The business owner's insurance product most often applies to farms with roadside markets that are in a permanent structure (as opposed to sales from a wagon or a pick-up truck alongside the road). This product provides protection against many events that are not covered under a standard farm owner's policy, because it combines business property insurance and business liability coverage. The property insurance portion covers your farm market in the event that your business activities or property cause harm to a person and/or damage their property. In relation to property, the insurance covers buildings, equipment, inventory, furniture and fixtures.
The initial step to receive coverage involves establishing exactly what you have to be covered. Take pictures of all items you want insured; keep detailed inventories of products for sale and have an accurate financial record keeping system. In addition, installing a security system may be warranted, because it shows that you have "done your part" in protecting the property.
The types of coverage that business owner's insurance provides include (described in more detail in the remainder of this fact sheet):
- Damage to permanent signs and glass (windows)
- Loss of income and valuable papers
- Employee dishonesty
- Loss of refrigeration causing loss of products
- Theft or loss of money, both by inside and outside persons
Damage to Permanent Signs
Because many roadside stand operators do not reside close to their markets no one is on-site all hours of the day and night, making this type of structure very appealing to vandals. When vandals break exterior windows or deface a permanent sign for the market, your business owner's insurance will replace or repair the damaged item (less your deductible).
Loss of Income
Natural disasters such as severe weather events may cause the farmer's market to close down for a week or more while repairs to the structure take place - resulting in a loss of income. Business owner's insurance covers this type of income loss. This coverage does not extend to the occasional need to close two to three hours early due to a weather event, since such closures usually do not involve damage to the farm market structure.
Loss of refrigeration causing loss of products
Because your refrigeration unit is a mechanical item that has an expected life, it will eventually stop keeping items cold. Many times, mechanical breakdowns will occur when no one is in the market, and products will spoil, leaving them unmarketable. This type of event is covered by business owner's insurance. Keeping a detailed inventory of the amount and value of the products within the cooler at all times, will make claim filing much easier.
Business Related Items
Deeds, proprietary recipes for their value-added products, or additional business-related items are often stored in the market office. These items are often essential to the operation of the business or market, so this insurance product would compensate the owner for their loss. If these objects are stolen, the insurance will cover their loss, as much as practical.
While everyone strives to hire the best employees possible, occasionally there will be an employee who cannot resist "dipping into the cash register." If you discover that this is happening, immediately, terminate this employee and conduct a detailed audit to determine the amount of loss. When you have a clear idea of the extent of the loss, contact your insurance provider and also file a police report. When the amount of theft is more than your deductible, the claim will be paid.
Theft or Loss of Money
Even with a security system to deter theft, some people may still see your market as an easy opportunity. If someone robs you, during or outside of business hours, this policy will provide protection, covering the funds taken from inside and outside cash registers. At the same time, you must make a good-faith effort at securing such items as plants, melons or pumpkins that are normally outside the market while the market is open, to reduce opportunity for theft. In reality, even something that is secured can be stolen, if the thief has enough time. For this reason, many large stores do not keep any items outside overnight, and you may consider how to move these items indoors at closing time to increase your business' security
Determining the Extent of Coverage
To ensure adequate coverage, you will need to provide your insurance provider a detailed description of the market and all items within and outside the market. Good records and accurate inventories will be a great benefit in the event that you need to file a claim, because you will need to pinpoint the lost items and their value. You can insure all of the items mentioned in this pamphlet, or you may decide to only insure specific items related to your business.
Checklist for Business Owner's Protection Discussions
Be prepared to provide your insurance salesperson with:
- The name, address, and business structure of the market
- A detailed description of the property and operations
- All items inside and outside the market and their value
- All employees' names
- The items you wish to cover
- The dollar amount of protection you are considering
- A description of any past losses you have experienced in this business
Prepared by Lynn F. Kime, extension associate; Winifred W. McGee, extension educator; Robert Faubel, independent insurance agent, Danner's Insurance; and Maggie Garcia-Taylor, insurance agent, Garcia-Taylor Insurance Agency.
This document is based on work supported by USDA, Risk Management Agency, 2014 Risk Management Education Partnerships Program, Agreement Number 14-IE-53102-036.