Picture these scenarios.

• Your neighbor, a corn farmer, decides that he can make more money with less effort by having a corn maze on a portion of his farm property than in actually growing and harvesting the crop.
• Mary Jones owns a vineyard. What a great place to hold weddings and receptions—especially since she just built a glorious gazebo in which to hold these events.
• The dairy farmer, Max Yasgur, decides to rent out his farm to a bunch of musicians to hold a summer music festival in the little town of Bethel, New York. Welcome to Woodstock!

What do all of those scenarios have in common? They are examples of "agritainment" or "agritourism"—and none of them would have liability coverage under a farmowners insurance policy, either Insurance Services Office, Inc. (ISO), or American Association of Insurance Services (AAIS) based, unless endorsed or dealt with under a separate policy.

What other pursuits might farm owners/operators undertake in order to increase their income, provide a broader service to the public, help their kids make a few extra dollars, and increase their overall value to their community? Let’s take a look.

Consider these activities and special uses, and see what you think in regards to their being covered under an ISO/AAIS-based farmowners liability policy.

• Weddings and receptions
• Hayrides and pony rides
• Archery practice and lessons
• Hunting
• Bed and breakfasts
• Mazes
• Wine tastings
• Pumpkin patches
• Public fruit/vegetable picking operations
• A day on the farm
• Petting zoos
• Charity fundraisers
• Horseback and trail rides
• Backpacking trips
• Paintball
• RV parks
• Dude ranches
• Harvest days
• Swimming and hiking
• Haunted houses
• Cooking and canning classes
• Picnicking
• Rodeos

If you can imagine it, there is probably a "farm" operation that has conceived of it and is trying it or planning to try it.

So, you ask, what’s the problem? Or, if you prefer, what’s the beef? (Sorry, couldn’t pass that one up.) The problem is a relatively simple one. The definitions of "farming" in the ISO and AAIS farm liability coverage forms do not contemplate these exposures as "farming." As such, there would be no coverage provided under either form unendorsed.

Coverage Issues

ISO’s Farm Liability Coverage Form FL 00 20 10 06 specifically states

This insurance does not apply to: … b. "Personal injury": (1) Business Pursuits—Arising out of or in connection with a "business" engaged in by an "insured." … 4. "Business" means a trade, profession, occupation, enterprise or activity, other than "farming" or "custom farming," which is engaged in for the purpose of monetary or other compensation.… 7. "Farming" means the operation of an agricultural of aquacultural enterprise, and included the operation of roadside stands, on your farm premises, maintained solely for the sale of farm products produced principally by you. Unless specifically indicated in the Declarations, "farming" does not include: a. Retail activity other than that described above; or b. Mechanized processing operations.

The AAIS GL-2 Ed. 2.0 Personal Liability Coverage (farm) defines "farming" under definition #8 to mean

… the ownership, maintenance or use of premises for the production of crops or the raising or care of livestock, including all necessary operations. "Farming" also includes the operations of roadside stands and "farm" markets maintained principally for the sale of the "insured’s" own "farm" products, but it does not include other retail activities.

The exclusions in the coverage form state, "This Personal Liability Coverage does not apply to: … 1. H. ‘bodily injury’ or ‘property damage’ which results in activities related to the ‘business’ of an ‘insured,’ except as provided for by an Incidental Business Coverage."

Unendorsed, neither policy would apply to agritainment or agritourism activities—unless the insured could prove that they were actually "farming" operations. While the exposures to injury (either bodily injury or property damage) may emanate from the insured’s "farming" operations, none of the items shown previously (in my mind) reach the definition of "farming."

Why Is It an Issue?

Consider the following.

• About 100 years ago, some 80 percent of the US population was involved in some aspect of farming. Today, it is a mere 2 percent.
• Consumers increasingly want to know where their food comes from, how it was produced, what’s in it, how it got to market, and more.
• Current USDA statistics reveal these farm numbers on a national basis.
  • Average farm size is 434 acres.¹
  • 54.6 percent of all US farms are less than 100 acres.
  • 56.6 percent of all farms produce less than $10,000 in annual farm sales. (Yes, you read that correctly.)
  • Another 18.9 percent produce from $10,000 to $49,999, annually.
  • Farm ownership is principally small business—86.7 percent of all farms are owned individually, family/sole proprietorships, with another 4.5 percent held in family-owned corporations. That’s 91.2 percent of all farms in the United States.
  • 52,000 US farms earn income from agritourism.²

Given numbers of that sort, is it any wonder why a small farm operation would look to various means other than farming to increase their overall income? Many of these farmers have inherited the property and/or it has been in the family for a generation or two, and they want to keep it in the family rather than sell it off to a larger farming operation or allow it to go into some other sort of production other than farming. After all, farming is in their blood and family. Besides, haven’t you sometimes imagined yourself owning a small little spread to raise the kids on or to have the grandkids visit? Throw in a few acres and a crop or two, and you too could be "farming."

In addition to the preceding, many state departments of agriculture are encouraging the use of farm lands in agritourism. After all, it brings folks out to the farms to get back in touch with their agricultural roots and helps them to understand where some of their food comes from. But it is also fraught with dangers.

Farms Are Different

Most people who have not been on or around a farm don’t understand the risks inherent with the property, let alone with the equipment surrounding them. Kids love to climb onto tractors, go wading into ponds, climb into trees and onto fences, chase after the animals, and the like. The dangers are inherent and everywhere. While some states have put into place laws that limit the liability exposure of farm owners, that does not make their liability disappear.

Besides, the farmowners insurance product is designed to address the exposures—from both a pricing and a coverage approach—of a "farming" operation. Unless otherwise endorsed as either an incidental part of the farm or separately insured under a general liability form, it is hard for me to expect a positive response from an insurer when one of their farm owners/operators sends them a claim for injuries that came from some of the operations previously discussed.

Additional Exposures

There is also the issue of the additional exposures from some of these operations. Again, think of the following potential losses or claims.

• Drownings
• Gunshot wounds
• Slips and falls off equipment, hayrides, tractors, etc.
• Animal exposures, such as E-Coli, bites, kicks, crushings, falls
• Americans with Disability Act (ADA) claims (after all, the farm is open to the public)
• Food allergies
• Liquor liability
• Attractive nuisances (Timmy fell into the well!)

What kind of response can you expect from an insurer when these claims come in? You know what the first question is going to be. "What were they doing on the insured’s property?" After that, it could all go rapidly downhill! And once the farmers are nonrenewed or canceled because of an "increase in hazard," you know how much fun they’ll have replacing their prior coverage.

So, What’s a Person To Do?

The answers are many and varied. What did we learn in initial risk management classes? Avoid it, share it, transfer it, or insure it. All of these options exist for farm owners/operators engaged in agritainment. But they will only recognize the risks if educated on the limits of their current policies or when they have to deal with a difficult or uncovered loss. I’ve always wanted to be in the position of educating my client before an issue arises rather than after his or her horse is out of the proverbial barn.

After all, the language in these coverage forms has not recently changed. It is the activities of the farm owner/operator that have.

¹United States Department of Agriculture, National Agricultural Statistics Service, Preliminary Report Highlights: U.S. Farm and Farmers, February 2014, http://www.agcensus.usda.gov/Publications/2012/Preliminary_Report/Highlights.pdf.

²United States Department of Agriculture, Farm-Based Recreation: A Statistical Profile, Dennis M. Brown and Richard J. Reeder, ERR-53, December 2007, https://www.ers.usda.gov/webdocs/publications/45941/12871_err53.pdf.