There are various forms of liability that a small farm has to consider, especially in today's litigious society. At the most basic level are things like farm insurance, but we must also deal with product liability, visitor liability, worker/intern liability, and so on. Basically we have to either protect ourselves against everything, or risk losing everything. In this piece, I'm drawing both from our own experiences, and from the excellent book Market Farming Success, by Lynn Byczynski, editor of Growing For Market magazine.
Naturally, we wish to protect our home, farm, equipment, and other such things against loss or damage from storms, accidents, etc. Without a business, this is a pretty straightforward homeowners policy. Add in a farm business where you live, however, and it gets far hairier. For one thing, many insurance products are not set up to recognize a business in which home and business are integrated to the extent that our farm is. Second, fewer and fewer companies even offer policies relevant to farms at all, much less direct-market farms that sell to individuals (as opposed to commodity or wholesale farms selling to elevators, auctions, or processors).
One national company informed us that while they offer a farm policy, they would not cover any farm on which poultry were present, regardless of number or type or whether the poultry would even be included in the policy. Residual bird flu paranoia? Others just don't bother at all, or technically offer something but don't know their own policies. Another significant company attempted to sell us their farm policy, but we discovered multiple cases where their own underwriters (not just the agent) were completely unfamiliar with the farm policy and kept giving us wrong answers that we had to correct by quoting from their own policy. Reassuring. Our best bet turned out to be a Missouri-based company that does still write small farm policies (we were initially referred to them by another small farm we trust), but it ain't cheap. The concept of "business" just seems to jack up the cost of everything.
Anyone selling food items ought to at least consider product liability. If a customer somehow gets sick, or even thinks they did, they can sue the farm for damages. No matter how carefully you wash produce, it's always possible something might slip through and make someone sick, and there's always risks associated with meats, eggs, and so on. It's just the nature of food. But in our litigious society, it takes on a whole new level of risk. Can a small farm afford to fight such a legal battle, even if wrongly accused? So many take on product liability policies, or try to given that it's hard to find those for small direct-market farms as well. This is particularly true for farms selling at farmers markets where the sales may be made in lots of different locations, rather than one farm or farmstand like a CSA or U-pick operation.
And then there's the fascinating and disturbing question of whether you OUGHT to have the policy. We've been told by several reputable sources, including insurance agents, that having liability policies can actually invite lawsuits, because they create a target for the other party to shoot for. If you're a poor farmer with no insurance, the other party may realize they're not going to get anything out of you. But if you're a poor farmer with a $500,000 product liability policy, you've got something that can be taken, and you're a better target for legal action. Twisted, but apparently true.
Now we move on to the even more frightening question of liability for anyone present on the farm. Most small direct-market farms like and want to have visitors; that kind of openness is part of the concept of local, safe food. Whether it's member-workers on a CSA, customers on a U-Pick, or visitors on an official market farm tour, these folks are on your property and you are responsible for their safety. If someone gets hurt, through an accident or otherwise, what happens? Their insurance company wants to know how the injury happened, and when they see it was on a farm, they instantly realize that the farm could be responsible and pursue that option. Thus, even your best friend could be forced to sue you if they (or their kid) hurts themselves while on-farm and the treatment is covered by their insurance; their choice is between the lawsuit or paying for the treatment out-of-pocket. Insurance, after all, is set up NOT to want to pay if they can get someone else to do it. Even if you end up proving you weren't at fault, how many farmers can afford that kind of legal battle in the first place, particularly in the growing season?
And really, no matter, how safe you are, it's a farm. Accidents are possible. There's no way to guarantee that visitors, especially kids, won't somehow hurt themselves. We had one illuminating episode where a family's kids were having a great time meeting the goats and chickens, until I looked over to see the youngest happily dipping her hand into a water tub and licking her fingers. Interacting with the real world carries risks, but our society is so paranoid about the wrong kinds of risk that we're forced away from plain old responsibility and common sense. So either you get an expensive (if you can even get it) liability policy that could act as a lawsuit magnet (see above), or you play dice and don't get one, hoping that nothing happens and that if it does the other company will decide you're too poor to sue (heaven forbid you're actually a successful farm with assets to be taken). Or you severely restrict visitors and run very controlled tours, both of which are counter to the entire educated-consumer, personal-responsibility ethic of modern direct-market farms.
All of these things are just so frustrating. We're forced into paying a great deal of money to protect against things that have little to do with real farming, or shouldn't be as big an issue as they are, all so we can just run a business people want to patronize. None of this is a problem if you're just a homestead; a simple homeowners policy covers all this stuff easily. But the second you try to make a living doing these things, the money and hassle just starts flowing. The full cost of all these things could top $3,000 a year for us, and that's not counting the many, many hours we've spent talking to agents, poring over microscopic policy terms, and doing everything right to be responsible businesspeople and insurance consumers. All to protect ourselves from frivolous lawsuits rather than common sense.
Like everything I'll write about in this series, keep these things in mind when you buy from a local farmer or farmers market. Like most businesses, there are a lot of hidden costs that aren't apparent to consumers. And like so many of these situations, my complaint is not with the taxes or the insurance itself, it's with the dysfunctional and nonsensical way in which we have to partake in these requirements. If governments focused more on making things work in a common-sense way, we'd all be a lot better off. And maybe our produce would be a bit cheaper.