature of Insurance Insurance is a means to minimize the seriousness of a risk to an individual. A risk is the exposure of a person er a commodity to loss or injury. Any person can encounter the vari- ous risks to which he and his properties are exposed. To a farmer, the risks are more numerous, such as flocd. typhoon, lightning, pests, fire, theft, fall in price, and deterio ration in quality of stored products Nevertheless, some of these risks can be reduced by advanced planning. For instance, the destruction of crops by insects can be foreseen. Therefore, to prevent or minimize losses, appropriate insecticide is applied on the crop. But there are kinds of risks which occur very rap- idly without any warning. And in some cases even if there are warnings, farmera are helpless to prevent or control the damage. The risks which are beyond the control of farmers greatly affect their economic and social conditions. It is not only their incomes which are reduced but also they cannot pay their debts. As a result, they find it difficult to finance their farm activities with their extremely low inceme. The government has realized the serious implications of this situation on agricultural production and on the quality of life of the farmers and their families. Thus, it has introduced the program of crop insur- ance for the benefit of the small farmera and for the econoray as a whole.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter16: Information, Risk, And Insurance
Section: Chapter Questions
Problem 11RQ: What is an actuarially fair insurance policy?
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92 AGRICULTURAL ECONOMICS Fire. Among the numerous risks which beset man is fire. Its occurrence is expected and pereistent. Its ravages nre costly and extensivo. Farmers, especially the big ones have buildings, machines, facilities and other materiala. These are susceptible to destruction by fire. There is therefore a need for fire insurance. Automobile. In highly developed countries like the United States, farmers enn automobiles and trucks. They are always exposed to risks in driving their cars or trucks. The worst risk of course is death from a car accident. Record shows that farmers not only lost their lives but also their properties if their dependents were not financially prepared. Crop. Cropeare ofton destroyed every year by typhoons, aside from plant disoases and infestations. Since most farmers in the Philippines are poor, it would be difficult for them to replant and recover for lack of money. Another immediate problem is that they cannot repay their production loans from financial institutions and unlicensed private moneylenders. However, if their crops are insured adequately, their possible financial losses are minimized, and they are able to meet their financial obligation.
Transcribed Image Text:92 AGRICULTURAL ECONOMICS Fire. Among the numerous risks which beset man is fire. Its occurrence is expected and pereistent. Its ravages nre costly and extensivo. Farmers, especially the big ones have buildings, machines, facilities and other materiala. These are susceptible to destruction by fire. There is therefore a need for fire insurance. Automobile. In highly developed countries like the United States, farmers enn automobiles and trucks. They are always exposed to risks in driving their cars or trucks. The worst risk of course is death from a car accident. Record shows that farmers not only lost their lives but also their properties if their dependents were not financially prepared. Crop. Cropeare ofton destroyed every year by typhoons, aside from plant disoases and infestations. Since most farmers in the Philippines are poor, it would be difficult for them to replant and recover for lack of money. Another immediate problem is that they cannot repay their production loans from financial institutions and unlicensed private moneylenders. However, if their crops are insured adequately, their possible financial losses are minimized, and they are able to meet their financial obligation.
AGRICULTURAL INSURANCE Nature of Insurance Insurance is a means to minimize the seriousness of a risk to an individual. A risk is the exposure of a person or a commodity to loss or injury. Any person can encounter the vari- ous risks to which he and his properties are exposed. To a farmer, the risks are more numerous, such as flood, typhoon, lightning, pests, fire, theft, fall in price, and deterio ration in quality of stored products. Nevertheless, some of theise risks can be reduced by advanced planning. For instance, the destruction of crops by insects can be foreseen. Therefore, to prevent or minimize losses, appropriate insecticide is applied on the crop. But there are kinds of risks which occur very rap- idly without any warning. And in some cases even if there are warnings, farmera are helpless to prevent or control the damage. The risks which are beyond the control of farmers greatly affect their economic and social conditions. It is not only their incomes whiclh are reduced but also they cannot pay their debts. As a result, they find it difficult to finance their farm activities with their extremely low income. The government has realized the serious implications of this situation on agricultural production and on the quality of life of the farmers and their families. Thus, it has introduced the program of crop insur- ance for the benefit of the small farmera and for the econoray as a whole. Types of Insurance Life. Every human being is confronted with the risk of death at an unfavorable time. For instance, a farmer with six children suddenly dies. If the farmer is adequately insured, the economic security of his wife and children are protected. Even under other circumstances, insurance is good for farm- ers. The nature of farm work involves several stages. The job o the farmer does not end after planting. He still has harvesting and marketing tasks to perform. If he dies in the middle of the season, his dependents can still continue the farm operations. Thus, the crop is saved from possible loss and there is no finan- cial burden for the wife and the children. of
Transcribed Image Text:AGRICULTURAL INSURANCE Nature of Insurance Insurance is a means to minimize the seriousness of a risk to an individual. A risk is the exposure of a person or a commodity to loss or injury. Any person can encounter the vari- ous risks to which he and his properties are exposed. To a farmer, the risks are more numerous, such as flood, typhoon, lightning, pests, fire, theft, fall in price, and deterio ration in quality of stored products. Nevertheless, some of theise risks can be reduced by advanced planning. For instance, the destruction of crops by insects can be foreseen. Therefore, to prevent or minimize losses, appropriate insecticide is applied on the crop. But there are kinds of risks which occur very rap- idly without any warning. And in some cases even if there are warnings, farmera are helpless to prevent or control the damage. The risks which are beyond the control of farmers greatly affect their economic and social conditions. It is not only their incomes whiclh are reduced but also they cannot pay their debts. As a result, they find it difficult to finance their farm activities with their extremely low income. The government has realized the serious implications of this situation on agricultural production and on the quality of life of the farmers and their families. Thus, it has introduced the program of crop insur- ance for the benefit of the small farmera and for the econoray as a whole. Types of Insurance Life. Every human being is confronted with the risk of death at an unfavorable time. For instance, a farmer with six children suddenly dies. If the farmer is adequately insured, the economic security of his wife and children are protected. Even under other circumstances, insurance is good for farm- ers. The nature of farm work involves several stages. The job o the farmer does not end after planting. He still has harvesting and marketing tasks to perform. If he dies in the middle of the season, his dependents can still continue the farm operations. Thus, the crop is saved from possible loss and there is no finan- cial burden for the wife and the children. of
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