Insurance and liability considerations for agritourism

Author: guest contributor Jerry Ford, Network Coordinator, Sustainable Farming Association

Insurance is very important for all farming operations, but is especially important for agritourism operations that host visitors on this farm. This article details important topics related to insurance for agritourism farms.

Image: Cory Ryan

This article was not written by an insurance professional or a lawyer. Please note that insurance policies vary across providers, and that agritourism activities like u-pick, farm stays, and tours all have different risks and considerations for insurance and regulations. This article is meant to serve as a starting place, but please reach out to a lawyer or insurance provider for more detailed information as it pertains to your specific agritourism activities.

Before talking about insurance, let's talk about the law.

Laws related to liability and agritourism

We are fortunate in Minnesota to have a statute that specifically protects those of us involved in agritourism: Minnesota Statutes; 604A.40 AGRITOURISM; IMMUNITY FROM LIABILITY.

This statute limits the liability of the farmer or agritourism professional: "an agritourism professional is not liable for injury, damage, or death of a participant resulting from the inherent risks of agritourism activities."

It lists many of things that you would want to do at your on-farm event and covers most potential hazards, including "natural hazards" and "ordinary dangers of structures or equipment ordinarily used in farming or ranching." See section (c) for that list (it includes "farm stay".)

However, it is important to note that it does not specifically cover activities that would normally not occur on a farm, and these could be open to interpretation: i.e. It could be argued that a hay ride would be a normal farm activity, but that a bounce house would not.

This statute applies whether the participants are paying or getting in for free.

There are important caveats. In order to be protected by this statute, the agritourism professional must be in compliance with it. Negligence can include if you commit an act "that constitutes negligence or willful or wanton disregard for the safety of the participant" and certain claims "arising out of the sale or use of alcohol at an agritourism facility." The SARE guide "Come & Get it: What you need to know to serve food on your farm" has some good examples of what could be considered negligent.

The easiest requirement to comply with, and yet the one that, at least in my experience, is very often overlooked is "Subd. 3.Posting notice." You are negligent if you do not "post plainly visible signs at one or more prominent locations in the premises where the agritourism activity takes place that include a warning of the inherent risks of agritourism activity." If you do not post these signs where they can easily be seen by your farm visitors, you are not protected by this statute.

Here is the sign that SFA provides for our on-farm events. If you do not already have such signs posted at your farm, it is an easy step to do.

So, let's say you have a guest on your farm and they get hurt and decide to file a claim against you. If you're in compliance with this statute, you are "not liable for injury, damage, or death of a participant resulting from the inherent risks of agritourism activities." However, that does not stop them from filing a claim or suing you and claiming that you were negligent.

Insurance considerations

Please note that, as I stated above, this is information from a layperson, not an insurance professional or lawyer. Here are some important notes:

• Talk to your insurance representative and ask very specific questions about how their policies apply to the various agritourism practices you’re using at your farm. Then tell them to show you where it is in the policy, or that you need it in writing.
• Policies can vary considerably from one company/underwriter to another.
• Understand that if you are negligent or if the incident in question is not covered by your insurance, the company may exercise “defense with the reservation of rights”: they will answer the claim, and then could withdraw from the rest of the proceedings.

A couple of terms to know:

• "Excess": If there is more than one policy in effect, then one policy will be primary. If settlement of a claim requires more than what's available in that policy, the second insurance may kick in. For example:
• Auto: If someone's car is damaged at your farm, auto insurance will probably be primary.
• Outside event management: a nonprofit organization or agency like Extension is producing an event at your farm. Their liability insurance should be primary. Hint: ask them to provide a certificate of insurance that extends coverage to you and your farm.
• "Endorsements and Exclusion": Clauses that are amended to the policy are Endorsements. Some of those endorsements stipulate what is covered, some state what is not covered. The latter are Exclusions. Read them all, and then ask questions.

Again, we are talking about liability insurance, not your farm/homeowner policy that protects your property. Often liability will be bundled with your property insurance (and others), but it is separate. At the very basic level, liability insurance:

• Provides for compensation to someone who experiences injury or damage on your property
• Provides you with legal representation in the event of a claim

There is also a distinction between this kind of liability insurance and the kind that covers your farm products after they leave the farm (the latter is called different names by different companies.)

For example, my farm has 1) a farm property policy that covers my buildings and equipment, 2) a liability policy that covers most incidents that may occur when an outside person is on our property, and 3) a product liability policy that covers us for personal injury claims about our beef and garlic after they leave the farm. All this is not cheap.

Then there's "Event Liability Insurance" and "Special Event Liability". It's possible that your farm liability does not cover special one-off events with attendance above a particular threshold (or some other definition of a special event.) Let's say you have a u-pick operation and glamping, and then you occasionally host weddings. The latter may require additional coverage as an event.

Now, you may also ask clients who do one-off events to provide their own event insurance, sort of like when the nonprofit or agency does an event on your farm. They can get single-use policies, and it’s best to ask them to provide you with proof that their policy extends coverage to you and your property (e.g. if your barn is damaged during the event) and covers personal injury and property damage to the guests. Then, their policy is primary, and yours would cover the excess if needed. Again, talk to your agent about how this would work.

For those of you who have animals/livestock there are additional considerations.

• There is another statute that may apply: Minnesota Statute 604A.12 covers certain livestock activity.
• On your own farm liability insurance, check if you have coverage for personal injury or property damage caused by your animals. If not, see if you can add it.
• If you have an outside group providing the primary insurance for a one-off event, check if they have coverage for injury/damage done by animals.

Infectious Diseases from animals

There are a lot of diseases that animals can spread to humans. Insurance for communicable diseases transmitted by your livestock to guests on your farm can be difficult to acquire, and may not protect you from a guest who seeks to sue for negligence. Doing everything you can to reduce the risks of transmission of these types of diseases on your farm is important and will show, if needed, that you have been proactive about protecting your guests.

So, here's what I now do at my farm:

• Post the signs where people can clearly see them, and then announce that they should read the signs.
• I do not let guests get close to the cattle (my only livestock.)
• I recommend that guests clean their shoes and thoroughly wash their hands.
• Provide access to real handwashing stands with running water, soap and single-use paper towels. Hand sanitizer does not replace handwashing. (Note that the FSMA Produce Safety Rule requires all farms covered by this law to make handwashing available to all visitors and employees)

If you are going to allow your guests to be close to animals, here are resources for you:

• UMASH at the University of Minnesota School of Public Health has a lot of signage, resources and information about keeping your customers safe. They have free signs you can order or download.
• The Minnesota Department of Health also has lots of downloadable signs and materials here.
• UMN Extension

In summary

Navigating liability insurance and understanding the statutory protections are complex, but they deserve our attention as agritourism farmers. Though many of us will go through our entire farming career and never have a claim against us, it only takes one to potentially put us out of business. We are fortunate in Minnesota to have the statutes that protect us, though it does fall to us to be sure we're compliant with them. And we are wise to remember that the statutes do not necessarily prevent claims against us, and it is our responsibility to research and procure the right insurance for our operations