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PYO and Agri-Tourism Liability and Insurance Issues for Farmers

PYO and Agri-Tourism Liability and Insurance Issues for Farmers

Are you interested in starting a PYO operation and concerned about liability and finding affordable insurance coverage? Farmers have unique liability concerns for harm that could occur to visitors to the farm property. Compared to a typical residential property owner, a farmer often has more land, guests, trespassers, and dangerous equipment and machinery. These factors increase the potential for injury to visitors and raise the risk of liability for the farmer who is the owner, lessor, or occupant of farm property. One way to lessen liability risk is to understand the rules of legal liability that apply when there is an injury to a farm visitor.

This is adapted from an Ohio State University Fact Sheet: "Liability for Visitors to Farm Property". Obviously, the regulations and laws vary from state to state, so you must speak with a lawyer to understand what applies where you are located. There's a book on this subject, titled: "The Legal Guide for Direct Farm Marketing©" By Neil D. Hamilton, available from Drake University Agricultural Law Center. I haven't read the book, but you can find out more about it here.

You will obviously need insurance to help mitigate and financial damage should an accident, lawsuit or other problem occur.

NOTE: Do you have any suggestions who to contact for PYO Liability Insurance, besides the Farm Bureau? A farmer has written, saying he wants to start a PYO but cannot find a company that will write a policy. If you have any suggestions, please write me!

Liability Applies to the "Possessor" of the Property

When a visitor suffers an injury, the "possessor" of the property is the first party to whom legal liability might extend. As an example, some state law defines the possessor as the party who is "in control" of the property area where the injury occurred. One important indication of control over the property is an exercise of the power and right to admit people to the premises and to exclude people from it.

The possessor of the property is not always the property owner. A farm tenant or an independent contractor performing work on the property can be the possessor, if that party has control over the property where the injury occurred. If more than one party has control of the property, the law allocates liability between the several parties. An employee having control of the property and acting within the scope of his employment is not a possessor; the employer is the possessor for liability purposes.

For these reasons, the farmer should examine liability concerns for all property that he or she owns, leases, or performs work on as an independent contractor. The key question is whether the farmer has the authority or shares the authority to control access to the property. If so, liability could attach to the farmer if someone is injured on the property.

Relationship with Landlord-Tenant Law

A liability issue that arises on leased property should be considered within the context of landlord-tenant law. A property lease usually transfers possession and control over a property to the tenant, and the tenant is likely to be the possessor of the property for liability purposes. However, in some circumstances, the landlord, rather than the possessor, will be liable for an injury caused by conditions that were not under the tenant's control. Examples include a structural defect or a dangerous condition that existed prior to the lease period.

Additionally, state Landlords and Tenants Acts may impose minimum standards upon a landlord for the condition of residential premises. The landlord will be liable for harm attributable to a failure of these statutory responsibilities.

Liability Factors

A number of factors determine whether the possessor is liable for an injury to a property visitor.

• First, State law differentiates liability on the basis of the "status" of the injured visitor.
• Second, allowing dangerous conditions on the property may create liability.
• Third, the possessor might have a legal defense that prevents or reduces liability.

A farmer must consider each of these factors when assessing a liability situation.

The Status of the Property Visitor

The property possessor has a legal duty to prevent harm to a visitor on the property. However, the degree of care the possessor must undertake to fulfill this legal duty depends upon the "status" of the visitor, that is, why the visitor is on the property. If a person visits the property solely for the possessor's economic purposes, the law requires the possessor to exhibit a high degree of care for the visitor. On the other hand, when a visitor has no permission to be on the property, the possessor has a minimal duty to ensure the visitor's safety.

Traditionally, State law has identified a visitor's status as an invitee, licensee, or trespasser. Additionally, the law recognizes a social guest as a separate type of visitor, and recently the State legislature created a new type of visitor - the recreational user. Each type of property visitor is described here.

1. The Invitee. An invitee is a person the possessor invites onto the property for the possessor's financial benefit or business purposes. The invitation may be expressly stated or implied by the possessor's actions. Examples of invitees are customers, clients, salespeople, and delivery people. A social guest is not an invitee.

   The possessor has the highest duty of care for an invitee, which is to protect the invitee from harm by keeping the property in a reasonably safe condition. The duty requires the possessor to either:

   a. Take reasonable steps to discover and eliminate all known and unknown dangerous conditions on the property, or

   b. Give the visitor adequate warning of dangerous conditions that have not been eliminated.

   The myth of the "pick your own" customer. There is a mistaken belief that operating as a "pick your own" business relieves liability for injuries to a customer. To the contrary, a "pick your own" customer is an invitee under State law, since the possessor has invited the customer onto the property for the possessor's financial benefit. The possessor owes the highest duty of care to a "pick your own" customer.

2. The Licensee. A licensee is a person who is on the property for his or her own benefit. The licensee is not invited onto the property but is there with the possessor's permission or acquiescence. A person who has permission to cut firewood on the property is an example of a licensee.

   The possessor owes a lesser duty of care to a licensee than to an invitee. The required duty is one of preventing harm where the possessor is aware of a dangerous condition with which the licensee could come into contact. The possessor is not obligated to prevent harm from unknown dangerous conditions. The possessor must either:

   a. Make safe any known dangerous conditions that the licensee would be expected to encounter, or

   b. Warn the licensee of known dangerous conditions that have not been eliminated.

3. The Trespasser. A third type of visitor to the property is the trespasser, a person who has not been invited onto the property and does not have the possessor's permission to be on the property. Examples of trespassers are a hunter or a hiker who has entered the property without permission or a salesperson who remains on the property after being asked to leave. There are two types of trespassers - the unknown trespasser and the known trespasser. The possessor's duty of care differs for each type of trespasser.

   a. Unknown trespassers. A possessor has the lowest duty of care to an unknown trespasser, a person who does not have permission to be on the property and whose presence on the property is unknown to the possessor. The possessor is not obligated to protect an unknown trespasser from dangerous conditions. Rather, the possessor's only duty is to refrain from harming the person by willful conduct. That is, if a possessor discovers an unknown trespasser, the possessor may not intentionally harm the person or harm the person by careless conduct.

   b. Known trespassers. The duty owed to a trespasser changes when the possessor becomes aware of the trespass. If a possessor knows that a person is trespassing on the property, the possessor must protect the trespasser from known dangerous conditions by eliminating the condition or warning the trespasser. This duty of care is the same duty required for a licensee. Examples of known trespassers include the neighbor children who regularly cut across the field or an unauthorized hunter who is in open view of the possessor.

   c. Child trespassers. The law in some states treats child trespassers the same as adult trespassers, meaning that the possessor does not have a special duty of care for a child trespasser. One exception to this rule is the "dangerous instrumentality" exception, described later in this publication.

4. The Social Guest. A social guest is a person invited onto the property for the mutual enjoyment of hospitality, such as a party guest. Many State courts have declined to label a social guest as either an invitee or a licensee, but have in effect applied the same duty of care as that required for a licensee. A possessor should, at a minimum, protect the social guest from known dangers by eliminating the dangers or providing a warning.
5. The Recreational User. State Recreational User Statutes may define a recreational user as a visitor using nonresidential property for recreational purposes with the permission of the possessor and without providing compensation for the use. The law specifically defines "recreational uses" as hunting, fishing, trapping, camping, hiking, or swimming, or engaging in other recreational pursuits. The possessor is immune from liability for harm suffered by a recreational user.

The Condition of the Property

The condition of the property is an important factor when determining liability for an injury. Was the injury the result of a dangerous condition on the property? Could the injury have been avoided if the possessor had inspected the property and eliminated the dangerous condition? Should the visitor have been aware that the condition was dangerous? These questions all relate to the condition of the property.

The possessor must protect invitees, licensees, and known trespassers from dangerous conditions that are known to the possessor, or that the possessor should know of. In the case of invitees, the duty extends also to hidden dangerous conditions, requiring the possessor to actively inspect the property for dangerous conditions.

What is a "dangerous condition"? The state's courts define a dangerous condition as one that creates an unreasonable and unnecessary risk of harm that is not readily apparent to the visitor. A minimal or trivial defect in the property is not sufficient to amount to a dangerous condition, such as a nail head popping out of barn siding. A situation that a person ordinarily encounters, such as ice and snow on outdoor steps in winter, is not a dangerous condition for these purposes. Additionally, the law expects a person to appreciate "open and obvious" dangers, such as a pond or a swimming pool, which are not considered dangerous conditions for these purposes.

A two-step question process can help determine whether a condition is dangerous:

1. Does the condition create an unreasonable or unnecessary risk of harm? If so, it may be a dangerous condition, based upon question No. 2.
2. Is the condition readily apparent to the visitor? If it does create an unreasonable risk of harm and it is not readily apparent, it is likely a dangerous condition.

What is a "hidden" dangerous condition? A hidden danger is one that a visitor would not discover, even if being cautious. Because the danger is hidden, harm is unavoidable. Examples of hidden dangers are a hole in the floor that is covered by loose straw, or an animal trap beneath the surface of a pond. A possessor must protect an invitee from coming into contact with hidden dangerous conditions, but the duty does not extend to licensees or trespassers.

Eliminating dangerous conditions. Once a possessor identifies a dangerous condition, he or she must either eliminate the condition or warn of its existence. The elimination of a dangerous condition often involves repair work. The possessor should take care to ensure that repair work or other actions taken to eliminate a dangerous condition do completely eliminate the condition and do not worsen the condition or create new dangerous conditions. For example, patching the hole in the wooden floor with an old piece of linoleum eliminates the hole but creates a new dangerous condition - unstable flooring through which the visitor may fall.

Warning of dangerous conditions. The possessor must warn visitors of dangerous conditions that have not been eliminated. Warnings can be made in the form of verbal instructions, written instructions, maps, signs, or by roping or blocking off the dangerous area. The possessor should ensure that the warning method used clearly identifies the danger. Once the possessor has provided a warning, the possessor has fulfilled the legal duty of care, and a visitor who proceeds to encounter the dangerous condition assumes the risk of liability.

Dangerous conditions and trespassing children. The majority of states follow an "attractive nuisance" rule, which requires a possessor to protect trespassing children from an attractive nuisance on the property. An attractive nuisance is an artificial condition that attracts a child but which the child doesn't recognize as dangerous, such as a swimming pool. Ohio is one of only three states that has not adopted the attractive nuisance doctrine. A possessor in these states may not be required to protect trespassing children from an "attractive nuisance." Note, however, the dangerous instrumentality exception to this rule, described here.

The "dangerous instrumentality" exception. States usually do recognize a special duty to trespassing children in one situation. The "dangerous instrumentality" rule provides that a possessor can be liable for harm to a trespassing child if the possessor creates an actively dangerous situation on the property in an area where children are known to trespass. Specifically, the courts have stated that the possessor may be liable if two conditions exist:

1. The possessor actively and negligently operates a dangerous apparatus on the property, and
2. The presence of the trespassing child is foreseeable.

One case applying the dangerous instrumentality exception involved an electrical transformer station. The property owner knew that trespassing children often visited the property where the transformer was located, so the owner had taken care to fence in the transformer. In this situation, the property owner would not be liable if a trespasser broke through the fence and was injured on the transformer. However, when the owner ceased to maintain the protective fence and allowed openings to develop in the fence, the court determined that the owner was negligent by allowing the operation of a "highly powerful and dangerous unit of electrical machinery"3 upon premises frequented by trespassing children.

The dangerous instrumentality rule has not been applied to a farm-related injury. However, farmers should be aware that the rule could be applicable where farmers operate machinery and equipment, leave machinery and equipment running, or work with chemicals in an area frequented by trespassing children. Any of these situations might be deemed a "dangerous instrumentality" by a court. In these and similar situations, the farmer should take additional care to protect against the possibility of harm to a trespassing child.

Employers and Liability

Different considerations may arise when an injury occurs because of an employee's actions. Generally, an employer is liable for harm resulting from an employee's actions. If an employee creates a dangerous condition on the property or fails to warn a visitor of a dangerous condition, the employer is liable. One exception to this rule is that the employer may not be liable for injuries resulting from willful or intentional acts by the employee. That is, if an employee intentionally harms a visitor without the employer's knowledge or consent, the employer usually is not liable.

If an injury occurs to an employee, state Workers' Compensation Laws are the first avenue of recourse for the employee. Liability of the possessor may be limited by the Workers' Compensation Law, depending upon the location and cause of the employee's injuries. State Workers' Compensation Law is an income-maintenance and health-care-insurance program that covers work-related injuries and deaths. However, if an employer is required to participate in the Workers' Compensation program and does not, the employer is vulnerable not only to liability for an employee's injury, but also to prosecution by the State.

For more information on the Workers' Compensation program, see state Farm Labor Handbook, OSU Extension Bulletin 833.

Liability for Injuries by Animals

Special rules of law apply when an animal on the property causes an injury to a property visitor. The "owner or keeper" of the animal is the party who might be liable. The issue of liability depends upon the type of animal causing the injury, the foreseeability of the injury, and the activity that resulted in the harm.

Dogs and Wild or Vicious Animals. The owner or keeper of a dog, a wild animal, or an animal known to have vicious propensities is strictly liable for injuries caused by the animal, meaning that a showing of fault or negligence on the owner's part is not necessary. Liability does not extend if the injury results from a trespass or from teasing or tormenting the animal.

Animals Lacking Vicious Propensities. An injury by an animal that is not a dog or wild animal and is not of vicious propensities creates liability for the owner or keeper if he or she is negligent in keeping the animal. Negligence often hinges upon whether the owner or keeper could have anticipated the occurrence that resulted in the injury and failed to take corrective action. If so, the owner will be deemed negligent for not having taken steps to prevent the harm.

However, an owner or keeper is not negligent if the animal is in a place where it has a right to be, and a visitor invades that place. For example, liability will not attach to the owner for harm caused by an animal enclosed in a stall or a pen if a visitor willingly enters the stall or pen.

Equine. Equine activities pose unique liability questions for the property possessor. Is the possessor liable for injury to a person taking riding lessons on the possessor's property? state's Equine Activity Statutes may address the issue of harm sustained as a result of the inherent risks of equine activities. The statute may provide immunity for any person who provides, sponsors or organizes a facility for equine activities, or an operator, promoter, or instructor at an equine facility if the harm results from a danger or a condition that is an integral part of an equine activity. Such inherent dangers include the propensity of an equine to behave dangerously, the unpredictability of an equine's reaction to sounds or other animals, or hazards such as surface or subsurface conditions.

The Liability Process

One misconception about liability is that it occurs automatically. To the contrary, a visitor seeking to impose liability on a farmer must take action. The visitor could demand payment of medical bills or request insurance carrier information. In these situations, the farmer or the farmer's insurance company may agree to compensate the visitor for the injury. A farmer does not become legally liable to the visitor, however, unless the visitor successfully advances a civil claim in a court of law.

Civil litigation for injuries to a property visitor usually revolves around a claim of "negligence" against the farmer. Negligence actions require the visitor to prove that the farmer breached his or her duty of care to the visitor and that the breach caused the visitor's injuries. The farmer may dispute the allegations and offer defenses to liability. The final judgment of the court or jury determines whether the farmer is liable, the extent of liability, and the amount of compensation due the visitor, if any.

The Farmer's Defenses to Liability

The law provides several defenses to a potential liability situation. A successful legal defense can remove liability completely or reduce the amount of liability. A possessor has three potential defenses where the actions of the visitor affect the injury. A fourth defense, the Recreational User's Statute, provides a defense to liability where property is used for certain recreational purposes.

Exceeding the Scope of the Invitation or Permission. If a visitor goes beyond the scope of the invitation or permission, the possessor is not liable for resulting injury. For example, where a possessor has granted a neighbor permission to cut wood from the wood lot and the neighbor Decides also to take a look around the barn, the possessor will not be liable if the neighbor is injured in the barn. Likewise, if a customer of a farm market enters a door that is posted "Keep Out - Personnel Only" and is then injured in the restricted area, the possessor is not liable. In both instances, the visitor exceeded the scope of the possessor's invitation or permission.

Assumption of Risk. The law does not impose liability on the possessor if a visitor ignores obvious risks. The assumption of risk defense prevents liability for the possessor where a visitor is aware of or should be aware of the risk, voluntarily encounters the risk, and is injured as a result of undertaking the risk.

Contributory Negligence. Often, a visitor's own negligent acts cause or contribute to the injury. In this case, state law apportions liability for the injury according to each party's degree of negligence. The judge or jury determines the portion of the injury that can be attributed to the possessor's breach of duty, and the portion of the injury that can be attributed to the visitor's own negligence.

Recreational User Statute. A possessor may use the Recreational User Statute, explained earlier in this publication, as a defense to a legal action if the possessor proves that:

1. The possessor gave the visitor permission to use the property.
2. The possessor did not receive a payment or any benefit for the visitor's use of the property.
3. The use of the property is "recreational."

Note that the statute applies only on nonresidential property, which raises a gray area for farmland that contains a residence.

Limiting Liability

There are many actions a farmer can take to limit the potential of liability for injuries to visitors on the property.

• Inspect the Property. The possessor should regularly inspect the property for dangerous conditions, being sure to note all hidden and known dangerous conditions. Document the property inspections in writing.
• Eliminate Dangerous Conditions, Where Possible. The possessor will have the best assurance of liability protection by eliminating all dangerous conditions. Ensure that the repairs are complete and performed properly, and document the repair work in writing.
• Provide Warnings. If a dangerous condition cannot be eliminated, the possessor should provide clear warnings of the condition. A warning can be in the form of a sign, a map, or instructions, or by roping, fencing, or otherwise blocking access to the dangerous condition. Avoid verbal warnings that cannot be documented. Keep a written record and/or copy of all warnings.
• Educate and Train Employees. Farm employees should also understand liability rules. The employees must be adequately trained so that they know how to recognize and eliminate dangerous conditions, do not create or contribute to dangerous conditions, and know how to warn visitors of the conditions.
• Utilize state's Recreational User's Statute. Where visitors seek to use nonresidential property for recreational purposes such as hunting, fishing, hiking, and camping, the possessor should ensure that the Recreational User's Statute5 is applicable. The following elements must exist: the possessor grants the visitor permission to use the property, the possessor receives no benefit of any kind for the use of the property, and the use is "recreational," defined by the statute as hunting, fishing, trapping, camping, hiking, swimming, or engaging in other recreational pursuits.
• Obtain Adequate Liability Insurance. Insurance coverage can provide additional assurance that the farm won't be lost due to a personal injury. Just as important as having the insurance policy is ensuring that the coverage is comprehensive and accurate. Carefully review with the insurance provider all uses of the property and types of visitors to the property. Notify the provider when new activities occur on the property, such as opening a farm market. Constant communication with the provider will eliminate liability exposure for an activity that the possessor mistakenly believed would be covered by the insurance policy.
• Document Injuries. Create an accurate accounting of accidents. When an injury occurs, immediately document how and where the injury occurred, the conditions of the property in the vicinity of the accident, and warnings given prior to the injury. Note witnesses to the injury. If possible, take photographs or a videotape of the accident site.

Conclusion

A farmer will benefit from understanding when and why he or she will be liable for an injury to a farm visitor. The answers to a few simple questions create a framework for reviewing liability issues:

1. What types of visitors do I have on the property?
2. What duty of care do I owe the visitors?
3. Have I fulfilled my duty of care by eliminating or warning of all dangers?
4. What more can I do to limit liability?

The chart on the next page summarizes the types of visitors to farm property and the appropriate duty of care for each visitor.

1. O.R.C. 5321.01 et seq.
2. O.R.C. 1533.18 and 1533.181.
3. Coy v. Columbus, Delaware & Marion Electric Co. (1932), 125 Ohio St. 283, 289.
4. O.R.C. 2305.321 et seq.
5. O.R.C. 1533.18 and 1533.181.
6. Use is on nonresidential land, with permission of possessor, provides no benefit to possessor, and is for hunting, fishing, trapping, camping, hiking, swimming, or engaging in other recreational pursuits.

Types of Visitors to Farm Property and the typical Duty of Care for Each
Status of Visitor	Examples	Possessor's Duty
Invitee	Customers U-pick customers Clients Salespeople Delivery persons	Discover and eliminate all known and unknown dangerous conditions, or Warn of all known and unknown dangerous conditions.
Licensee	Firewood cutter, with permission	Eliminate known dangerous conditions, or Warn of known dangerous conditions.
Social guest	Guests at social gathering	Eliminate known dangerous conditions, or Warn of known dangerous conditions.
Recreational User	Hiker Hunter	No duty if meets the state's Recreational User's Statute.
Known Trespasser	Without permission, possessor aware of	Eliminate known dangerous conditions, or Warn of known dangerous conditions.
Unknown Trespasser	Without permission, possessor unaware of	Refrain from harming by willful conduct.
Child Trespasser	Without permission, presence foreseeable	Protect from actively dangerous instrumentalities.

The purpose of this publication is to provide accurate information on the subject matter. In providing this information, the author does not intend to offer legal or other professional services. The reader should seek the services of a competent attorney if legal advice is necessary.