Craft Brewers and Distilleries need Specialized Insurance
You are operating a craft brewery and you discover that there is a problem with a batch of beer that you manufactured and sold. Now you have to withdraw that product. Does your current business insurance policy provide coverage for the expense to withdraw that product? If not, then it is time to talk with Huff Insurance for your Maryland brewery or distillery.
Equipment breakdown can cause a huge disruption to your business in time and money. A power surge at a microbrewery caused an electrical breakdown, the compressor needed replacement and not the entire system, therefore they did not have a business income loss but they still have $9365 in property damage and $7200 for a spoilage claim. If this happened to your business, do you have the proper protection?
As a craft brewery or distillery, you have specific needs because of the operations of processing water, contamination and adulteration.
Craft Breweries have some distinct coverage needs that are different from some other businesses
You want to be sure when you are reviewing your insurance coverage that you have considered the following:
Property Insurance Coverage– You not only want to insure the building and the equipment but also you want to be sure that the policy expands the definition of the building to include all of the additional piping, plumbing and electrical that you may have ran to satisfy your needs as a craft brewery, even if you do not own the space.
Spoilage Insurance Coverage: You want insurance coverage for spoilage that is caused by mechanical breakdown and/or loss of power. In addition, you want to be sure that you have what is called peak season coverage. If you sell the majority of your inventory at certain times during the year you want to be sure that your coverage limit increases appropriately during these busy times times. Another thing to keep in mind is that you want to make sure that when the company is evaluating your loss that they are using the market value of your inventory. In doing this, your claim will be paid on what you could have sold the inventory for at the retail prices and not pay just for the underlying cost of the inventory itself.
Product recall expense Insurance coverage: Product recalls happen on a frequent basis these fays Should you find yourself in a position to have to issue a recall one of your craft brews, you want to make sure you have the coverage to pay for the expenses associated with the said product recall. . In addition to the recall expense insurance coverage, you should also have contamination & adulteration coverage.
Business income and loss of income insurance coverage: This is a very important insurance coverage. Should your craft brewery have to close down for a period of time due to a covered cause of loss, you want to make sure that you have this valuable coverage. Because even though you are not making money in your business, there will still be bills that have to be paid. And this is where the business interruption coverage will come in play,
Equipment breakdown insurance coverage: Your equipment is valuable and essential to the success of your business so you want to make sure that you are covering it properly. You also want to be sure that beverage product leakage, known as tank leakage, is covered under the insurance policy.
Liability insurance coverage: Your liability insurance needs to include coverage for the premises, including any tasting rooms, restaurant space and lounges. Your policy needs to provide liability insurance for both your premises and your products.
Liquor liability insurance coverage: Since your business involves serving alcohol, in addition to the general liability insurance, you also need liquor liability insurance. Also, make sure that you have special event liability to cover any off- premises events.
Umbrella Insurance policy: An Umbrella insurance policy will provide you additional limits of liability insurance. With the frequency and size of lawsuits happening these days, it is always a great idea to have an umbrella policy as part of your insurance protection plan.
Worker’s compensation insurance coverage: In the event an employee is injured on the job, workers compensation insurance is a must have.. There are types of roles in a distillery or craft brewery. so separating your clerical, restaurant, manufacturing and delivery employee payroll will help ensure that you are paying the proper rate for your workman’s comp insurance.
Employment practices liability insurance (EPLI) coverage: protects the business if an employee alleges sexual harassment, discrimination or unfair hiring practices. EPLI coverage is a must in the craft brewery/restaurant business. All it takes is one employee to make an accusation of sexual harassment and you could be out of business without this coverage. One of the key items to look for in this coverage is to have what is called “Defense Outside Of Limits” provisions. This clause means that the attorney fees with not be part of the insurance limits in the policy. So if you have an EPLI policy for $500,000 and get involved a long drawn out lawsuit, and you do not have this clause, the attorney fees could use up most, if not all, of the policy limits. We have seen attorney fees for harassment suits go into the hundreds of thousands of dollars.
Operating a distillery or craft brewery is very complicated you need to work with an agent that can accommodate you and can help your business grow by making sure that you have the appropriate distillery insurance or craft brewery insurance coverage in place. Give Huff Insurance a call at 410-647-1111