Farmers’ Guide to Food Safety Insurance

Introduction

If you are a farmer, chances are that food safety is a topic that is at the forefront of your mind. It goes without saying that you want to ensure that the food you produce is safe to eat.

Nevertheless, food safety incidences are widespread. As the food system has become increasingly industrialized, foodborne illness has likewise increased. The Center or Disease Control (CDC) estimates that each year about 48 million people get sick, 128,000 people are hospitalized, and 3,000 people die from foodborne illnesses in the United States. Bacteria like E.coli, Listeria and Salmonella are typical culprits.

Usually these incidents are minor, but a few notorious incidents may still haunt produce farmers, such as when 33 people died after eating Listeria-tainted cantaloupe in Colorado in 2011. The outbreak was traced back to a cantaloupe farm owned by two brothers. The brothers eventually pled guilty to misdemeanor counts of introducing adulterated food into interstate commerce and were ordered to each pay $150,000 in restitution and perform 100 hours of community service.

The increase of food safety incidents led Congress to create the Food Safety Modernization Act (FSMA) in 2011. FSMA includes the “Produce Safety Rule” and the “Preventive Controls Rule” which both give the federal government broad powers to prevent food safety problems and respond to food safety issues on farms. In other words, the federal government can now enforce certain food safety requirements on farms. The FSMA rules started going into effect for farmers beginning in 2015.

Small-scale farmers are often exempt from FSMA requirements. But here’s a word of caution for small-scale farmers. Even if you don’t have to comply with the FSMA rules, you are not exempt from the legal implications and costs of food safety incidents traced to your farm. Implementing food safety protocols and plans can go a long way to preventing an incident. Even still, small scale farmers are not immune to such an incident happening, including getting entangled in the finger-pointing quagmire if a food borne incident were to occur somewhere along the supply chain. A small-scale farm has a lot to lose if such an incident did occur. A lawsuit to pay someone’s medical bills could bankrupt a small farm operation. Even if the likelihood of something happening is small, the prudent farmer still will want to make sure they are covered for it.

Farm Commons has several guides explaining ways that small-scale farmers can reduce the likelihood of a food safety incident and to take steps to protect themselves if one ever does arise.
Farm Commons Guides include:
• Managing Food Safety Liability Risks Basics
• Checklist for Managing Your Food Safety Liability
• Farmers’ Guide to Food Safety Liability

Insurance is a key part of the food safety liability risk prevention strategy that Farm Commons recommends. This comes as no surprise as getting proper insurance coverage is a key component in nearly every aspect of building legal resilience on the farm.

What may come as a surprise, however, is the amount of difficulty a farmer may have to ensure adequate coverage for a potential food safety incident. The one thing worse than not having any insurance at all is paying for insurance thinking you’re getting coverage for something, when in reality, you’re not covered.

A common belief amongst small-scale farmers is that their farm liability policy – which is the most common type of insurance policy a farm will have – covers them for foodborne illness. This makes a lot of sense! Shouldn’t a liability policy cover you from all forms of liability? One would think. However, the reality is that a run-of-the-mill farm liability policy does not offer the coverage farmers hope and believe it does when it comes to food safety incidents.
How do we know this is true? Well, we at Farm Commons had our suspicions that basic farm liability policies were falling short in food safety coverage. Not wanting to go on suspicions alone, we investigated this theory through a project involving real farmers and their real insurance policies.

Part I of this guide explores the trends that we uncovered. With these trends in mind, this guide then offers solutions for ensuring food safety coverage on your farm. Part II does a deep dive into the anatomy of a farm liability policy, providing guidance to the intrepid farmer who wants to explore their own insurance policy and investigate their food safety coverage.

PART I:  Identifying Trends and Embracing Solutions

As we said in the introduction, we at Farm Commons had our suspicions that farmers thought they were covered for all things food safety, but that in reality, their coverage didn’t offer them what they thought. Wanting to test this theory and find out if our suspicions were correct, we launched a food safety insurance project where we recruited a small group of farmers to participate in this investigation. The participating farmers sent us their insurance policies, we analyzed them, we talked to the farmers about what we found out, we encouraged the farmers to reach out to their insurance agents and we followed up later to see what action steps they took.

Identifying trends
What did we find out? We discovered that our suspicions do appear to be correct. We can’t say anything more definitive than that. That’s because we also found out that it is very hard to get definitive answers when it comes to insurance. Here are the trends that emerged from our project:

• Most farmers assumed that they were adequately covered for food safety incidents through their existing farm liability policy. From the farmers we spoke to, it was clear that they assumed – logically so – that their farm liability policy covered all potential liability that would stem from their farm businesses. Because their farm businesses involve selling food, it sure made sense to them that injuries caused by the food they sell would be covered.

• In reality, most farmers probably are not adequately covered. The policies we reviewed all shared a common theme: They are a confusing mishmash of terms and contradictions. At first glance, the insurance contracts themselves appeared to cover the farmer for every type of liability under the sun. But upon closer inspection, scattered within the main contracts themselves, and added on in the form of “endorsements” at the end of the contracts, were a variety of exclusions. In various and often insidious ways, the exclusions appear to take away food safety incidents liability coverage.

• The specific trends around food safety liability coverage are as follows:
o Typical farm liability policies include coverage for the odd nail or other foreign object in an apple. Your customer bites down on a foreign object in the food item you produced and breaks a tooth. You get stuck with their dental bill. Your typical farm policy will cover that.

o Most policies exclude injuries from “communicable diseases,” which most likely includes foodborne illness. Most insurance policies have a “communicable disease” exclusion. In other words, they include a clause that says injuries caused by communicable diseases are not covered by the policy. However, none of the policies we reviewed actually define “communicable disease.” Without a definition in the policy, we look to the ordinary dictionary definition for guidance. Go to Webster’s dictionary and you will see that the definition of communicable disease includes foodborne illness. Following that train of logic, it is likely that if the question came up as to whether a foodborne illness is a communicable disease and therefore excluded from coverage, the insurance company would likely say it most certainly is, sorry Charlie!

o Beware the dry rot/bacteria/virus exclusion. Even if communicable disease does not mean foodborne illness, there’s another exclusion that likely knocks foodborne illness out of coverage. Tacked onto many of these policies that we reviewed is something called the “dry rot/bacteria/virus exclusion.” These types of exclusions state that coverage for this type of damage is included, but not if the damage/injury comes in the form of anything intended for bodily consumption. Food is obviously intended for bodily consumption, so it follows that if someone was injured by rot, bacteria or a virus in food that they consumed, that their policy wouldn’t cover this injury.

o Watch out for the “business” exclusion. If, on the rare occasion, your standard farm liability insurance policy does include food safety liability coverage—even if it’s limited to just the errant nail—beware that this coverage only extends to “farming” activities and not “business” activities. What that means in insurance speak is that liability coverage only extends to sales of raw farm products sold on the farm or at a roadside stand. If you are selling anywhere else, such as a farmers’ market or a food co-op, or if you are selling anything else, such as value-added products, you are not covered.

o The “Agri-tainment endorsement” – it’s not a catchall. Many of the farm policies we reviewed had an “Agri-tainment endorsement” tacked on. This endorsement does extend coverage, but farmers beware: The extension only goes so far. The “Agri-tainment endorsement is helpful in that it extends liability coverage from the farm to other sales locations such as farmers’ markets. The endorsement also extends coverage to activities that are not traditional farm activities, so the accidents and injuries at your corn mazes and cider-making days are covered. However, the coverage does not appear to include foodborne illness. In the endorsements we examined, there was an outright exclusion for injuries resulting from ingested food.

o Even a commercial general liability policy may not cover you. So far we’ve talked mostly about standard farm liability policies. These are the policies that include two basic elements: 1) coverage for injuries to people while they are at your farm and 2) coverage for loss or harm to your farm property. We now know that these policies don’t tend to cover foodborne illness. But what about a “commercial general liability” policy? This type of policy is an additional policy that farmers may have if they are selling to retail venues or have large institutional buyers. One farmer participating in our research project had a commercial general liability policy in addition to a regular farm liability policy. However, when we examined the policy, we saw that this also had a communicable disease exclusion. So, don’t count on a commercial general liability policy to cover your food safety concerns either.

o Product liability insurance is what you really need. There is another type of insurance that farmers should really be looking at to assure coverage for foodborne illness. This is product liability insurance. This sometimes is called “products-completed operations coverage” (oof that’s a mouthful!) or other times just completed operations. Sometimes it is offered as a stand-alone policy, and other times it will come as part of a general liability insurance policy. Either way, this is the type of coverage that should be pursued for foodborne illness coverage. Now, whether it is affordable or not is another story…

These trends together reveal that unfortunately, most farmers are probably not covered with the liability insurance policies they have.

Embracing solutions
Realizing your existing policy probably does not provide coverage for food safety incidences can be frustrating and overwhelming. Knowing these trends, what is a farmer to do? Where do you start? Fortunately, there is good news. We have created a roadmap to help you navigate this process.

Step 1. Investigate your policy yourself.
It is always a good idea to start with exploring your own policy. We highly recommend finding your policy and digging into it. You might have to locate it on a shelf and clear off the dust, search your email for an electronic copy, or call your insurance agent to get a copy. (This is because sometimes you may not even have a copy of the policy! That was true for some of our participating farmers.) Go to Part II of this guide to walk you step-by-step through that process. Note: After you are done with this process, come back here to Step 2 because you’re not quite done yet!

Step 2. Talk to your insurance agent.
Ok, so you’ve really gotten into your policy with a fine-tooth comb, you’ve explored all the pertinent areas we mentioned, and you’re still confused. You still are left with the uncomfortable feeling that you don’t really know what is and what is not covered, or if you may possibly have food safety coverage. Now what? How can you get that clarity?

First, we recommend that you reach out to your insurance agent. Admittedly, this may be easier said than done. The farmers participating in our research project had a difficult time with this part themselves. For one thing, it proved difficult for them to even make the effort to contact their insurance agent. Farmers are busy and calling the insurance agent to double-check on coverage isn’t always top priority. While it’s one of those things that sits in the recesses of their minds, irritatingly causing a vague sense of anxiety, it often doesn’t rise to the top of the list of things that must be done today. That’s because farmers face many more acute and pressing needs like mending fences and tending to animals and figuring out how to secure enough water in the middle of a “historic” drought.

Important note! If you are able to prioritize contacting your agent, and if you are able to pin down an answer, great! If you are told that you are in fact covered for food safety incidences, don’t stop there! WRITE THAT DOWN! It is really important to get whatever your agent tells you in writing. This is because you may very well need to rely on what your agent tells you. For example, say you are told that you have coverage for foodborne illness and then an incident occurs and you make a claim, and your claim is denied Now you owe lots of money for medical bills out of pocket. Yuck. But don’t despair. You have an available remedy! Insurance agents have what’s called “errors and omissions” insurance. This is akin to malpractice insurance for doctors and lawyers and the like. This wouldn’t be a fun road to go down but you could sue your agent for telling you something incorrect, and recover from your agent for your associated financial losses. Your agent’s own insurance coverage will then cover them.

What if you’re met with silence? Or “I don’t know!”? Even when participating farmers did make the effort to reach out to their agent, they were often met with answers such as, ”Hmmm, I don’t know. Let me check and get back to you,” or “That’s a great question. I will look for an answer.” This is if the farmers could even get through to the agent. Often, the farmer only got a voicemail or an email that was never returned. Even the lucky ones – the farmers who did make initial contact and were told the agent would look into it – weren’t so lucky in the end. The agents simply never followed up with them.

You can see that this can be a challenging endeavor. Something that should be relatively easy is not. This leaves us with an unfortunate conundrum. The farmer doesn’t know the answer, because they didn’t get a response. Often times, this is because the insurance agent doesn’t know the answer either. They merely sold the policy and did not write it. They can’t quite get a handle on all of the intricate details of each and every insurance product they sell. If that happens to you, and you really want an answer, you are going to have to either be the squeaky wheel and call and call until you get a call back, or find another agent. I know, I know…Easier said than done. This one doesn’t have a quick fix.

Step 3. Explore product liability insurance.
Even when farmers make contact with their agent, and the agent tells them definitively that they are not covered, those farmers are still in a difficult bind. This is because there aren’t always a lot of viable options out there for food safety insurance coverage. The agent may draw a blank as far as other coverage options. Or, if they do know of other options, likely those options will be prohibitively expensive. Most of the time, the insurance product you are really looking for to offer this type of coverage is product liability insurance. Again, these can be anything but cheap.

Farm Commons does not endorse any insurance products, so this is not an endorsement. That said, there is a product out there that looks relatively promising. It is called FLIP, which stands for the “Food Liability Insurance Program.” It is a relatively inexpensive product, selling for about $300 annually if sales are $50,000 or less, and the prices go up if sales are above that threshold. FLIP has two policies that may work for farmers. One is for farmers’ markets and the other is for value-added products. The verdict is still out as far as whether FLIP policies cover farmers’ products that are sold on the farm or in other locations besides farmers’ markets. But, we think this is worth checking out. For more information see https://www.fliprogram.com/.

Step 4. Focus on food safety incidences prevention.
While we’re putting it at step four in this guide to food safety insurance, this is really the first and most essential step. The best way to reduce your liability risks of a food safety incident is to focus your efforts on preventing a food safety incident in the first place. Chances are, you are already doing this, but if you need some assistance, check out our other resources. One helpful resource worth pointing out is Farm Commons’ Checklist for Managing Your Food Safety Liability, which focuses heavily on prevention steps such as creating a food safety plan for your farm, keeping good records and looking into GAP certification.

PART II: Exploring your policy – A Roadmap (A. DECLARATIONS & SUMMARY PAGES)

Investigating your policy yourself
As we mentioned, the farmer who is concerned about being covered will want to investigate their own policy themselves. As you are about to find out, this is not that easy. Insurance speak is a hard language to learn. But, picking up your policy and spending 20 to 30 minutes exploring it yourself is a valuable use of your time. You may find out if you are covered or not, and even if you don’t, that’s ok. At least you will have a foothold into the process and can look to the specific parts of your policy that you have questions about. Empowered with this knowledge, you can now take your informed questions to your insurance agent. This section walks you through process of investigating your own policy.

In Part II of this guide we will be looking directly at sections and wording from an actual farm liability insurance policy that we reviewed from one of our participating farmers. We’ll be referring to this as the “Sample Policy.” We recommend you refer to it as you read along. By looking at the specific wording and idiosyncrasies in certain sections, we can flag some significant issues for you to look out for in your policy. That said, the Sample Policy is just one example. Keep in mind your policy may look similar or different in many ways.

Exploring the “Anatomy” of the insurance policy
Investigating your own insurance coverage can be a real challenge. Let’s go over the “anatomy” of the insurance policy so you know what you’re looking for and how to find the information you need. You may not even know what to look for. You might not even have a copy of the actual policy or perhaps you have just a digital copy. Your policy will be big – probably 100 + pages.

Declarations
The first page or pages will give you a lot of information. (See Declaration from Sample Policy below.) This first section is usually referred to as “Declarations” and it may actually say as such (e.g., “Farmowners Policy Declarations”). It will say the name of the insurance company or the “underwriter.” It will also have other important identifying information such as the policy or account number, the term of the insurance policy (e.g., January 2021-December 2021), your insurance agent, the name and address of the insured (that will be you and/or the name of the farm). Note that the name of your insurance agent is different than the insurance company/underwriter. The agent is the one who you will interface with and who sells you the policy. The insurance company/underwriter is who actually writes the policy and decides what and what not to cover you for.

The other important aspect of the Declarations page is that it gives an overview of your coverage. It might say something such as “Summary of Coverages and Premiums.” Under that heading, you will see a list of the coverage types and their premiums. The premiums are the price you are paying for the coverage. These are usually itemized with the total at the bottom.

A typical farm liability policy will include coverage headings such as “liability coverage”, “property coverage” and “optional coverage.” You will see that under the liability coverage heading. There are sub-headings that include things like bodily injury and property damage, and medical payments. The property coverage heading includes sub-headings that refer to the property on the farm – the dwelling, outbuildings, and farm equipment and so on. The optional coverage heading includes anything that would not come in the standard farm liability policy, but would be added based on the unique needs of the farmer.

The Sample Policy has optional coverage that includes an “Agri-tainment endorsement.” You will see that the farmer elected not to pay for the other available options like “watercraft” or “recreational vehicle.”

The next page will usually list all the “forms and attachments.” (See below.) You can see on this page of the Sample Policy that there are quite a lot! The first one listed here is called “Farm Liability Coverage Form.” This one is the main part of the policy (it’s 19 pages) and then all the other ones are additions – either “endorsements” or “exclusions” or other “by the way” forms that either add coverage or take away coverage, or say that by the way, coverage is only allowed under certain conditions.

The next part of the Declarations section summarizes the actual coverage. (See below.) Unlike with the summary of coverage section which only lists the coverage types and how much you are paying for the coverage, this section lists both the premium (how much you pay) and the “limit of insurance.” The “limit of insurance” is the amount that the insurance company will pay out for certain types of claims. These can be some big numbers but there definitely is a range. The Sample Policy says, for example, that it will pay out $2 million in the “aggregate” for liability (harm to other people’s bodies or other people’s property). This means that in total, it will pay out $2 million for harm to others that comes from “occurrences” that happened during the year you maintained coverage. But, see the other limits. It will pay out only $1 million per each occurrence and only $5,000 per person for their medical bills. It’s important to know what these limits are. That is not actually that much for medical bills. It can cost greater than a few grand if the injury or illness is serious.

Note: You can see here that there is also coverage for liability associated with “fungi or bacteria” but that it is limited to $10,000 in the aggregate (so total, per year). This may have perked up your ears because this sounds like it may cover the farmer for a food safety incident, but hold tight…We’ll come back to that later because it’s not as good as it sounds.

You can see too that in the Sample Policy this farmer has added on an Agri-tainment endorsement and the coverage limits are included here. The farmer is covered for $2 million in the aggregate and $1 million for each occurrence. The farmer is covered for liability at two specific farmers’ markets locations. Note: This one looks like it might offer food safety liability coverage. Although it looks promising too, let’s come back to that one.

The next section outlines the property coverage. This part is not at all relevant in terms of food safety because this deals with payment for the loss or damage of property on the farm. However, it’s still important to know what’s in here. This part of the Sample Policy includes the deductible ($1,000). This means that the farmer is responsible for covering the first $1,000 of any claim of loss/damage to farm property. It then goes on the list the specific property that is covered and how much the company will pay out for loss or damage of each item. You can see that the farm dwelling and personal property within the dwelling are covered, and so are the farm structures – hoophouses, pole sheds, garages, etc. You can see why it is important to make sure specific farm structures are included, otherwise they may not be covered at all.

Next in the Sample Policy is a standard legally required privacy disclosure. Then it contains a notice including the contact information for the insurance company as well as the Office of the Commissioner of Insurance in case you have some complaints. (A screenshot of that page is not included here as it’s mostly self-explanatory.)

Part II: PART II: Exploring your policy – A Roadmap (B. THE POLICY ITSELF)

Farm Liability Coverage Form
This is the “liability” part of the insurance. “Liability” here means all the costs associated with various accidents, mishaps and losses that the insurance company is taking responsibility for. The standard farm liability policy is a hybrid policy. It covers liability for (1) injury and damage to other people and their stuff that occurs within the scope of your farm operation, and (2) damage or loss of your farm’s property. Of course, both are limited to what the policy says, and doesn’t say, in between the lines.

In the Sample Policy, there are about 19 pages of the liability coverage contract itself, and then another 20 pages of the “by the ways” – the endorsements, exclusions, and other extra bits that make you scratch your head and wonder what in the world you are actually covered for when it comes to liability. In the case of the Sample Policy, there are 13 of these “by the way” forms. (Note: This part of the insurance contract is not included as a screenshot because it is very long! However, there are screenshots of relevant sections throughout this next section, as we discuss various aspects of the policy.)

Farm Property – Farm Dwellings, Appurtenant Structures and Household Personal Property Coverage Form

This section will have nothing to do with food safety coverage, but again, it’s good to know what you are looking at. The Sample Policy includes nine pages of the actual contract on what specific loss and damage of farm property is covered, and then another 24 pages of the “by the ways” that involve farm property coverage.

More “by the ways” – exclusions, endorsements, amendments

To get even more confusing, the Sample Policy includes at the very end an additional 30+ pages of “by the ways” that relate to either the liability contract, the property contract, or both. This is all included after the main contract for liability and its related “by the ways.” (Note: These extra pages are not included in their entirety due to length, but relevant excerpts are included as needed.)

It’s a lot. It’s not an understatement to say that you may need a law degree to understand this. Frankly, even with two attorneys here at Farm Commons working to understand what exactly the farmers participating in our project are covered for in terms of food safety issues, we didn’t come away with total clarity either. But, we still believe it is a worthwhile exercise to examine your policy. Having even just a vague understanding of what you are looking can go a long way when you’re talking to your agent to determine what’s the best policy for your farm.

Now that you have the lay of the land and are familiar with the basic “anatomy” of the farm liability policy, here is some guidance on investigating your coverage for food safety incidents. Let’s explore the Sample Policy specifically for food safety liability coverage, which should in turn help you explore your own.

Because food safety liability is – you guessed it – regarding liability, you will want to visit the liability section of your policy. You know where that is because you can look to the Declarations section to find where that is located. In the Sample Policy, it is called “Farm Liability Coverage Form. ” This is where to go. We can see that “Section 1 – Coverages” includes “Bodily Injury and Property Damage Liability.” That sounds like a smart place to start as after all, sickness caused by foodborne illness is bodily injury.

However, while there’s all this talk about “bodily injury” in this first section, nowhere does it seem to explain what that actually means. Many insurance policies will have a definition section at the beginning of the insurance contract. Often times the definition section will include “bodily injury.” There is no such definition section right up front in the Sample Policy. However, this doesn’t mean there is not one here. There is! Surprise! It’s all the way at the end of the Farm Liability Coverage Form. The Definitions section is the last section in this part, covering the last five pages of that liability coverage section.

The definition of “bodily injury” is:
“Bodily injury” means bodily injury, sickness or
disease sustained by a person, and includes
death resulting from any of these at any time.

Ok great! That is very helpful. Maybe…So…bodily injury means…bodily injury! Hmmm, thanks. Well, in terms of trying to figure out if you are covered for foodborne illness, foodborne illness definitely makes people sick. So, it must be covered! Excellent.

But, not so fast. One must never look solely at the (hard to find, buried at the end, and not so helpful) definition. One must also consider…the Exclusions. Let’s go back to this Sample Policy. Come to the end of the section on bodily injury, and you reach Section 2. “Exclusions”. Uh oh. Could it be possible that it excludes foodborne illness? We see that there are lots of types of bodily injury that are not covered, such as expected or intended injury (a mere threat), injury from pollution, discharge of substances from aircraft, watercraft-related injuries and so on. There are seven pages of excluded types of bodily injury, and nothing here mentions foodborne illness. So, it must be covered. Great!

Not so fast. Unfortunately, buried within the many pages of exclusions, is “M. Communicable Disease.”
“Bodily injury” or “property damage” arising
out of the transmission of a communicable
disease by an “insured”;

Hmmm. Why does this matter? I thought I was looking for foodborne illness, you say? This policy doesn’t mention foodborne illness anywhere, and this is typical of the many policies that we reviewed. All the policies we reviewed in our project did, however, mention communicable disease. They all declared that communicable disease is an excluded bodily injury. In other words, it’s not covered.

But…What is “communicable disease”? Unfortunately, the Sample Policy, and all the other policies we reviewed, fail to define communicable disease.

In the legal world, when a contract, statute, rule – or anything you are relying on for legal responsibilities or rights – doesn’t specifically define something, you look to the common definition out there in the world. That’s generally the dictionary definition.

What does Webster’s dictionary say about “communicable disease”?

Most foodborne illness incidents involve either bacteria (Salmonella, Listeria, or E. Coli) or viruses (norovirus or hepatitis A). Well, hepatitis is right there in the dictionary definition. It feels like a safe bet that at least foodborne illnesses involving hepatitis are in fact a communicable disease, and therefore excluded from coverage. Darn. But the others? Those that are not included here in the dictionary definition?

Well, those are all the source of debate. A debate that is unresolved.
State and federal courts have dealt with this very issue, and there are at least a couple of judicial opinions that held that the communicable disease exclusion does not apply to salmonella. In other words, foodborne illnesses involving salmonella would be covered unless its otherwise excluded in the policy. In one opinion, the judge found that the communicable disease exclusion was ambiguous, and that where the insured bought the policy primarily for coverage of foodborne illness, that when they so heavily relied on this coverage, the insurance company could not use the communicable disease exclusion as a basis to deny coverage.

This is good news! But, it is not a panacea. Where there is this communicable disease exclusion, there is always the potential for the insurance company to deny a foodborne illness claim. This is especially true in a world of increased catastrophes of all kinds. Insurance companies will become more and more pressured to deny claims and keep the money in their own hands. Even if the court battle is one, it can be a long and expensive fight. Farmers don’t have time for that.
Bottom line: If you see this communicable disease exclusion lurking in your policy, view it as the red flag that it is. Contact your insurance agent at once. Ideally, get a written confirmation that you are covered for foodborne illness. If you cannot get this, and this coverage is really important to you, seek other coverage options.

Fungi/Bacteria Endorsement
Although the communicable disease exclusion puts quite a damper on a farmer’s hopes that they are covered for foodborne illness, the presence of a fungi/bacteria endorsement may give the farmer hope again. Let’s explore such an endorsement in the Sample Policy, and find out if that hope is warranted.

Go back to the Declarations section and you will see that the summary of the coverage under the Farm Liability Coverage Form includes a “limited fungi or bacteria coverage” endorsement. Yay! This sounds promising. Upon seeing that in the policy, a typical farmer would be apt to assume that they have some special add-on that covers them for foodborne illness. (Salmonella is bacteria after all!)

But, when it comes to insurance, one should never assume anything. Let’s go to the actual endorsement and read it.
Here’s what it starts with:

Ok great! This talks about medical expenses…arising out of fungi or bacteria incidents. This is sounding like foodborne illness alright! This is good. I mean, it also talks about the coverage being limited, but hey, at least it’s talking about it!

Ok, this is still sounding good. Yes, there is a limit to what they will pay. But, it appears that they will pay for bodily injury arising out of a fungi/bacteria incident. Great!
But wait…Then it goes on to say this:

Uh oh. This C. clause is not so good. It appears to say that if the good or product is intended for “bodily consumption”—which is most things farmers sell on their farm—a resulting foodborne illness or injury would not be considered a fungi or bacteria incident. Bummer.
It is possible that this C. clause means that the limit to the coverage is only applicable to fungi/bacteria incidents that are not food-related (i.e., not intended for bodily consumption). In other words, it could be that this clause puts coverage limits on incidents that don’t involve food products. If this is the case, the coverage is up to the larger $1 or $2 million limit for a foodborne illness. But, it is also quite possible (and probably more likely) that the C. clause is plunked in there to be sure that people understand that this endorsement has NOT added foodborne illness coverage at all.

Ugh. This is another one of those bits that the farmer will want to point out to their insurance agent and get confirmation on what this means. If the agent says such a clause provides coverage for some types of foodborne illnesses, make sure you get this in writing!

Business Pursuits
Is it Farming or Business? Let’s say you’ve cleared some hurdles and have discovered, to your utter amazement and delightful surprise, that the communicable disease exclusion does NOT include foodborne illness. So you ARE covered for that. Let’s say you’ve also discovered that the fungi/bacteria endorsement doesn’t exclude foodborne illness from coverage either. That’s great!

But… you still have some other issues lurking in your policy that you’ll need to contend with. Even if you do have coverage for foodborne illness, what you also need to know is that it is highly likely that you only have coverage for very traditional FARMING activities and nothing more.

Most farm liability policies make a distinction between “farming” and “business” activities, and only cover farming activities. Farming activities are usually defined as including activities like planting, harvesting and selling raw farm products on-site or at farm stands. Business activities are basically anything else. In other words, if it’s creative and innovative, it’s probably not covered.

Let’s take a look at how the Sample Policy handles farming versus business activities.
The answer is in the Exclusions section. One of the exclusions is “Business pursuits”:

Now we know that bodily injury (and foodborne illness, which is what we really care about here) arising out of business pursuits is not covered. We will also need to know what “business pursuits” means. For that, we go to the Definitions section. (Yes, reading your insurance policy is like a scavenger hunt).

In the Definitions section, we find a definition for “Business”:

Now we understand what “Business” is not. It is not agritainment, farming or custom farming. This leads us to another question. What is agritainment, farming and custom farming? We must hunt more within the Definitions section. Luckily, this Sample Policy includes definitions for these terms:

What does this all mean? Basically, you ARE covered if you read all three of these definitions and come away with thinking that your activities fall into any of these categories– agritainment, custom farming or farming.

But, that’s not the end of the story. Remember the Exclusions section?
Both Agritainment and Custom Farming are listed in the exclusions from coverage for bodily injury:

So here’s the only real conclusion you can draw from all these sections put together in the puzzle that is an insurance policy. Only the very basic and traditional of farming activities will be covered for bodily injury, whatever that coverage entails.

If you are selling at roadside stands or on your farm property itself, and you are selling ONLY farm products that are YOUR OWN, you will probably have coverage. If you are selling any other products at any other location, you will most likely not be covered.

The Agritainment Endorsement – Does that Cover Me?
There is one last string of hope that is floating around in several of the insurance policies that we reviewed at Farm Commons. This is the “agritainment endorsement.” As you now know, endorsements are additional add-ons or “by the ways” as we like to refer to these extra bits in insurance policies. One popular such endorsement is the agritainment endorsement.

What the agritainment endorsement does is add back in coverage for liability arising out of agritainment (or “agritourism”), which is normally excluded.

Let’s turn to the Sample Policy to see how the “Agritourism – Liability” endorsement works:

(Exclusion 2.bb. is “Agritainment.)

What types of liability this actually covers is hard to pin down. Upon a careful examination of the Sample Policy, we conclude that such policies tend to cover events you would typically consider agritourism/agritainment. These typically include events on the farm, and most likely also off-site farmers’ markets.

The definition of agritainment is activities for the purpose of “tourism and entertainment.” It is not clear that this definition includes farmers’ markets. However, the Declarations section of the Sample Policy lists two specific farmers’ markets that are insured locations under the Agritainment Endorsement. That’s a reliable reference point to indicate farmers’ markets are included.

Let’s take a step back. In the Sample Policy, we have the option of going without the Agritainment endorsement or going with the Agritainment endorsement.

If we chose without an Agritainment endorsement, the only bodily injury the farmer would be covered for is that arising out of traditional farming activities, including selling on the farm or at roadside stands. That’s it.

If we chose with the Agritainment endorsement, the farmer is now covered for bodily injury that includes selling at farmers’ markets (at least the ones that have been declared as insured locations) and also for non-traditional farming activities like pizza night and farm tours and goat yoga.
The question still remains: Does this endorsement cover foodborne illness arising out of sales at farmers’ markets, caramel apples on sale after the farm tour, etc.?

Well, it’s a little hard to discern. The answer is buried within an exception to an exclusion within the Agritainment Endorsement. The answer is: No. It does not. Take a look at the text pulled from the Agritainment Endorsement below. While bodily injury arising from agritainment activities is in fact covered, bodily injury that arises out of your products that are “intended for bodily consumption” is not.

Bottom line, here’s the important thing to know about the Agritainment endorsement.
An Agritainment endorsement extends liability coverage to on-farm events and off-farm farmers’ markets. But it does nothing for you in terms of coverage for any type of food safety incident.

Conclusion

It’s a real bummer to find out that you are paying good money for something that isn’t doing what you thought it was. Unfortunately, this is often the case with insurance and food safety coverage. While this is an unpleasant realization, it is a necessary one if food safety liability is something that concerns you. Yes, ignorance is bliss. Ignorance is also risky and costly.

Empower yourself with knowledge and find out if you are covered. Read your policy (using the roadmap in this guide to assist you), talk to your agent, and write down what your agent tells you. If you find out that you are not covered (or conclude that you likely are not, even where answers are not clear), explore other options. Look into product liability coverage, with the “FLIP” insurance product being a potentially viable option. If that is cost-prohibitive, be even more intentional about focusing on preventing foodborne illness through prevention.