Who doesn’t love brewery insurance?
Whether you are looking over your business plan and sipping a cold one, or you’re sitting in your tiny warehouse space with just a few barrels of foamy goodness, or even if you find yourself in your well establish brewery smiling in delight at the bustle of a busy brew floor, you have one thing at the forefront of your mind: brewery insurance.
Okay, probably not. But if you haven’t thought about it, you may want to. Insuring your brewery can be complicated, but not understanding it can cost you even more if someone sells you a bad policy just because they sound like they know what they are talking about. So let’s go into exactly what brewery insurance covers and make sure you know your Boiler & Machinery coverage from your Excess Liability. (See what I mean? Do you need this or what?)
Brew, drink and be merry.
Brewery insurance can be broken down into several different parts, which is fairly common in commercial insurance. Each part of this package policy gives protection to a different kind of accident, or risk in insurance jargon, that can happen to your brewery. I would say it is like an onion, with layers of coverage each building upon the other – but if that’s not a tired metaphor, I don’t know what is. Instead, let’s compare it to a beer.
Just as a beer has four main components – grain, yeast, hops, and water – a brewery insurance policy has four components: General Liability, Liquor Liability, Property Coverage, and Miscellaneous Coverage.
General Liability – This coverage is similar to all liability insurance in that it protects you from legal responsibility for events that happen either on your property or from some interaction with your business. If someone slips on your brew tour and gets injured, this is the coverage that would pay for their medical expenses – and your legal bills if they took you to court. Let’s call it the grain.
Liquor Liability – Since most breweries serve their beer on site, this coverage is a vital one. It protects you from responsibility for accidents that are the result of intoxicated customers. A drunk person who leaves your bar and gets involved in an auto accident can sue you for negligence – and it is this policy that would help pay for legal expenses to keep you safe. We’ll call this the hops.
Property Coverage – This is the coverage that most brewers think of when they think of brewery insurance. The building that covers you, the floor you stand on, the tasting bar up front, and importantly (especially!), the mash tun and brew kettles and all of your lovely, gorgeous tanks that make the fabulous beer bringing you fame and glory. Boiler & Machinery coverage is a part of this, and it helps you if your equipment breaks down. This is the yeast (get it, because it actually makes the stuff!)
Miscellaneous Coverage – A catchall category including things like: Business auto for cars, vans and delivery vehicles; Crime & Fidelity insurance; Umbrella/Excess Liability insurance to cover you if you run out of General Liability coverage (yes, it happens – lawsuits are expensive!); Employment Practices Liability Insurance for lawsuits by employees against the brewery; Cyber Liability insurance (in case the Russians start hacking for beer); many others. And last but not least, this is the water.
Additional Coverages – I know what you’re saying. “Wait what? You said four!” But just like Bud Light and Miller Light, sometimes there are additives to their beer (like rice, preservatives, corn syrup*, etc). The additives in your insurance policy can be things like Contamination & Adulteration insurance, which can protect you from risks like customers drinking a batch that you forgot to dump containing insanely high levels of acid and resulting in instant vomiting. Fun!
One size fits all. Kinda.
This policy can cover all kinds and sizes of breweries, whether you brew 100 barrels or 100,000 barrels. The amount of coverage can vary as well depending on size, equipment, level of production and risk exposure. We will be covering the parts of a policy in greater detail in future blogs and videos, so for now just knowing what the coverages are and how your brewery is protected gives you a major advantage. What do I mean? Let’s break it down.
Breweries come in all shapes and sizes. Some are big commercial operations with national distribution, others are micro-breweries that don’t have a bottling line, while others are basically restaurants that started making their own beer and it can only be bought in house. Each type of brewery has it’s own kind of risk, leading to coverages that can protect against those risks. Remember, craft can still mean big: according to the Brewers Association, “Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales).”
So our big craft brewer producing five million barrels a year will have tons of exposure, requiring broad risk management including property coverage for their massive production facility, business auto coverage for their vans and trucks, liquor liability for their thriving tasting room and restaurant, millions of dollars in general liability protection, and many pieces of additional coverages to protect against specific risks that they face on a daily basis.
But if we compare this to a new brewery with a humble thirty barrel production, there would be an enormous difference. Our micro-brewery would need general liability but on a smaller scale. They would also want property coverage for the few tanks and other equipment they keep in their rented warehouse space, as well as a business auto policy for the Subaru Outback one of the owners uses for deliveries – if it hauls your goods, it’s a work vehicle. They would not, however, need liquor liability since they don’t even have a tasting room, let alone a bar. They also would require very few additional coverages, though they probably should get Contamination coverage in case they don’t have a thorough quality control program up and running yet. At that level, “quality control” means drinking several bottles to see how it turned out! (Of course I know some of you have degrees in micro biology, so don’t @ me.)
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Don’t wait to be protected the right way.
If you have no idea what is on your policy and don’t even know who your agent is, send us a message through the link below or emails us at firstname.lastname@example.org. If you’re wondering who I am and why you should care, I will go over it in detail in a future blog and video. But the short version is I was a beer, wine and spirits buyer and distributor for ten years, most notably in the Venice Beach and Hollywood neighborhoods of Los Angeles, California. I drank it, I bought it, I lived it – and I want to do that again, but this time, by helping the people that make the stuff I love get the protection they need.
So what are you waiting for? Let’s get to work.