If you have applied to be a vendor with Artisan Markets, or most other BCAFM markets, you are probably aware there is a requirement for vendors to have insurance this year.
The following are speaking notes Brent Milburn (formerly with Central Agencies) kindly contributed for this post from his talk at the 2018 AGM discussing the importance of vendors having proper insurance.
Seann Shaffer is the current insurance agent contact with Central Agencies Ltd..
Why Have Insurance for the Market?
Wealth accumulation vs. Wealth Protection
Three Legal Entities:
- Vendors – Commercial General Liability (If someone sues you)
- Market – Additional Insured on Vendor’s Policies
- Land Owners – Hold Harmless Agreement
Protect your family and yourself from a devastating occurrence that could be covered by a comprehensive insurance policy.
Vendor General Liability Insurance provides two major types of protections or benefits:
- Funds to pay settlements or verdicts (your insurance “limits”)
- Legal Fees. The insurance company will hire and pay for lawyers to defend its policyholders.
If a claim is brought against you, you will need to hire a lawyer to defend you. Even if you are not liable for the injury, legal fees and other costs can be extremely high.
Case Study: Years ago, a woman scraped her leg on a produce basket at a farmers market. The scrape required no medical attention, but the woman filed a claim against the market seeking $25,000 in damages. The market had an insurance policy that covered the claim and the cost of defense.
Moral of the story? You do not want to pay $25,000 out of pocket. Get an insurance policy.
Common Risks at farmers markets:
- Injuries to People & Damage to Property
- Food-Related Illnesses
1. Slip and fall
One of a farmers market’s most likely risks is a slip-and-fall incident where a customer or vendor trips over an obstruction, falls and is injured. Potential sources for slip-and-fall incidents include:
- wet grass;
- ice and/or snow
- spilled liquids
- electrical cords
- tent stakes, lines, or weights
Tents, canopies, and umbrellas
Canopies, tents, and umbrellas (“tents”) serve multiple purposes at farmers markets. They shield products from the sun and rain. They provide vendors and customers with shade and shelter. Despite their many uses, tents can also be hazardous. For example:
- A tent can become dislodged by wind and damage others’ property, products, and/or injure people.
- A customer may trip over, or otherwise harm themselves on, stakes, lines, and/or weights used to secure a tent.
- An umbrella can jut out into the market walkway and injure a passerby.
Food can be hazardous. Thousands of Americans are hospitalized by food-borne illnesses every year. Others are harmed by food allergens or by impurities in food, such as tiny pieces of metal, glass, or plastic. Some people shop at farmers markets to find safer, more wholesome food. Customers appreciate the small number of production points, local sourcing, responsible growing practices, familiar faces, and fresh food. Yet, terrible things such as these incidents can still occur at farmers markets:
- Food sampling can lead to an outbreak of E. coli.
- A prepared food vendor could be shut down for unsafe practices.
- An animal could contaminate a berry field, leading to hospitalizations and even death. If these berries are sold at farm stands and farmers markets, the source can be difficult to pin down, leading to a loss in sales for a national crop.
When talking about food safety incidents, everyone wants to know who is responsible. The answer can be quite simple: whoever caused the problem is responsible for the problem. It can get a little complex to determine who caused the problem, but it’s often quite straightforward. For example, if the farmers market is distributing donuts made by volunteers at the market’s info station as a market attraction, the market is responsible for the safety of the donuts. If a farmer sells spinach contaminated with bacteria that causes an illness, the farmer is responsible for that.
How to Manage Your Risk?
As vendors are usually the ones handling the food, they generally bear most of the legal responsibility for food safety. But, even when an injury is caused by a vendor’s actions, the market may still bear some responsibility. For example, the farmers market’s rules can be so lenient that food safety incidents become more likely. Also, a farmers market may not adequately screen vendors for safe food practices before admitting vendors, or sufficiently enforce existing food safety rules. Each of these things can lead to legal liability for the farmers market, even though the vendor’s actions directly caused the problem. Of course, the vendor itself may hold most of the responsibility for the incident, but that doesn’t mean the market doesn’t share in a small part of the liability, legally. Even if the market doesn’t become legally liable, one bad incident can be enough to ruin the market’s reputation with vendors and customers alike.
How Does Artisan Market Manage Risk?
An “Additional Insured” is a person or organization that enjoys the benefits of being insured under an insurance policy purchased by another entity.
Requiring a party to have its own insurance and naming the Farmers Market as an additional insured can help ensure that a party agreeing to “indemnify” you (hold you harmless) will actually have the financial resources to live up to these obligations.
Example: A farmers market is named an additional insured on a vendor’s liability policy
Insurance Case Study Handout:
Here is a real-life lawsuit involving vehicle traffic. These examples are useful for illustrating how accidents might occur. At the same time, they are a great opportunity to understand how liability is assigned in a typical personal injury or property damage case.
After a market closed for the day, a vendor drove into the market to take down his booth. In the process, the vendor ran over a customer.
When something like this traffic collision occurs, generally all potentially responsible persons or entities will be sued. In an incident where a vendor hits a customer, we can expect that the vendor, the farmers market, and potentially the landowner will be sued. In the ideal case, each of these entities would report the incident to their insurer, and the insurer would appoint an attorney to manage the case.
Generally speaking, the injured party will claim that negligence occurred. Negligence, legally, is the failure to do what a reasonable person/entity would have done under similar circumstances. Using the case of the vendor who struck a customer, the injured customer would claim that the vendor was negligent because he didn’t see the customer, that the market was negligent for setting up a situation where this could happen, and the property owner was negligent (perhaps) for allowing the market to operate without proper safety precautions. During the lawsuit process, all sides will argue their points as to why the various parties were or were not negligent, and thus are or are not legally responsible. In the ideal scenario, the persons found to be negligent will have an insurance policy limit that is high enough to cover the award to the injured person.
Here’s what actually happened. The injured person claimed that the farmers market was negligent because its rules were insufficient. Although the market rules said that vendors couldn’t bring a vehicle inside the market until 15 minutes after the market closed, the injured party argued that they also should have specified in the rule that no vehicles could enter the premises until all shoppers had exited it. The court agreed, and the market was liable, in part, on those grounds. (Of course, the vendor was also responsible in part.)
It can be extremely challenging for any individual farmers market to determine what might and might not be found negligent in court! A farmers market can’t be expected to predict that the rules have to also include the exiting of customers. This is why insurance is so vital. A market can’t predict the outcome of the huge variety of injury cases that could occur, and thus can’t construct rules and procedures that would cover every scenario. Insurance exists to address these unknown contingencies. Insurance companies are experts in assessing the likelihood of negligence overall, they provide an attorney for a defense, and they pay on successful claims up to the limits of the policy. When insurance agents inspect farmers market sites, they are looking for things that may cause liability, based on their extensive involvement in litigation around such cases.