Almost everyone who gets involved in the brewing industry dreams of growing their business and their brand. However, with growth come additional risk that need to be managed. Below are some items to address with your insurance broker if you are in the process of growing or changing aspects of your operations;
- Increasing property coverage limits: Going from a 3 barrel system to a 7 barrel system for example, brings with it some items that should be addressed to make sure your coverage is adequate for your needs. Firstly, you’ll want to inform your broker about the cost of your brewing equipment, so it can be added to the policy. You don’t want to find out after the fact that the amount of insurance you needed a month ago isn’t enough to replace your new equipment. Secondly, more production capability means more inventory on hand. Some policies will cover your product either while in production or after it is finished. Make sure that this is something that is covered (preferably at market price as opposed to production cost) and that you increase your limits for the amount of beer you will have on hand.
- Transportation coverage: Once you begin distributing product, you will want to make sure your policy provides protection for beer that is being delivered, whether it is by you or a distributor. The more you are selling your beer to others off premise, the higher amount of insurance you will want to make sure you have so that if something happens, you are not in the hole for your loss (again, a policy that covers your beer at retail value is ideal)
- Workers compensation: Once you grow to the point where you hire employees, you will need to purchase workers compensation and short term disability policies to protect your employees. Rates for employees who tend bar and/or prepare food are around a little under 3% of their gross payroll. For employees involved in the brewing process that rate is around 10% of their gross payroll. If you already have a workers comp policy, let your broker know as you add staff to make sure the right class codes are on your policy, and to help you budget for increases in your premium.
- Employment Practices Liability: Typically recommended once you hit the 10 employee mark. This insurance protects you by providing defense costs in case there is an allegation of sexual harassment, hostile work environment, wrongful termination, or discriminatory hiring practices. The cost to defend these suits typically starts at around $15,000, far more than the few hundred dollars that this coverage typically costs.
- Cyber Liability: For breweries that sell through their web site and frequently obtain customer’s credit card information, this policy provides a variety of coverages in case there is a breach and your customer’s data is compromised. Costs to simply notify a customer that there has been a breach (which you are legally obligated to do) costs on average $250 per customer that needs to be notified. On top of the other costs and damages that come with a breach, cyber liability is a far more economical alternative.