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What if a customer gets hurt while on my farm, or gets sick from eating my farm products?

This is a legitimate concern on many farms, particularly those that welcome customers onto the farm and those that market directly.  There are some very practical and successful ways to minimize these risks.

Acquire the insurance you need to protect yourself.

Several kinds of insurance may be appropriate, depending on your operation.

  • Farmers Comprehensive Liability Insurance covers on-farm accidents affecting farmers, employees, guests, and customers. It does not replace Worker's Compensation Insurance and only covers activities considered "farming."  This is usually defined to include production and farm stand operations but not other forms of marketing.
  • Commercial Business Insurance may be necessary if your activities are not considered "agricultural." This insurance is appropriate if you sell at farmers' markets or even farm stands if you sell more than a certain percentage of products that originated off your farm.
  • Owners of small operations may be able to expand their homeowners policy to cover farm and marketing activities.
  • Product Liability Insurance. The policies mentioned above are unlikely to protect you if customers are injured as a result of eating your farm products. You may want a product liability insurance policy that will protect you against this sort of liability.

Resources:

  • The Legal Guide to Direct Farm Marketing. This guide discusses recommended insurance coverage for direct market farmers, including product liability, as well as covering operations that run a farm stand, pick your own operation, CSA, or other marketing venture. This is available at http://www.smallfarm.org/bookstore/index.htm.

Make sure your farm and farm products are safe for customers.

Strategies:

  • Make sure that all farm areas that customers visit are safe and posted with cautionary signs where appropriate.
  • Learn about farm product safety, particularly for value-added products.

Resources:

Consider organizing your farm business as a corporation to limit liability.

Strategies:

  • Incorporating your farm can protect you, your family, and your farm team from many types of liability. You can learn how and why you might form a farm corporation through any of the business planning resources listed below.

Resources:

  • Planning the Financial/Organizational Structure of Farms and Agribusiness Firms: What Are the Options? This guide focuses specifically on farm organizational structure and discusses how to set up a farm corporation. Available from http://www.mwpshq.org/.
  • Tilling the Soil of Opportunity is an agricultural business planning class and workbook. It is offered every winter in Massachusetts. The curriculum includes information on choosing a legal structure for the farm. To find out about upcoming classes, contact Rick Chandler of the Division of Agricultural Resources at (413) 577-0459 or rchandler@umext.umass.edu.
  • Your local Small Business Development Center (SBDC) has information about appropriate classes as well as written materials that discuss various legal structures. To find your local SBDC, contact (413) 545-6301 or http://www.msbdc.som.umass.edu/.
  • Building a Sustainable Business: A Guide to Developing a Business Plan for Farms and Rural Businesses. This self-study guide to farm business planning includes a discussion of choosing an appropriate legal structure. Available from the Minnesota Institute for Sustainable Agriculture at (802) 656-0484 or viewable online at: www.misa.umn.edu/publications/bizplan.html.
  • The National Agricultural Risk Assessment Library. This website features many publications on business planning and managing the financial risks of farming. http://www.agrisk.umn.edu/

 

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