Liability and insurance on a market farm

Liability is a major concern for us in running this kind of farm, for all sorts of reasons in our paranoid and litigious culture. There’s product liability, in the event someone feels our products made them sick. There’s worker liability, now that we’re planning on hiring help. There’s visitor liability, an especially frightening prospect with children touring a working farm. There is liability on the farm, liability while transporting farm products, liability while set up at a farmers market (let’s say someone trips over a tent pole; it happened last year).

Then there’s the related question of insurance, not just against liability issues, but hazards. Insurance for farm equipment and supplies, insurance for harvested products in storage, insurance for crops in the field, etc. In theory, and as we’re taught in this culture, we need insurance for every possible danger that could happen or that we could be sued for. Except that the more we interact with the insurance system, and ask questions, the more we’re convinced it’s at best flawed and unreliable, and at worst an outright scam. Let me elaborate:

First, insurance has to be the only business in which a consumer isn’t allowed to read or evaluate what they’re buying. Every insurance agent/company we’ve worked with refuses to let us read the actual wording of the policy they want to sell us, instead simply assuring us to take their word for it. Only by paying for a policy can you read a policy. The only exception was an agent who agreed to let us “borrow” a copy of the policy, if we promised to bring it back soon and not tell anyone or he’d get in trouble. It’s not like these are proprietary or customized; in most cases the policies are old boilerplate. In one case, the highly protected policy we paid to see was written in 1988 and not even by the company selling it.

Second, the wording is nearly impossible to understand even for graduate-educated scientists, and offers enough vaguely-worded phrases to allow any underwriter more than enough room to wiggle out if desired. So far, most agents we’ve worked with haven’t even read some of the policies, and just rely on calls to an underwriter to answer questions. They don’t even know what they’re selling, much less be able to offer a concrete promise that the policy will do what it says it does. Multiple times, we’ve received an assurance from an agent (or their underwriter) that a policy does or doesn’t do something, and then had to correct them with the text from their own policy.

For example, two farm policies we’ve reviewed include specific exemptions that they do not cover liability issues related to pollutants, which are defined as any potential irritant or waste product used or produced on a farm, even if necessary for the operation of a farm. This is meant to include things like diesel, but is written broadly enough to include manure. Does this mean our product liability won’t cover any potential accusation of illness from the use of manure as fertilizer, even if used in accordance with NOP standards? This is not a hypothetical case, given the current national hysteria over food safety. Why would we pay thousands of dollars for a policy written to give an underwriter more than enough room to dump us for “contaminating” our fields with manure six months before harvesting anything?

Then there are the outdated definitions of “farming”. We run a modern diversified farm, whose real and potential income streams include sales of produce, wood products, crafts, processed food products, agritourism educational offerings, and more. Of these, all of which are reliant on the overall existence and operation of our farm, only raw produce is described and defined as covered under farm insurance policies, which specifically say that any other “business” not defined as farming (in the sense of growing crops) is not covered in any way by the policy. So when visitors pay for a farm tour, or buy a cornhusk doll, or eat our cornmeal, we may have no liability coverage. So much for opening a farm up for customer inspection, if the tour isn’t covered by our insurance because it’s a separate “business”. Insurance companies still think “farming” means growing a single crop and taking it to the elevator.

From a liability perspective, we’re better off shutting the gates and never letting anyone in here, even though that’s completely against the rational model of direct-market farms being open for customer inspection. And let’s not forget the outdated sense of what constitutes “marketing”. If a farm policy even considers marketing as something other than taking grain to an elevator or cattle to a sale barn, it only describes it as “operating a farm stand on the premises“. No concept of farmers markets, CSAs, or other modern farming models. So again, even the farm policies available don’t actually cover the kind of business we run.

I could keep going, but this is long enough. The point is that we’re trapped. Either pay thousands of dollars of hard-earned money every year to an insurance company for a policy that may or may not actually protect us from anything, and is worded to allow the company to define terms any way they want and weasel out of an issue, or go it alone and do our best to remove chances of liability in the first place by being extra-careful in produce handling, holding tours, and so on. That last bit is sensible, of course, but leaves us wide open to frivolous or even potentially accurate suits. We debate this constantly among ourselves, as farming is not lucrative enough to make the costs of insurance remotely comfortable, yet it’s frightening to go alone in a society where even friends can be forced to sue one another by insurance companies seeking to avoid liability.

Finally, there are the companies that just don’t cover some things, period. A certain large insurance company, whose name implies they used to cover people like us, informs us that they (a) don’t cover any farm that engages in sales of poultry of any sort (eggs, meat, etc.), even if that’s a tiny portion of the overall business, and (b) don’t offer workers comp insurance to any type of farm. Lovely.

As I’ve said before, we’ve concluded that going into business on one’s own is one of the riskiest decisions anyone could make. It’s sad that a choice which carries so much econonic and social benefit is the choice most impaired by every aspect of our culture and politics. We’d be far safer sticking to being salaried employees in an office, with a nice garden at home. And until that changes, a lot of other factors in America will stay the same.

5 thoughts on “Liability and insurance on a market farm

  1. This is really interesting. It seems like there is a major disconnect between the law and insurance policies and the diverse strategies farmers are using to survive. I hope that the laws catch up. In some states, agritourism laws have been passed to limit liability, but that seems like the exception, and in most places agritourism seems to fall through the legal cracks, making it harder for farmers to pursue.

  2. Michelle,I think even in places where laws limit agritourism liability, the underlying problem is still the same. Policies which are not really written for people like is are still not really going to cover these situations. 1980s-era policy wordings just can't be applicable (we found hilarious references to "methods for storing information on tapes, reels, and other media").It's also that no one reads the fint print. The farmers who referred us to companies they used couldn't have read their own policies, because when we looked at the wording it clearly didn't do what they thought it would do. I hope they never have to make a claim.

  3. What's interesting and what most people don't know is that there really is very little to no difference between most insurance policies from company to company. Almost every policy is written by the ISO (Insurance Services Office) and then revised/tweaked by individual companies. But for the most part, the covered vs not-covered language remains the same.Liability is especially tricky from a claims stand point, because it's such a gray area. i get calls all of the time (because this is what I do for a living) from Agents asking whether something would be covered or not and the answer is almost never a simple yes or no. Policies used to be easy to read, with common language and terms that everyone could understand. However, thanks to our litigious society policies now need a full 3 paragraphs to describe what they mean by "mold" or a full paragraph to describe "flood."Just my $.02 to add to the discussion 🙂

  4. Great input, Ryan, thanks.It would be nice to see political leaders attempting to address practical issues like this rather than grandstanding on larger, perhaps unsolveable issues.