Yes, we should and do avoid what is harmful, and yes people are hurt in a free market system, but it only because some actors are not ethical(greed’s influence causes people to take short cuts for greater gain than they deserve), or the injured has made a decision that is inefficient(i.e. ignoring or mis-estimating due diligence). 

The free market is always heading in the direction of efficiency. Every creature on the planet wants the most gain for the least amount of effort, and that is regulated by risk taking depending on the situation.