Liability Insurance - Colorado Farm To Market

Liability Insurance

The increasing popularity of direct sales to consumers at farmers markets, on the farm and at roadside stands increases the opportunities for slip and fall accidents, encounters with pets and other potential injuries associated with consumers purchasing goods directly from vendors. Liability insurance should be a part of every direct market business to help reduce any possible legal and financial burdens that may arise from an injury or other claim brought against your business. Liability insurance for farmers markets and for vendors is important because it:

Transfers risk of the most common claims and lawsuits to an insurance company (however, not claims related to any intentional tort or contract claim).
Protects businesses from property owners, customers or other potential claimants.
Helps businesses focus on risk assessment, food safety, and good operating practices.
Serves as a contractual requirement to operate in the market.

Liability Insurance can be obtained from a variety of sources and may provide coverage for many aspects of a business, including property and people. It is important to know what and who your insurance covers. Producers and markets are both responsible for carrying insurance policies, but each policy may not cover both entities.

The cost of insurance depends on several factors, including the size and type of the operation and unusual hazards that may exist (ponds, hayrides, road side stands). Some policies may include coverages, where others may need to endorse the coverage on to the policy. Examine several deductible options to keep the premium more reasonable.

Here are some liability insurance considerations to be familiar with when applying for coverage.

Who to Insure: Coverage is provided to the Named Insured on the policy. A Named Insured can be a sole proprietor, partnership, corporation or other legal entity.

An Additional Insured is a person or organization that enjoys the benefits of being insured under an insurance policy, in addition to the entity that originally purchased the policy. Additional Insureds are only covered if the claim against them is due to the negligence of the Named Insured. Being named as an Additional Insured is valuable but it does not guarantee that insurance will be available to protect you.

Business Infrastructure Considerations:

Identify the type of coverage needed, and make sure the policy has that type of coverage.
List business activities to determine coverage.
List all potential market products and be sure that those foods are covered (meat, eggs, dairy products, and/or prepared foods).
Identify potential infrastructure hazards and weather considerations.
Identify potential risk zones: parking lots.
Identify special event requirements/activities: How will pet injuries be covered? Both injuries caused to pets, and injuries caused by pets).

Legal Costs: Even if you are not at fault, claims can require significant legal fees. An insurance company has the duty to defend the insured. The insurance company will decide whether it wants to contest or settle the claim. Generally, legal fees do not affect the policy’s limit. Without an insurance provider’s help, these fees can often be disastrous for a market manager or a vendor.

Types of Insurance:

Premises Liability Insurance: This protects you if you should cause injuries to the public or damage property that belongs to the public. You may need Farm Liability coverage, General Liability coverage or both.
Employer’s Liability Insurance: This is to protect you in event of injuries to your employees.
Property (Physical Damage) Insurance: Provides protection against loss to the property owned by the farmer or rancher, such as buildings, equipment and merchandise.
Product Liability Insurance: This covers injuries which may arise out of products that are raised or sold by you.
Inland Marine: owned or rented property
Rain Insurance: Insures is the event cannot take place due to rain.
Liquor Liability: Protects a person or organization that distributes or serves liquor.
Directors and Officers Insurance: Provides financial protection for the directors of your company or non-profit in the event they are sued in conjunction with the performance of their duties as they relate to the company. However, a board member of any organization, including a non-profit, may be sued for liability resulting from the actions of the board. Remember, a board member of a non-profit can be held liable for the actions of the board. This can cover both the indemnity costs and defense costs.
Event Coverage: Rated on a number of factors such as:

Number of attendees
Type of event
Projected revenue of the event
Experience – track record of previous events

Managing Risk: Managing risk through risk-reducing activities provides a means for business owners to minimize possible claims brought against the business. The following activities may be incorporated into a business practice to minimize potentially hazardous environments for your customers or visitors. Be sure that all employees and volunteers are familiar with any risk-reducing activities. If you operate a farmers market, be sure that all market vendors are familiar with the risk-reducing activities of your business.

Use hold harmless agreements or liability waivers signed by a vendor. A hold-harmless agreement indicates that the person signing the agreement will not hold the market liable for damages or injuries sustained at the market. Many questions exist about the effectiveness of hold-harmless agreements in the management of risk. Such agreements may not prevent liability claims or lawsuits nor decrease the obligations of the market to create a safe environment and ensure the sale of only safe products at the market. If hold-harmless agreements are used by a market, it is suggested that they not be the only method of risk management but, rather, used in combination with other methods.

Conduct ongoing risk assessments. See Assessing Risks at Farmers Markets for specific ideas on reducing risks associated with structures, tables, and surface conditions, equipment and facilities, fire and electrical hazards, first aid, parking and traffic, weather, security, staffing and reporting incidents that occur at the market.

Prepare for diverse weather conditions and cancel events during hazardous conditions.

Require that vendors at farmers markets list the market as additional insured on their policies and GET CERTIFICATES OF INSURANCE SHOWING THEIR PROTECTION. Require vendors to sign the market rules, and develop procedures for removal of a vendor who will not follow market rules.

Follow food safety practices and obtain required licenses before selling your products at the market.

Create an emergency checklist with phone numbers for police, fire, etc. and for insurance representatives, as well as a procedure sheet for use in case of an incident that might trigger a claim.

References:

Bollman, D. (2011). Making the Most of Your Market Liability Insurance Policy & Minimizing Risks,
Taggart Insurance, pg.1, http://www.coloradofarmers.org