Livestock Risk Protection (LRP) Insurance FAQs

How does LRP insurance work?

Livestock Risk Protect (LRP) insurance is a federally subsidized program that enables ranchers to lock in a “floor price” for their livestock and receive an indemnity payment if the overall market drops below their floor price during their endorsement period. On the other hand, if the market price climbs above the chosen floor price, the producer can take full advantage of the upswing, but they would owe their LRP premium in this case.

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What Prices Is LRP Insurance Based On?

The prices insured through LRP insurance are based on the USDA’s Agricultural Market Service, which is updated almost daily.

How Long Are LRP Endorsements?

Endorsements can last anywhere from 13-52 weeks. Producers are able to market their livestock within 60 days of the end of their endorsement period but are not required to actually sell their livestock insured.

How Much Does LRP Insurance Cost?

The premium on your LRP policy varies depending on your operation. However, the USDA subsidy makes the US Government responsible for a portion of your premium. However, if the market price drops during your endorsement and your indemnities cover the premium in full, any additional payments go straight to you with no up-front or out-of-pocket cost.

When Are LRP Insurance Premiums Due?

Because LRP insurance is self-funding, you’ll only owe a premium if the market prices rise above your floor price, or if your indemnity does not cover the balance in full. Premiums are not due until 30 days after the end of the endorsement period and are tax-deductible.

When Should I Lock In My LRP Policy's Coverage?

Once your application is on file and approved, you can lock in coverage almost immediately whenever you or your LRP expert see that the market prices are optimal for your operation. This is Redd Summit recommends filling out an application (this doesn’t lock in your coverage) so that it’ll be on file, and you won’t have to wait a day or two for approval to secure your floor price.  Otherwise, you could risk the prices changing before you can take advantage of an LRP policy.

What Type of Cattle Prices Does LRP Insurance Cover?

LRP insurance through Redd Summit Advisors is available for the prices on fed and feeder cattle and feeder calves that haven’t hit the ground yet.

Can You Insure Cattle?

LRP insurance covers the cattle market prices, not the cattle themselves. However, there are other insurance products that cover mortality as well.