There are many insurance companies that will entertain breweries large and small, but that does not mean that all policies are equal. In many cases, brewery insurance is a “square peg in a round hole”. Although insurance carriers will try to provide an all encompassing policy, all brewers should make sure that they carefully review their coverages. Below are a few areas that should be of concern to all brewers, both large and small
Production Brewery Coverage vs. Tasting Room Exposure Coverage
As we all know, every brewery is unique. Not all policies or carriers want to handle all exposures. Many carrier’s definition of a brewery is narrow, while others will allow more wiggle room. Inspections are not always performed and the first time you may realize you aren’t properly covered will be in the event of a claim. Take a moment to look at the classification on your policy. If your carrier’s definition includes a provision that beer is not supposed to be “consumed on-premise”, this could be a problem.
There are three major types of liability coverage that every brewer needs to be concerned with. These are Premises/Operations, Products and Liquor Liability:
A standard policy will include Premises and Products coverage, but Liquor Liability is a specialized coverage, which must be added on. Most brewers policies offer this coverage, but some carriers do not. In that event, a separate Liquor Liability policy may be purchased
Designated Premises Endorsement
As a brewer, most of your liability will stem from your on premises operations, but as we all know, the best way to expand your business is to get in front of crowds. It will not be mentioned on the declarations page of a policy, but some carriers include a Designated Premises Endorsement. This restricts your coverage to your location and its immediate surrounds. The problem with this restriction is that it will leave you vulnerable to claims at festivals, in-store tastings, street fairs, farmers markets and any other location you may be conducting business. To determine if this affects you, review your policies list of exclusions.
Special Events Coverage
If your policy doesn’t include a “Designated Premises Endorsement”, the other issue you could encounter is a special events “exclusion” or “limitation”. Many policies are very liberal with what they allow, but you may need to get a separate special events policy if you plan on hosting major events.
From time to time brewers will encounter a problem with a batch that just doesn’t go as planned. Most of these times, the problem is realized prior to making it out of the brewery, but a good brewers policy will include coverage to recall the tainted product if necessary.
Your stock should be covered in the event of your standard causes of loss, like fire or theft, but not all policies will cover food spoilage. Spoilage is not a standard covered cause of loss under a regular insurance policy. While temperature may not necessarily affect beer, it could be a tough pill to swallow if you had to replace a few thousand dollars worth of perishable ingredients out of pocket.
While these are just a handful of examples as to where you need to carry specialized coverage, there are always areas of concern distinct to each and every operation. As a business owner, you don’t have to be an expert at everything, but the best thing you can do is surround yourself with trustworthy and knowledgeable advisors. Don’t hesitate to ask questions and lean on your insurance agent to make sure that you won’t be left with a problem in the event of a claim.