Agritourism: Liability Considerations for Your Farm Part 2
In part 2 of this series, Carolina Farm Credit Corporate Attorney Lee Cobb shared information about the North Carolina General Statutes and agritourism. Every agritourism operator in the state needs to be aware of the statutes and post warning signs per the statute. Here, Lee shares additional considerations to help protect your farm, family, and visitors.
- Talk with your attorney about how best to protect you, your family, and your business.
- While North Carolina is a limited liability state for agritourism businesses, that doesn’t mean if an accident happened on your farm that you would not be sued. Find an attorney who understands agritourism and talk with him or her about your operation.
- Share your business plan and information about specific agritourism activities and events so your attorney can help assess risk level.
- Inquire whether it makes sense to set up the agritourism portion of your business as a separate legal entity from the rest of your farm business.
- Talk with your insurance provider about necessary coverage.
- “Despite North Carolina being a limited liability state for agritourism, that doesn’t mean that you shouldn’t have insurance,” says Lee. Share your business plan with your insurance provider. Share details about specific agritourism activities and events so your agent can help determine risk level and correlating insurance needs. For example, a pick-your-own pumpkin patch has a lower risk level than a 10-foot-tall haybale slide that ends up in a corn pit. Talk with your agent about your options. “If you’ve got five activities you may need a certain level of coverage; if you have 10 activities and double the capacity you may need a very different level of coverage,” says Lee. One size does not fit all when it comes to agritourism. “Insurance is a relatively affordable way to mitigate risks when it comes to agritourism activities. You want to make sure that your family and your operation are not so negatively impacted that you can’t continue to do what you love. Insurance helps protect you from worst case scenarios.”
- Negotiate your premiums and coverage limits. Make sure your maximum coverage limits are high enough to meet any potential judgment.
- Review the per occurrence maximum coverage on your policy. For example, you may have a $250,000 per incident coverage with a maximum of $1 million in one year. That gives you an unlimited number of claims up to $1 million but no more than $250,000 per claim. If someone gets hurt due to wanton disregard on an employee’s part and places a claim for $300,000, the insurance will cover $250,000, which means you are $50,000 in the hole. Maybe you need to look at a policy with $500,000 per claim. “There are lots of combinations and different options so make sure you talk with your agent to get a clear understanding of your policy and its coverage in light of your events and activities,” says Lee.
- Review your insurance policy at least annually and any time you add a new feature to your agritourism business. Always talk with your insurance provider any time you make changes. While new features may add to your policy, conversely the removal of certain features on your farm may mean a reduction in costs. Also review protections you have in place such as required signage. On a regular basis repair any problem equipment or facilities.
- If you are just getting started, check with an agritourism trade association for referrals to professionals who are knowledgeable about agritourism. The N.C. Agritourism Networking Association can be a helpful resource.
- Consider waivers. Some agritourism operations require guests to sign waivers that they understand the inherent risks. While this step isn’t required by North Carolina statute, it can be helpful. “Waivers are never a bad idea,” says Lee. “They also could be dictated by your insurance policy, so check that. If you are required to get waivers, make sure you have a system so you can catch everybody that comes onto your property.”
- Ensure safety of homemade or home-preserved food products. Some low-risk foods can be produced at home. High-risk products must be produced in a non-home-based commercial facility. The Food & Drug Protection Division of N.C. Department of Agriculture & Consumer Services provides guidelines. Home inspections and/or laboratory testing may be required.
In part 1 of this 3-part series on agritourism, Victoria Patterson, NCDA&CS, shares marketing ideas; in part 2 Lee Cobb introduces information from the North Carolina General Statutes about agritourism.
Disclaimer: Nothing contained in this article is to be considered or construed as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. Additionally, nothing in this article is to be considered as authoritative as to advice on the obtaining of insurance. Carolina Farm Credit, ACA is neither in the business of providing legal services nor selling insurance. This article is intended for educational and informational purposes only. The information here is limited to descriptions of the law of North Carolina. Every state is different and North Carolina law will not apply in other states. Each individual’s or entity’s operation is unique and each individual or entity interested in engaging in agritourism activities should obtain independent legal advice from a competent attorney licensed to practice law in their location. Additionally, laws change frequently and court cases can render prior general statements about the law inaccurate due to the passage of time. This blog post will not be updated and while information herein is believed to be accurate at the time of its writing, it may be outdated or inaccurate at the time of publication due to changes in the law. The only way to protect yourself from the risks described herein is to obtain independent legal counsel and to seek their advice concerning your contemplated operation.
By Leah Chester-Davis