Agritourism Insurance: Protect Your Farm While Growing Revenue
According to The National Agricultural Law Center (NALC), agritourism is defined as the intersection of agriculture and tourism. Agritourism activities are designed to attract visitors to farms, with the "purposes of entertaining and/or educating the visitors and generating income."
This new business sector includes a wide range of activities, including:
- Pick-your-own fruits and vegetables
- Cut-your-own Christmas trees
- Dining (from ice cream stands to full meals)
- Wine tasting and tours
- Rides on animals or motorized equipment
- Wagon rides
- Hunting or fishing
- Petting zoos
- Living history farms
- Educational programs
- Camping and lodging
Impact of Agritourism
The U.S. travel industry is considered to be the country's seventh largest employer, with over eight million jobs. With the rising interest in destination travel and hands-on activities — especially for children — agritourism is poised to grow significantly.
Every five years, the U.S. Census of Agriculture is conducted by the Department of Agriculture. Over the five years between 2007 and 2012, the number of farms engaging in agritourism grew 30 percent. So did small farm revenues, with 24 percent more farms earning more than $25,000. On-farm businesses can help bring in new sources of revenue while building sales of existing farm products.
Liability and Protection
Farming is considered a hazardous profession because the occupation has a variety of inherent risks. These include equipment accidents, falls, injuries from animals and the physical strain of hard labor.
Each agritourism business creates specific liability considerations for farm owners. While farms are already liable for even unwanted guests, like trespassers, inviting visitors on the farm creates a higher standard of reasonable care.
Assess and Mitigate Your Risk
Depending on the type of agritourism business you're interested in, the scope of risk will vary.
For activities where visitors traverse the property or enter buildings, it's critical to identify and fix any issues possible. This might include grading paths and roads or fixing steps and floors. Clearly mark any hazards or areas where visitors shouldn't go. Make sure interactions with animals are supervised and that rules are clear.
Product liability exists when visitors consume raw and processed foods, whether samples or purchased. Food safety laws should be followed and employees need to be trained and certified. Information regarding allergens should be posted and labeled clearly.
Incidents on the property may involve customers injuring each other, such as a fender-bender, or employees who inadvertently cause a hazard through spills or carelessness. Creating a safety plan (and conducting regular inspections) is critical to staying on top of potential problems and properly responding when an injury or other crisis does occur. Consult with a lawyer to make sure you're covering all your bases.
On-farm activities require insurance above and beyond the standard liability coverage, usually under a commercial business policy. The extent of coverage depends on specific risks as well as the frequency of visits. If on-farm events are only held certain days of the year, then riders can cover for that period. Year-round or ongoing activities will, of course, require more comprehensive coverage.
As with any insurance, it's critical to understand exactly what is covered, the cost of the policy and level of exposure. The right mix of insurance products can help create peace of mind and confidence. Qualifying for coverage will most likely require compliance with state and local regulations regarding the proposed activity.
The myriad of regulations, rules and risks that accompany agritourism can often be daunting — but well worth it. Many states are now passing laws to help farmers diversify without incurring undue liability or costs. Agritourism laws by state can be viewed on the NALC's official website.
To be absolutely sure that you're in compliance with state laws and are mitigating risk on your farm, consult a legal professional.