This is an excellent question and the answer may surprise you. First, it is clear that selling at an organized farmers market located off of the insured property is not a “roadside” stand which would be included in the definition of farming. If the activity isn’t within the definition of farming, then the question is whether it is otherwise covered by the policy. As the second definition of “farming” set out above makes clear, some farm policies clearly exclude off-farm retail activities, unless they are separately insured. But the real answer to this question will come when determining how the farm liability policy treats other business activities of the farmer.
Business pursuits exclusion
A typical farm liability policy will include what is known as the “business pursuits exclusion.” For example, the following common policy includes this exclusion:
4. We do not cover bodily injury or property damage arising out of business pursuits of an insured person. But, we will cover activities of that person not ordinarily incident to business pursuits.
To understand the effect of this exclusion you have to look at how the policy defines what is a “business.” The policy uses this definition:
(a) any full or part time trade, profession or occupation;
(b) the rental or holding for rental of any premises by any insured person.
But “business” does not mean:
(a) farming; …
The farm liability policy used by the grower in Pennsylvania uses somewhat different language for the “business pursuits” exclusion. It provides:
h. Business Pursuits
“Bodily injury” or “property damage” arising out of or in connection with a “business” engaged in or by an “insured”. This exclusion applies, but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the “business”.
In that policy the term “business” is defined as “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.” The purpose of the “business pursuits” exclusion is clear – it limits the farm liability coverage to only those activities which are naturally part of a farm and it requires the insured to obtain separate coverage for other business activities. The difficulty in interpreting how the business exclusion works is deciding how broadly the term farming should be read.
So what does all of this mean, is participating at the farmers market covered or not?
The answer depends on whether raising and then marketing crops is considered to be within the definition of farming or whether it is a separate business. While this would seem to be the type of question on which there would be agreement under insurance law, or at least be an issue for which courts have clearly established the law, this is not the case. The best answer is to consider the two opposing arguments. An insurer will probably argue that your participation at the farmers market is not covered by your liability policy. First it does not take place on the insured premises. Second it is not within the definition of farming. Third it would appear to be a business separate from the traditional farming activities. Your argument would be that, as a farmer, you have to sell what you produce and choosing to sell at a farmers market is part of your farming operation. Also, farmers markets differ from roadside stands only in the fact that you have gone to where people are; rather than inviting them on to your property.