Our guest contributor Marc Cohen is a risk consultant with the Property & Casualty department at Bearence Management Group.
All businesses follow the same general principles of insurance, and some of those businesses will be entirely covered by the basic policies – general liability, property, auto, and workers compensation. But because breweries are unique, they need are many additional endorsements, found in what we refer to as a specialized insurance program. These days no two breweries are alike and are nothing like the breweries of past generations. What used to be factories set up as manufacturing plants are now set up more as destinations for entertainment, offering tours, live music, tasting rooms and even food. As craft breweries grow and evolve, so do the insurance programs by several insurance carriers.
The following are specialized types of coverage specific to a brewery operation and not included in your basic policies:
- Broadened definition of property: Your raw materials are stored outside the building in silos or sheds. To cover those materials, you may need a broadened definition of property endorsement depending on how far these storage places are from your building. Here’s another example of broadened property: think about all the pipes moving water and ingredients around to the different tanks. If these pipes were to go out of commission and need repair, you would need to find coverage here.
- Spoilage and contamination: The power goes out on the whole block because a substation was hit by lightning, and your whole batch of Octoberfest is ruined. Or, your raw material is contaminated in refrigeration or while in storage. This coverage pays to replace the beer and/or raw material and may also pay for the lost profits while you get back up to speed.
- Product recall expense: A good segue from spoilage. Say you inadvertently send a contaminated batch of brew out. If you learn that you must withdraw your product from the market before it causes harm to consumers, you find coverage here for those many expenses incurred in that process.
- Business income from dependent properties: One of your key suppliers experienced a fire and therefore was cut off from making deliveries for an extended period of time. Would that interrupt your business, and do you have coverage to make up for lost profits?
- Equipment breakdown: This coverage will pay for replacement, repair, and in most cases rental of temporary equipment if necessary in the event that any piece of equipment were to break down.
- Beer leakage/tank collapse: Your employee drives a forklift into a tank, puncturing it, and beer spills everywhere, or a tank collapses. This endorsement pays for that lost beer.
- Property in transit: Once your product leaves your building, it is no longer covered under your business personal property. If you are headed to a tasting, a trade show, or delivering product to a customer, and your vehicle is involved in an accident, ruining all your product, you will find reimbursement here. This coverage may also cover the raw materials you order while they are in transit to you.
- Seasonal increase: You may be a lot busier in the summer months, resulting in 25% more inventory than what is typical. This endorsement automatically increases the value of your inventory.
- Liquor liability: If your brewery has a tasting room, this is a no-brainer. Pretty straightforward: a guest has a few too many, leaves your brewery, gets behind the wheel and is involved in an accident. Your business may get sued.
- Umbrella: Umbrella extends over your general and auto liability, but most policies exclude liquor liability. It is imperative to buy an umbrella that does not exclude the liquor liability.
- Risk control services: Does your current carrier include risk control consulting in the premium you pay? To help prevent claims, some of the better carriers out there will visit your establishment and write up a review on things that may cause exposure to loss. Many of my clients have taken advantage of these services and find a lot of value in the visits.
Many or all of these types of coverage can be conveniently bundled into a single program if you are with the right carrier. The prices will vary depending on how high a limit you want to set. Your agent should take the time to go over every exposure and the values of all your property, inventory and equipment, and take care to place you with the best customized insurance program that fits your operation.
A specialized industry like craft breweries requires an insurance agent who truly understands your operation in order to adequately protect it. If your agent does not know the difference between a lauter tun and a fermentation tank, then you may want to have a second set of eyes on your current insurance program.
By Marc Cohen
Contact Marc Cohen at firstname.lastname@example.org or 651-379-7852 with questions or to schedule a no-obligation policy review.