Insurance, Liability, and Regulation
What types of insurance does our market organization need? Where should we get it?
Even if you do everything you can to make sure your market is safe for your vendors and your customers, accidents can still happen. Obtaining the proper insurance provides you with a safety net to protect your market from a lawsuit that could hinder market operations. Here are some of the most common types of insurance to consider:
Liability insurance, often called slip and fall insurance, protects your market in case a customer experiences an injury during market hours. Many markets have this insurance and many property owners will require this of a farmers market if you do not own the property. Many farmers markets also require their vendors to have their own liability policies. Take a look at FMC’s Farmers Market Insurance Tip Sheet, and watch FMC’s webinar Making the Most of Your Market Insurance Policy and Minimizing Market Liability Risk.
As an added assurance, a market should also establish a “Hold Harmless” clause in their market policies in which vendors sign an agreement that they will not hold the market liable for any loss, damages, liability, claims, suits, costs, and expenses they incur related to their involvement in the market. Here is an example of Galway Farmers Market’s Hold Harmless Agreement.
Food is the center of business. Customers from near and far visit the market to meet with vendors. While your vendors’ quality standard is high, sometimes things fall through the cracks or variables completely outside of control take over. A customer could have an allergic reaction from a product without a clear label they purchased from a vendor. It’s a risk they face every day on the job and it could become a reality. Product liability insurance is designed to protect vendors if a customer gets sick from a product they purchased.
FMC has worked with Insurance Canopy for product liability coverage that is designed to respond to defects. You can learn more at FMC Explores Farmers Market Insurance Options.
If the farmers market owns the property on which the market is located or has any property, you should consider property insurance to protect you from any damages.
Chances are, if someone sues the market for an injury or illness, they are going to sue all parties involved, including the vendor, the market, and the property owner. Because of this unpleasant prospect, many markets ask their vendors to list them as “additional insured” on a vendor’s liability policy covering the market. The Understanding Liability Insurance Section of the Farmers’ Market Federation of New York’s Farmers Market Manager Training Manual explains this concept well.
Directors and Officers Liability:
This type of coverage is designed to protect your board of directors in the event of a lawsuit. Claims could come from members, donors, and individuals. Veracity Insurance Solutions offers comprehensive directors and officers liability insurance with additional coverages to customize a policy that fits your needs. You can also learn more about the D&O Policy made available to FMC members through Campbell Risk Management.
Workers Compensation and Unemployment Insurance:
Markets that hire employees will have to look into worker compensation insurance. Depending on the type of coverage you should have, we recommend checking with your state and local government for more information. Our partner, Insurance Canopy offers workers compensation insurance.
Incorporation as Risk Management:
Zachary Lyons from the Seattle Farmers Market Association notes that it is a good idea to think about incorporating your market organization such as through an LLC, corporation, or nonprofit as it can help protect the individual staffers, volunteers, and board members from liability if the market itself gets sued. He explains that, “in essence, the act of incorporation is like another level of insurance protection.” If you are considering incorporation, be sure to be familiar with incorporation laws pertaining to your state.
Where should we get insurance?
A private insurance agency will be able to offer these types of insurance policies for your market, but first, check to see if your state’s Farmers Market Association offers a policy or suite of policies for their members at a special group policy rate. In addition, your local department of agriculture or farm bureau may have a group rate. As purchasing insurance can be a large expense, make sure you fully understand what is included in the policy and be sure to shop around for the best price before purchasing. FMC has worked with Campbell Risk Management to make affordable farmers market specific market liability policies available to its members.
FMC has partnered with the Food Liability Insurance Program (FLIP), a leader in the liability insurance industry for food vendors. They insure over 19,000+ food businesses and can provide coverage in all 50 states. By obtaining liability insurance, each vendor has a financial safety net to protect their business and coverage gives them an opportunity to participate in events where liability insurance is required.
For participants who sell non-food products, FMC has partnered with Artists, Craftsmen, and Tradesmen Insurance that offers affordable comprehensive liability coverage for this space. Vendor liability insurance is designed to protect against third-party general liability claims such as personal injury or property damage that arise out of business operations. They can choose from their annual or show policy and can even add unlimited additional insureds for free.
Additional Resources from the Library:
- Washington State Farmers Market Association’s General Market Liability Insurance Information
- University of California Small Growers Program’s Guide to Managing Risks and Liability at California Certified Farmers Markets
What types of insurance should our market’s vendors have?
General Liability Coverage:
Injury and property damage can be a nightmare, especially if it leads to a lawsuit. We live in a litigious society and legal action is always a possibility. A lawsuit could range from hundreds of dollars to thousands of dollars very quickly. This is why it is so important to have business liability coverage.
Product Liability Coverage:
Selling to customers means the risk of something going awry with the product, such as lack of food safety measures. Product liability is designed to cover product defects that cause sickness or injury.
Business Personal Property/Inland Marine Coverage:
Vendors work with several appliances and gadgets on the job. There’s a possibility of damage or theft. Replacing the item in a timely manner isn’t a feasible option for many people. Business personal property/inland marine coverage is designed to respond to these instances vendors may face. This type of coverage is for movable items over land and does not cover a building/structure.
Damage to Premises Rented Coverage:
This coverage applies to vendors who rent out space. It can be a crippling expense to face alone. If a vendor causes property damage, such as a fire, damage to premises rented coverage is designed to respond.
Watch the FMC webinar Understanding Liability Insurance Section of the Farmers’ Market Federation of New York’s Farmers Market Manager Training Manual for more information.
About FLIP: Vendors can get liability coverage completely online through the Food Liability Insurance Program (FLIP). All they need is to fill out the online application form, pick the coverages, and checkout. From there, vendors will have access to their proof of insurance certificate and can add additional insureds. Vendors can add an additional insured, such as a farmers market to their policy and coverage can extend to the market if any claims occurred during the event.
How do we ensure our vendors have adequate insurance?
An additional insured is an organization or person who is not automatically included as an insured under an insurance policy and who is included or added as an insured under the policy at the request of the named insured. Accidents can happen at any station and a customer may sue a vendor. Most of the time, they will sue all parties and try to get more money. FLIP’s policy allows vendors to add additional insureds online and can extend coverage to your event if there’s no fault on your part.
Our partner, the Food Liability Insurance Program (FLIP) offers comprehensive liability insurance coverage and gives vendors the option to include additional insureds. They offer coverage for businesses grossing up to $500,000/year and makes it easy for businesses of all sizes to get covered. Obtaining insurance and adding additional insureds can be done all in the one place.
Here are some resources that might be helpful to your vendors as they are looking into insurance policies for their farm:
- University of Wisconsin Cooperative Extension’s Risk, Liability, and Insurance for Direct Marketers
- The National Agricultural Law Center’s Farmer’s Legal Guide to Producer Marketing Associations
- FMC’s webinar Producer Liability: Understanding & Communicating Vendors’ Risks and Insurance Needs
- The Farmers Market Legal Toolkit, a partnership between the Center for Agriculture and Food Systems at the Vermont Law School, FMC, and the Northeast Organic Farming Association of Vermont.
Are there certain things that we can do to reduce the likelihood of someone getting hurt or sick at our market?
There are many things your market can do to prevent your customers from getting hurt or sick at the market. Taking precautions when it comes to safety upholds the integrity of your market, which can lead to ongoing success.
Preventing Customers from Getting Hurt
Risk management is very important to make your market as safe as possible for your vendors and your customers. Take precautions to ensure safety and prevent your market from being sued. Address problems and safety hazards immediately and document these actions to show that you took all preventative measures. Here are some things to consider to prevent individuals from getting hurt at your market:
- Develop a Farmers Market Safety Checklist. Check out the example in the University of California Small Farm Program’s Guide to Managing Risk and Liability at California Certified Farmers Markets or look to the Risk Management Section of the Washington State Farmers Market Manual for more information.
- Use signs, cones, or ropes to make sure market traffic flows in the right direction and prevents customers from going into areas where they might get hurt.
- Make sure your vendors practice canopy safety. Take a look at Washington State Farmers Market Association’s Canopy Safety 101.
- Develop a Crisis and Emergency Plan. Some helpful resources include:
- Flipchart of Emergency Procedures by the Michigan Farmers Market Association
- Market Umbrella’s Market Day: Weather
- Document any actions taken to enforce your safety rules with your vendors to show that you took proper action to prevent injuries.
Preventing Customers from Getting Sick
Food safety measures are put in place to eliminate or reduce the risk of someone getting sick from food through a food borne illness. One of the first steps to ensuring food safety at your farmers market is to be familiar with the federal, state, and local regulations regarding what types of products can be sold at farmers markets and what licenses or permits your vendors will have to obtain to sell or process certain products. For example, many value-added or processed products must be processed or prepared in a licensed facility. As these regulations vary at the state and even local level, it is important to contact your state and local departments of health and agriculture to understand what regulations pertain to your area. Some organizations have developed guides at the state level to help farmers and farmers markets navigate these regulations. Here are a few examples:
- Farmers’ Market Federation of New York’s detailed Food Safety Training Curriculum
- West Virginia Bureau for Public Health Sanitation Division’s Farmers Market Food Safety Vendor Guide
- Oregon Department of Agriculture’s Food Safety at Farmers Markets: Information and Guidelines
- New Mexico Farmers’ Marketing Association’s Suggested Sampling Guidelines
- Marin Farmers Markets Hand Washing and Food Sampling Requirements, Guidelines, and Procedures
While the federal government does not currently mandate food safety regulations at the farm-level, the Food and Drug Administration has issued guidance on food safety, which spurred the development of Good Agricultural Practices (GAPs). GAPs provide a list of recommended protocols that can be implemented at the farm level to ensure food safety. As GAPs vary by the type of farming operation and the commodities that are produced, they are not one-size fits all procedures and may not work for small farms or farmers markets. Nevertheless, it is still important for farmers market growers to start thinking about food safety plans and training.
Take a look at the article, Filling the Food Safety GAPs in the Farmers Market Coalition’s Newsletter for more discussion of this issue or take a look at FMC’s Information Marketplace Webinar Food Safety First: GAPs and Food Safety Issues at Farmers Markets. For more information on GAPs, check out Cornell University’s National GAPs Program.
Lastly, food must be handled, displayed, and stored properly at the market. It is also important to follow guidelines for cooking demonstrations and sampling products. You may also want to make sure vendors are following labeling guidelines and labeling products that contain one of the eight major food allergens (eggs, wheat, finfish, shellfish, peanuts, tree nuts, milk products or soy). Check with your local health department for specific guidelines on these topics, and be sure to check out Market Umbrella’s From Field to the Table: Suggested Food Handling Guidelines for Farmers Markets, Fairs, and Festivals.
What licenses and permits do we need to obtain and renew?
There are no required federal permits for farmers markets, but other licenses and permits vary by state, county, and town. Your state’s farmers market association, cooperative extension service, health department, city government, or chamber of commerce should know what regulations will pertain to your operation. You will want to check with your state department of agriculture, state and local departments of health, and city government to find out about any applicable permits. Permits that the market itself might have to secure include:
- A permit to use the site if owned by municipality
- Zoning permits
- A permit to build any structures
- A permit for playing music or holding special events
- Health permits for food demonstrations and sampling at the market
- A license to sell potentially hazardous foods such as cut melon, raw seed sprouts, garlic in oil mixtures, cooked plant food, and raw or uncooked meat.
- Permits for road closures
- State or local sales tax permits for selling flowers, crafts, or ready to eat foods (these may or may not be the sole responsibility of the vendor).
Your vendors will also be required to have various permits based on the types of products they sell. Make sure to be familiar with what is required of them, communicate this to vendors when they apply, and keep copies of their permits on file. Do not forget that the permits that your market or vendors will need will vary based on state and local regulations so be sure to be in contact with state and local departments of agriculture and health and your local government. To get an idea of some of the permits that may be required take a look at the Farmers’ Market Federation of New York’s Market Manager’s Checklist: Permits/Licenses/Certificates Required for Farmers Market Sellers and consider creating a checklist like this for your market. For more information on what permits the market might need, take a look at these resources in the resource library.
- Farmers’ Market Federation of New York’s Farmers Market Manager Training Manual
- Idaho State Department of Agriculture’s Idaho Farmers Market Manual
- The National Agricultural Law Center’s Farmers Market Rules, Regulations, and Opportunities
Can copyrighted music be played at our market?
The responsibility of obtaining the license is that of the market and not the musician who is playing the music, as ASCAP states in their Frequently Asked Questions: “Some people mistakenly assume that musicians and entertainers must obtain licenses to perform copyrighted music or that businesses where music is performed can shift their responsibility to musicians or entertainers. The law says all who participate in, or are responsible for, performances of music are legally responsible. Since it is the business owner who obtains the ultimate benefit from the performance, it is the business owner who obtains the license. Music license fees are one of the many costs of doing business.” For more explanation on how this pertains to farmers markets, take a look at the letter Hillsboro Farmers Market in Oregon received from ASCAP in 2010. As of 2013, FMC is still in negotiations with ASCAP and BMI about a potential special rate for FMC member markets. During these negotiations, ASCAP will waive any fees for FMC member markets. If you have any questions or would like to obtain a license, contact your local ASCAP representative.