What You Need to Know About Farmers Market Insurance

As the popularity of Farmers Markets continues to grow – the USDA estimats there are approximately 7,175 markets in 2010 – farmers market associations and market managers are starting to insist that all participants have a commercial general liability insurance policy. Unfortunately, not many insurance companies specialize in this coverage, and farmers market managers and vendors do not understand much of the insurance industry’s jargon.

A basic market or vendor insurance policy is structured to give a wide range of coverage in order to protect the market or vendor against lawsuits. The main component of a short term policy is liability coverage. This form of insurance pays for damages if someone is injured or if there is damage to property belonging to someone attending the event. Additional insureds can also be added to policies to protect the organizer, venue, etc., from claims arising out of the operations of the market or vendor.

Liability insurance policies cover the market or vendor in the event that an attendee is somehow injured from the vendor’s display or products or damage is caused to the venue by the vendor.

Question: Is my property covered under a general liability policy?

Answer: The general liability policy excludes property that you own, rent, borrow, or property that is in your care. This exclusion exists because if you do have property that fits this description, there are separate property policies that are available to insure such exposures.

Question: What type of property does the general liability cover?

Example: An example would be a patron whose clothes are damaged when he trips and falls over an exposed extension cord you have improperly laid for your event. Because this property (his clothing) was not owned, rented, or borrowed by you or in your care at the time of the damage, the general liability policy would pay for the damages to these items.

Question: If I name someone on my policy as an Additional Insured, does it mean they don’t need their own separate insurance?

Answer: No, they would still need their own insurance in order to be properly protected. A common misconception with additional insured’s is the belief that if they are named as additional insured on a policy, they don’t have to worry about buying their own insurance. However, an additional insured only has protection under your policy if they are not responsible for the claim. They would not be protected under your policy if they were at fault for a claim.

The reasoning behind this is simple. If you are responsible for a claim, your own insurance should provide protection, including providing protection for the additional insured’s. If an additional insured is responsible, their own insurance would have to provide them coverage. If you are both equally and partially responsible for the same claim, then each would rely on their own insurance for protection.

Example 1: As a vendor, you are attending the Great Pumpkin Farmer’s Market, and have named Great Pumpkin on your policy as an additional insured as required in your vendor agreement. Through no fault of Great Pumpkin, a patron slips and falls in your booth and brings suit against you and Great Pumpkin. Your policy would provide coverage for both you and Great Pumpkin.

Example 2: Same scenario as above. But instead of slipping and falling in your booth, a patron falls in a common area near your booth, like an aisle. The customer sues both you and Great Pumpkin. Your policy would protect you, but would not provide protection for Great Pumpkin. They would have to rely on their own insurance.

Question: What are Occurrence & Aggregate Limits?

Answer: The Occurrence limit is the maximum amount the insurance company will pay per incident, regardless of the number of persons injured (claimants).

An Aggregate means the same as a cap. It’s the total amount, regardless of the number of separate incidents; the insurance company will pay out for all claims during the term of your policy.

Example: Your policy has a $1,000,000 Aggregate limit. During the term of your policy you have 3 claims that are awarded against you. $250,000 was awarded on one claim, $500,000 was awarded on the second claim and $300,000 was awarded on the third claim. Total amount awarded: $1,050,000. The insurance company would pay a total of $1,000,000 (Aggregate max policy limit). You would be responsible for the balance of $50,000.

Question: What is Products Liability Insurance?

Answer: Products liability (including completed operations) insurance provides protection for you against injury to members of the public caused by a defective product you manufacture, sell, or give away.

Most, but not all, general liability policies automatically provide products liability/completed operations coverage. Sometimes, we are unable to provide this coverage if your products are considered hazardous; for example tobacco, cosmetics, motorized vehicles, etc.

Here are a few examples of product liability claims:

Example 1: A customer purchases a souvenir t-shirt sold by the vendor at a market. The shirt was improperly labeled and contained fabric the spectator was allergic to. Products liability insurance would provide coverage to the vendor for any resulting claims.

Example 2: A food vendor, selling chicken dishes improperly prepares the food causing bacteria to develop. As a result, some customers get food poisoning. Products liability insurance would provide coverage to the food vendor for any resulting claims.

Other options for short term insurance policies include coverage for the cost of medical care to someone who is injured as a result of the exhibitor at the special event, whether the holder of the policy is liable or not. Coverage for vehicles used at the event also can be included.

Short term insurance policies differ from company to company, so you should always consult your agent to understand exactly what the policy covers.

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