Business Clinic: What are the insurance needs if I diversify?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Rory Gibson, regional director, Scotland, at A-Plan Rural Insurance, sets out the considerations for diversification insurance.

See also: Business Clinic: How to get correct public liability cover

Q: I own a 450-acre farm with my brother. My daughter already works on the farm and my brother’s son is just about to finish college and wants to join the business.

We want to diversify to create work for everyone and are considering a wedding venue or a farm shop. What advice do you have on the insurance aspects?

A: A diversification can be a great way to involve more family members in the business. However, the challenges of setting up a new venture should not be underestimated.

Whatever type of venture you choose to launch, careful business and risk management planning, as well as compliance with legislation and regulations, are essential.

Health and safety risk assessments are necessary at the early stages of planning your new venture and it’s definitely worth speaking to a professional on this aspect. 

Given you might be welcoming members of the public onto the farm for the first time, considerations will include creating adequate boundaries between the working farm and the public facilities.

This will include steps such as putting up appropriate signs, and managing slips, trips and falls, which cause many of the most common claims. 

One of the most important considerations will be to ensure the right level of public liability cover.

Hosting weddings 

You mention that a weddings business is an option. Large outbuildings or barns have lots of potential, and can be turned into charming, successful venues. However, there is a lot to consider before you get started. 

From an insurance perspective, this is a very limited market and ensuring you have appropriate cover for listed properties used as wedding venues is even trickier. So, it’s important to get things right from the start.

As well as the right level of public liability insurance, if you’re providing food you’ll need product liability insurance, too; this covers you, for example, if someone gets food poisoning.

Site management is essential too, while making sure all activities you offer are covered.

Where external contractors are used always check they have appropriate cover in place and retain a copy of their insurances for your records.

Look for contractors to carry the same level of indemnity as your own policy.

Where this isn’t the case, careful thought should be given to the risk, especially when it comes to the likes of caterers where the risk of potential claims is considerable.

There are other considerations such as fire alarms and other emergency measures.

These need to be appropriate for the size of the property: if you’re insuring a £10m property smoke alarms aren’t going to be enough.

Opening a farm shop

Starting a farm shop is another well-trodden path – there are an estimated 1,500-plus farm shops in the UK.

Here, it’s essential to understand and comply with food safety regulations and licensing requirements.

Consider product liability insurance to protect you in the event of a claim as a result of a product that you have sold.

Other covers might include personal accident or key man cover for key personnel without which the business wouldn’t be able to operate. 

Every venue is unique so establishing appropriate, comprehensive business interruption cover is key to ensuring continuity of your business.

This advice only scratches the surface so speak to an insurance broker to get more detailed information about your specific plans and circumstances, every business is different.

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