Rare coverage: options for mad cow policies are limited for cattle growers.

The cattle growers who sustain the United States' $175 billion beef industry are going to have a hard time obtaining private coverage against losses from mad cow disease, as only two companies advertise it.

Making matters worse, one of those companies stops writing policies during a disease outbreak, while the other doesn't offer any income protection.

"I'm surprised there are actually two companies out there," quipped Jeffrey S. McDowell, spokesman for Boise, Idaho-based General Fire & Casualty, Co., one of the two firms offering the policies.

Most policies covering agribusiness specifically exclude mad cow disease or Bovine Spongiform Encephalopathy from policies, leaving it up to niche underwriters such as General Fire & Casualty' and Denver-based Farm Credit Services Inc., which offers BSE coverage through Lloyd's of London.

Answering the Call

With the Dec. 23 announcement by the U.S. Department of Agriculture that a dairy cow in Washington state tested positive for BSE--which, though rare, is fatal if transmitted to humans through infected meat--cattle producers have been scrambling for policies. General Fire & Casualty began offering them in October, and fielded more calls about the policies in the week after the announcement than in the entire month leading up to it, McDowell said.

Farm Credit Services began offering BSE policies on July 1 through Crowe Livestock Underwriting Ltd., an underwriting syndicate of Lloyd's of London. The insurance is designed to supplement payments that would be made by USDA in the event of a BSE outbreak.

Farmers that don't have an FCS policy now, though, are out of luck for the time being. FCS earlier announced that if a case of BSE is suspected, under writers would stop accepting new farms until the cases are brought trader control.

For the FCS coverage, premiums are $15 a head for dairy cows and $5 a head for feedlot cattle, for a herd valued up to $1 million. Premiums are higher for herds worth more than that. The policy period is annual, and there is a $1 million per farm cap on the policy, as well as a cap of $20 million of coverage per state. Policies exclude livestock younger than six months or older than eight years. The indemnity is 15% of the market value at the time of slaughter, up to 15% of $1,700 per head for dairy, cattle and 15% of $700 per head for feeder cattle. It also covers loss of income. There is a 10-day deductible and includes a payment per day up to a maximum of 90 days.

The General Fire & Casualty policy, dubbed "CattleGuard," offers a monthly per-head premium to account for inventor), changes. Coverage is up to $5 million. The company offers the policies in the West and Midwest: Arizona, Colorado, Idaho, Iowa, Kansas, Missouri, Nebraska, Nevada, North Dakota, Oklahoma, South Dakota, Texas, Utah and Washington state. The company has fried for regulatory approval in Oregon, Montana, Minnesota, Wisconsin, Illinois, Indiana and Kentucky.

The General Fire & Casualty policy requires a number of "biosecurity guidelines" intended to make sure that BSE doesn't enter into an insured's herds, McDowell said. The policy is part of a package that also covers foot-and-mouth disease, rabies, anthrax and other diseases. Due in part to the increased herd security measures, the policies also cover outbreaks even if they are the result of an act of terrorism.

The General Fire & Casualty policy does not offer revenue protection, McDowell stressed. That's significant because experts have declared that cattle prices are almost certain to plummet. The Colorado-based National Cattlemen's Beef Association, however, has historically opposed revenue-protection insurance.

Optional Policies

"The cattle industry is pretty much on record as being against it," McDowell said. "They feel that it's a risk inherent to the industry and that if you're a weak operator, you shouldn't be in the business, essentially."

Product-recall coverage, meanwhile, is available to a limited extent, with American International Group Inc., Lloyd's and Aon Corp. all advertising policies in the product-recall market. Mad cow disease is thought by health officials to cause an offshoot of the neurological disorder Creutzfeldt-Jakob disease in humans. That offshoot, called Variant CJD or vCJD, is invariably fatal, causing schizophrenia-like symptoms, including jerky movements, visual disturbances and rapidly progressive dementia.