Agritourism 101 Workshop

Overcoming the Insurance Barriers Related to an Agritourism Business

Risk Management Process

Identify and Analyze Loss Exposures Examine Feasibility of alternative Techniques Select Apparent Best Technique Implement the Chosen Technique Monitor and Improve the Risk Management

Program

Identification

Types of Exposures

1. Property

2. Liability

3. Personnel

4. Net Income

Methods of Indentifying Exposures

1. Surveys

2. Loss histories

3. Financial Statements

4. Records and files

5. Personal inspections

6. Experts

7. Flowcharts

Analysis of Risk

Organizational Objectives

1. Profit

2. Continuous operation

3. Stable earnings

4. Growth

5. Humanitarian concerns

6. Legal requirements

Significance

1. Loss frequency

2. Loss severity

Alternative Techniques for Handling Risks

Risk Control

Risk Financing

Risk Control to Stop Losses

Exposure Avoidance Loss prevention Loss reduction Segregation of exposures

– Separation– Duplication

Contractual transfer for risk control

Risk Financing to Pay for Losses

Retention

1. Current expensing of losses

2. Unfunded reserve

3. Funded reserves

4. Borrowing

5. Captive insurer

Transfer

1. Contractual transfer for risk financing

2. Commercial insurance

3. Hedging (business risk)

Agritourism Liability vs. Farm GL

• Exposures never contemplated by insurance companies

• Agribusiness application fails to ask for information concerning agritourism exposures

• Undisclosed Agribusiness events

NC Session Law 2005-236

NC Limited Liability Law Law may not protect against all liability

exposures Overview of Law

Insurance Company View on Agritourism/Special Events Coverage

Insurance companies and the rating of exposures are geared to traditional agricultural exposures

Standard insurance companies are not confident they are receiving adequate premium for the exposure

Pricing Considerations – Premium Based on Exposure

Total revenue from agritourism event Total number of participants Total number of days Products liability exposures

Proper Risk Management of Agritourism Exposures - Are you prepared for:

Crowd control Traffic flow Exposure of unattended children Sufficient staffing Hygiene issues Protection of equipment, supplies, animals

and staff

Key Considerations for Dealing with Agritourism Risks

Expect the unexpected Attention to detail Assess operation from beginning to end to ensure

attendees’ enjoyment and safety Assess operation from customers’ point to view to

anticipate problems Utilize well-trained staff Have emergency plan in place, including first aide on

site

J. Dal Snipes, CIC

Snipes Insurance Services, Inc.

PO Box 1165

Dunn, North Carolina 28335

Phone: 910-892-2121

Email: Dal@snipesins.com

Website: www.snipesinsurance.com