Do you know insurance?

If you run a business, you know that insurance is one of your top operating expenses. Some others on the list include payroll, merchandise, advertising, permits, licenses, fees, etc. For most of these items, it is easy enough to understand what you’re actually paying for. However, how do you know that your insurance is worth it? Are you a licensed insurance broker? No of course not; you’re too busy running your business to have time to figure out all that legal jargon.

There are a few distinctions to be made in the insurance world. First, is the person you are dealing with an agent or a broker? Do you know the difference? Second, does the coverage you are paying good money for actually apply to your business? Do you understand all of the exclusions and endorsements? And third, do you understand the process involved in recovering from a loss?

Let’s start with the first item: agent vs. broker. Basically, an agent represents the insurance carrier (Travelers, Hartford, State Farm, etc) and a broker represents the business owner (you!). When dealing with an insurance representative, ask whom it is they are representing. Some can do both – in fact, many brokers work for agencies. In other words, the company they work for has a responsibility to the carriers but the individual broker has a responsibility to the business owner. It is an important distinction to make because, in the event of a loss, you want to know that the person you’re dealing with has your best interests in mind.

Now, coverage: this needs to be tailored to your business. You are a craft brewer and there are specific programs from various companies that meet your needs. I’ve seen craft brewers with bar/tavern coverage. While the needed liquor liability is there, many of the other risks specific to your business are not covered. Why? Because the carriers want to know EXACTLY what they’re getting into – after all, they are on the hook for large sums of money if something goes wrong! Your broker (you are working with a broker, aren’t you?) should understand what you’re doing to the letter, and he/she should classify your business properly. Some important endorsements include spoilage, leakage, and equipment breakdown. Did your grains get destroyed by mold? Do you have coverage for that? Did a forklift run into a kettle and ruin a batch of brew? Can you recoup the loss? Did a boiler explode and damage your building? How will you stay in business during your repairs? These are all things you should know the answer to immediately. In other words, if an emergency occurs, and you’re driving to the brewery to assess the damage, are you thinking, “I hope that cheap coverage includes this catastrophe!” or are you thinking, “This will be inconvenient, but at least my policy will pick this mess up.” I hope it’s the latter. Did your major supplier have a fire at their warehouse and now they can’t get you your orders? How are you going to make up the difference? If you have the right coverage, it’s all part of getting value out of your insurance policy.

Finally, let’s talk about loss recovery. I can’t tell you how many people I’ve spoken to who haven’t filed claims because they didn’t know that their loss was covered! Did you know that the damaged property is not the extent of your loss? What happens if a boiler explodes and does severe damage? You certainly can’t just turn the process on and off at a whim – especially not when the time element of fermentation is involved. Do you have loss of income coverage? That picks up your monthly expenses while you’re rebuilding and it may include things like key-person payroll expenses. Master brewers aren’t a dime a dozen – you need to keep them happy! Your insurance policy can and should have provisions for that. These are just a few things to look for in your policy. There are many more, and most of them are not a la carte line items to be paid for one at a time. Rather, they typically are part of a package that is built (underwritten) for your business. You just need to know that they are there and how to use them to your benefit.

Nate Zacek