What is the purpose of covering approved yields in crop insurance?

The purpose of covering approved yields in crop insurance is to determine the minimum guarantee of revenue for the insured crop. Approved yields are calculated based on the historical production data of specific crops grown in a certain area, which allows insurance providers to set a baseline yield that farmers can expect as a minimum. This baseline plays a crucial role in calculating indemnities in the event of a loss due to natural disasters, pests, or other damaging conditions.

This approach ensures that farmers have a safety net that reflects their past production abilities, providing a degree of financial security and stability. If the actual yield falls below this approved yield, the crop insurance policy will trigger compensation, helping farmers recover losses and maintain their livelihood.

The other options, while related to different aspects of crop insurance, do not capture the primary function of approved yields in establishing the minimum guarantee of revenue. Subsidized rates, payout limits, and premium discounts are important elements of crop insurance but are not directly linked to the core purpose of approved yields.