Property and Casualty

Agribusiness Insurance Update: Special Events Coverage for Farms, Ranches and Wineries

January 18, 2022

If you’re engaged, recently married or someone who has been invited to a wedding in the past five years, you’re probably familiar with The Knot, a wedding-planning website that hosts couples’ pages and provides all sorts of information on just about anything nuptials-related. A December 2021 article in Successful Farming magazine cites a poll by The Knot in which barns and farms were the second most popular type of wedding venue.

“Farmers and other landowners have caught on to the trend, and barn venues are popping up everywhere,” Successful Farming reports. “These venues are often rented at rates of $6,000 to $12,000 per wedding, according to The Knot.”

The Successful Farming story, headlined “Getting Hitched on the Farm,” poses the question: “Should you hop on the trend of barn weddings and build a venue on your farm?” It also provides its own response: “Consider all the options first.”

Hosting events such as wedding receptions is an option many — if not most — farm, ranch and vineyard owners have at least considered. The trend first gained traction in the 1990s, achieved peak popularity from 2008-13 and has remained in vogue ever since, leading The Atlantic to ask, “Why Is Everybody Getting Married in a Barn?”

Couples’ reasons for getting married and hosting a reception amid a rustic setting such as a farm, ranch or winery vary, but for owners of such properties, the reason for doubling as an events venue is simple: Doing so provides an additional, dependable revenue stream in an industry known for its volatility.

Hosting events comes with its own set of risks, however, adding to the insurance challenges agribusinesses face amid an ongoing hard market for property and casualty (P&C) coverage.

Agribusiness P&C Outlook for 2022

In December 2021, Alera Group released its Property and Casualty 2022 Market Outlook. Our summary of P&C market conditions for agribusiness includes the following:

Property insurance pricing and availability depend on geography, with rate increases moderating for clients with minimal catastrophe exposures.

More buyers are being forced into the non-standard market, particularly in catastrophe-prone areas such as California.

Cyber is a growing risk, as cybercriminals target food producers who have become increasingly dependent on technology.

Small farms increasingly make use of a new insurance source, the USDA’s Risk Management Agency.

Labor shortages pose a threat to worker safety and employer liability, as agribusiness managers are forced to hire inexperienced workers.

Employee lawsuits are a concern, primarily due to factors related to relatively recent developments such as the labor shortage and COVID-19, as well as the pre-pandemic risks of discrimination and sexual harassment.

Food processors need to become more proactive in managing food safety incidents, with 72% of industry survey respondents foreseeing an increase in claims but only 43% having management teams in place to address the risk.

Cannabis continues to be a challenging industry to insure, as the number of insurers willing to write coverage remains small and the task of finding the appropriate coverage forms remains difficult under federal guidelines.

The good news: While market conditions for Excess Liability and Umbrella insurance remain unfavorable in all regards, market conditions for Workers’ Compensation are expected to remain stable in terms of rates, capacity and underwriting scrutiny, while rates decrease slightly in certain classes and states. The market for Environmental Liability also remains stable, while Property rates are trending positively for consumers.

Wedding Receptions Pose Additional Risks

In deciding whether hosting special events is ultimately beneficial to your agribusiness, it’s essential to consider how such events will affect the property’s primary business — farming, ranching or wine-making. It’s also vital to consider what additional risks hosting weddings and other events may entail.

Lawsuits and so-called “nuclear verdicts” resulting from social inflation have contributed to the hard market for property and casualty insurance. Increasingly, farms and wineries doubling as wedding venues have become targets of suits.

In December 2021, a judge in Montgomery County, Ohio, ruled against a farm using a barn on its property as an events venue, stating that activities such as wedding receptions are not covered under the state’s agri-tourism law.

Earlier in 2021, a South Carolina farm paid a fine of $6,000 and faced potential lawsuits from state park and environmental groups over alleged violations of anti-pollution regulations.

Also in 2021, a winery in the Berkshires region of Western Massachusetts faced lawsuits from neighbors complaining that live music during events at the site, including wedding receptions, violated local noise restrictions.

In 2020, the father of a woman whose death was tied to a drunk-driving incident following a wedding reception at an Oregon farm sued the farm’s owner for close to $1 million, accusing event staff of overserving the driver in the incident.

Weighing Costs vs. Benefits

Anyela’s Vineyards in New York’s Finger Lakes region hosted weddings from 2009-18, averaging 20 receptions per year. But owner Jim Nocek found that doubling as a wedding venue compromised the vineyard’s mission of making great wines and cut into profits from wine tastings, which were more likely to turn visitors into repeat customers. In 2019, Anyela stopped hosting weddings.

“We were cannibalizing some of our regular Saturday business,” owner Nocek told the online publication VinePair. “And that concerned me a great deal. We were first a winery before anything else. That’s our core business.”

The VinePair story in which Nocek is quoted, “The Winery Wedding Industrial Complex Doesn’t Care if You Have Objections,” goes on to report:

“(Nocek) had also learned that weddings aren’t always the massive cash cow that they seem to be to outsiders. There are all kinds of hidden costs and challenges, like setting up temporary seating, coordinating with caterers (few wineries have kitchens), and not annoying countryside neighbors with loud music. There’s countless headaches to deal with as well, including portable bathrooms getting flooded, and young, drunken guests mistreating the facilities.”

Managing Risk in Hosting Events

If you do host or are planning to host weddings at your farm, ranch or winery, you’ll find excellent guidance in a whitepaper produced by the University of Vermont: “How to Host Weddings on Your Farm,” which includes a section on safety and liability. Among the document’s tips for protecting your business:

“Setting it up with the appropriate legal structure;

“Using waivers, signage and adequate lighting;

“Setting clear rules for guests;

“Taking medical trainings;

“Maintaining a clean environment;

“Keeping records;

“Complying with codes;

“And, of course, having an adequate insurance policy.”

As the UVM document notes, venues typically require clients and vendors to provide liability insurance coverage of $1 million, which can cost as little as $150-$250 when the coverage is for a single day.

Insurance Partnership

Whether or not you host events, it’s important to keep your insurance agent or broker apprised of any changes to your property or business operations, and work together to inform underwriters about conditions that should lead to a more favorable review of your application. As we’ve reported previously, underwriters may be conditioned to view applications unfavorably — especially in catastrophe-prone areas — but a comprehensive presentation including property details and claim history may help overcome underwriter reluctance.

If you do host events, it’s also vital that you inform your agent/broker about venue details including:

Where on the property events will take place;

How many people will attend;

Whether alcohol will be served;

Whether you’ll be working with any outside vendors and, if so, what services they’ll provide and what insurance coverage they have in place.

Reading Alera Group’s Property and Casualty 2022 Market Outlook will provide additional insights. In it you’ll find valuable information on factors driving the current P&C market, strategies for navigating market conditions, and the market outlook by lines of business, as well as by industry. To obtain the whitepaper, click on the link below.

GET THE MARKET OUTLOOK

About the Author

David Espinoza

VP Risk Advisor

Barkley Risk Management & Insurance, an Alera Group Company

David Espinoza has spent all of his working years in the agriculture industry. A former grower, shipper and transporter of field products, he spent 10 years as CEO of the farm labor contracting business Trinity Produce Inc., where he developed deep knowledge of legal requirements related to the day-to-day management of employees, as well as a deep appreciation for risk management and regulatory compliance. He’s applied that knowledge to his work with insurance and benefits clients, helping them protect their business, their employees and their bottom line.

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