How to Pay Your PRF Insurance Premium: A Comprehensive Guide

With the significant amount of rain that the Western United States has received this year, many ranchers insured with PRF policies are going to owe a portion of their premium balance. If you’re facing a payment this September, are currently insured with a PRF policy, or plan to be in the future, it’s a good idea to have a plan in place for how you will cover your remaining premium balance. This paper breaks down what a premium is, how it is paid for, and what to do if you need to pay your PRF insurance premium. 

Understanding PRF Insurance Premiums

An insurance premium is the cost associated with maintaining coverage, regardless of whether you utilize it. In the case of PRF insurance, it's important to note that PRF insurance premiums are not due upfront; instead, they are covered through indemnities that are credited toward your policy when your area experiences below-average rainfall.

However, if your area experiences average or above-average precipitation during your coverage intervals, your policy may not generate sufficient indemnity to cover the entire premium amount. In this case, you would be responsible for any remaining balance. 

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Paying Your PRF Premium: Options and Strategies

In the instance that you owe a PRF insurance premium, your Redd Summit team is here to guide you through your payment options. Your agent creates your policy to maximize the potential for indemnities and minimize the chances of owing a premium. However, no one can make a guarantee with a policy dependent on the weather. Consider the following options to cover your premium balance: 

1. One-Time Payment: 

You can pay the remaining premium balance in full through a one-time payment to your Authorized Insurance Provider (AIP).

2. Operating Line of Credit: 

Consider drawing on an operating line of credit from your preferred lending institution to cover the outstanding premium.

3. Finance Plan Through AIP: 

Some opt for a financing plan through your AIP, which sometimes defers your premium due date until February. Although interest rates tend to be higher than a loan through your operating line of credit, this option offers flexibility for those whose coverage is placed in intervals that occur later in the year.

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Long-Term Risk Management with PRF Insurance

PRF insurance is a strategic long-term solution for managing the risks associated with precipitation volatility. Your Redd Summit agent leverages your land's 20-year history to create a policy that maximizes your potential for indemnities and minimizes your risk of owing a premium. While occasional premium payments may arise during unusually wet years, the overall net impact of your policy will remain positive. To gain deeper insights into your policy's long-term performance, ask your agent for your land's 20-year PRF performance analysis.

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Conclusion

Your Redd Summit team is dedicated to providing the knowledge and support you need to make informed decisions about PRF insurance premiums, coverage, and payments. Whether you're considering a one-time payment, exploring financing options, or simply seeking peace of mind and a listening ear, your team is here to help you every step of the way. If you have any questions, please don’t hesitate to reach out to your agent. If you’re not currently insured through Redd Summit Advisors but have questions about PRF insurance premiums, give us a call at (435) 625-1022. 

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