Operations for craft breweries are unique….
- What other small business owners invest in 2,500 gallon tanks?
- What other industrial facilities get to run a bar on their premises?
- What other manufacturers get to celebrate beer at their product exhibitions?
To match their unique operations, breweries need a package of insurance coverages that appropriately manage their special risk exposures.
The Right Insurance Package
Establishing the right concoction of coverage lines is up to the brewery owner / manager.
Some want to focus on the core ingredients. Others add-in ‘flavors’ like Crime coverage or Cyber Liability.
Let’s explore both options…
|Commercial Property||Coverage for fire, hail, vandalism, theft and other hazards that cause damage to your facility and / or business personal property.|
|Equipment Breakdown||Coverage for ‘sudden and accidental’ equipment breakdown (ie – electrical arcing, mechanical failure). Not intended to cover ‘wear and tear’ breakdown, but still a key coverage for breweries with expensive equipment.|
|Business Interruption||An electrical fire near your tanks render them in-operable and production comes to a halt. ‘Business Interruption’ pays for a temporary equipment while you go through the process of buying replacement items.|
|Brewers Spoilage and Contamination||A utility interruption shuts down power, causing the current batch to spoil, costing you $10,000 in lost revenue.|
|Products Liability||A bad batch of a new recipe has traces of E-Coli, causing a consumer to be hospitalized. He sues the brewery for his damages. Products Liability covers bodily injury and property damage caused by your product.|
|Liquor Liability||The serving area of your facility is ‘laid-back’, and offers generous quantities at a low price. Some tasters have a low tolerance, and as they leave the facility, cause an accident. The victim sues you for over-serving.|
|Product Recall Expense||After distributing their product, a covered cause of loss forces the brewery into a recall situation. ‘Product Recall Expense’ pays for the costly process of withdrawing these items.|
|Commercial General Liability||During a group tour of the facility, an elderly man loses his footing on a wet spot, slips, and shatters his hip. While the $5,000 medical payments covers some costs, the man’s family seeks additional restitution from the brewery’s GL policy.|
|Commercial Automobile||After several years of sustained growth, a brewery decides to do their own delivery. Adding trucks, drivers, and loading operations to their business model, they also need proper insurance to cover auto liability, physical damage, PIP, uninsured motorists, and loading / unloading liability exposures.|
|Workers’ Compensation||In an effort to cultivate an enjoyable work environment, management offers relaxed guidelines for employee operations. Working with high-pressure equipment and operating at a raised elevation, an employee doesn’t properly turn-off the equipment and injures his hand fixing a busted valve.|
|Property in Transit||You’re transporting inventory, kegs, other beer equipment to a festival. Someone steals the equipment while unloading or while the truck is parked.|
|Property off Premises||If you’re at a festival, exhibition….you’re property is not ‘in-transit’, and you would need this particular endorsement to cover theft.|
|Commercial Umbrella||Add an extra $1m, $3m, $5m, $10m, or more of liability coverage to ensure your assets are fully covered in the event of litigation. Umbrella policies sometimes offer broader coverage than the underlying GL, Auto, etc|
|Non-owned and Hired Auto||Your brewery doesn’t own any vehicles, and occasionally the employees use their personal vehicles for work activities. If they are in this situation and cause a wreck, this insurance provides coverage. Similar coverage applies for autos ‘hired’ or rented by the brewery.|
|Employee Benefits Liability||An office administrator fails to correctly apply the group benefits plan. An employee then has a medical situation which calls for the group health coverage to kick-in. EBL covers this situation.|
|Employment Practices Liability||Coverage for a situation where an employee sues the brewery for harassment, discrimination, or wrongful termination.|
|Crime||Coverage for a situation where an employee steal company money via forgery, alteration, wire transfer fraud, etc.|
|Cyber Liability||Coverage for a situation where a hacker breaches the IT systems, steals valuable client data, and threatens to expose the info on the dark-web.|
Like their beer recipes…the brewery has the final say on what they want in their insurance package.
One piece of advice – brewery management must assess what risk they wish to transfer (to insurance) and what they wish to retain.
- If customer data is minimal, you may choose to retain cyber liability risks
- Workers Comp is not mandated in Texas, and a well-oiled operation may elect to retain employee injury risks.
- If beer festivals and exhibitions are a major element of your marketing strategy, it might be in your best interest to transfer ‘property in transit’ and ‘property off premises’ exposures.
The CFO / risk-manager for a brewery ought to spend some time outlining the company’s risk-profile, and formulating a risk strategy that determines the best way to manage (transfer / retain) exposures.