The scheme mitigates the financial risks faced by farmers due to unpredictable weather events like floods, droughts, hailstorms, and cyclones. It also addresses losses caused by pests and diseases, which can devastate crops. By providing financial security, the scheme helps stabilise farm incomes and encourages the adoption of modern agricultural practices. However, farmers must report losses within 48 hours to ensure timely claim processing, and non-loanee farmers need to apply before the seasonal deadlines to benefit from the coverage.