Insurance Planning for Craft Breweries

“There are worse things in life than death. Have you ever spent an evening with an insurance salesman?” -Woody Allen

We recently went through our insurance renewal. This is a painful experience for some, but I actually enjoy the process. It’s an opportunity to have a business discussion about the brewery, and make sure the proper insurance coverages are in place.

The purpose of insurance is to reduce your exposure to business risks. Risks are everywhere and for the right premium amount insurance brokers will gladly write a policy to cover most any scenario. The key is to make sure you have the right types of coverages in place for a brewery.

As our broker told us during our renewal, few insurance brokers offer brewery specific endorsements. In other words, few insurance companies are writing their policies to ensure that brewery-specific risks are covered. Therefore, it’s your job to ask the right questions to make sure your brewery risks are covered.

In this article I’ll share several brewery risks that are commonly overlooked, and how you can protect yourself against them. Protection may come in the form of insurance coverages, or a simple form you can use to limit liability and risk. An ounce of prevention can save a pound of insurance claims.

3 Brewery Risks and How to Protect Yourself

  1. Events in the tap room and the Certificate of Liability
  2. Sub-contractors in your brewery and the hold harmless agreement
  3. Beer in transit and cargo coverage

I’m not a lawyer or an insurance broker, and this is not legal advice. However, these are ideas and questions to bring up in your next meeting with your insurance guy to make sure you’re protected.

Events in the Tap Room

Breweries bring in music acts, yoga instructors and outside organizations to hold events in the tap room. If something goes wrong during one of these events it will be your problem and your liability.

The Certificate of Insurance is a one page document that serves as proof of insurance. It shows the coverages and limits in place for an organization. This is the document you’ll want to get from any outside organization that will use your tap room.

The Certificate (COI) also has a place to indicate an ‘additional named insured’. Since the insurance coverages protect the policy holder (the outside organization that will use your tap room) you want to make sure you are covered, too.

Request that the organization have their insurance company send you a COI with your brewery as the additional named insured. This way, there’s no doubt they have coverage and that you are covered. The process takes five minutes and the document can be emailed to you for proof of coverage.

The COI is quick, it’s easy, and it will make sure you are protected.

Sub-Contractors in Your Brewery

Plumbers, electricians and repair techs are in and out of your brewery all the time. Things break and these good folks come in and put things back together so that your brewery remains up and running.

However, if these tradesmen get hurt in your brewery it may become your financial problem to fix.

Anyone can sue anyone for anything. That’s our legal system. A hold harmless agreement from your contractor, along with a Certificate of Insurance naming your brewery as additional insured will provide you needed protection.

The hold harmless agreement is designed to release one party (you) from liability due to the act of another party (the plumber hanging off the roof rafter). This type of agreement is usually included in a construction contract and will minimize the risk of being sued in the event of an injury or accident.

To get this right, have your lawyer draft up a document you can use with your subs. Alternatively, your insurance broker may have a template form that you can use to protect yourself.

Sub-contractors do good work and are necessary to maintain and grow brewery operations. A COI and hold harmless agreement will make sure you are protected while they are in your building.

Beer in Transit

If you deliver your beer to retailers or distributors and there’s an accident, make sure the value of the product is insured. A 53′ trailer can hold about 20 pallets of beer. That can quickly add up to $30,000 or more of product.

Check with your insurance person and determine if you have Cargo Coverage. This will protect you from any loss or damage to product that is shipped out.

Likewise, check and see if raw materials being delivered to you are covered (hops, malt, packaging materials). The terms with your vendor will indicate when ‘title’ to the goods transfers to you. Once title transfers, you own the materials, and the liability if they are damaged in transit.

A few simple questions of your insurance broker and vendors will identify whether you have exposure on beer in transit. Cargo coverage is relatively inexpensive, and provides peace of mind while delivering the beer.

Wrap Up + Action Items

The annual insurance renewal is a good time to have a business discussion with your broker. Talk about your plans, your operations and any changes you expect in the new year.

Review the three common brewery risks noted here and talk to your broker.

  1. Events in the tap room and the Certificate of Liability
  2. Sub-contractors in your brewery and the hold harmless agreement
  3. Beer in transit and cargo coverage

Do you have coverage for each? Does your broker have template agreements to lower your risks? When do you ‘own’ the hops and raw materials being shipped in by vendors?

A short meeting with your insurance broker can go a long way towards protecting your brewery against financial risks. There are worse things in life than death, but a meeting with your insurance guy is worth the risk.

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