It is an exciting time for you! Your operation has evolved over the years from using glass carboys in your basement for your homebrew to signing the lease for a large commercial space. But before you pitch the yeast into your inaugural batch, you’ll want to make sure those new tanks are properly covered and […]
It is an exciting time for you! Your operation has evolved over the years from using glass carboys in your basement for your homebrew to signing the lease for a large commercial space. But before you pitch the yeast into your inaugural batch, you’ll want to make sure those new tanks are properly covered and that the substantial investment you’ve made in your brewery is covered. That’s where brewery insurance comes into play.
Brewery insurance can refer to one policy, or a comprehensive set of small business insurance policies, that protects your company against the financial loss of a claim. The most important brewery insurance policies for you will be general liability, commercial property, equipment coverage, and workers’ compensation. You can expect brewery insurance costs for general liability to be around $100 to $200 monthly.
Key Takeaways:
The type of coverage your brewery needs will align with the type of operation you are running. If it is a strict brewery with no public tasting room, coverages will be different from one that serves alcohol on site.
Sometimes called commercial general liability, this policy will be an essential building block of your brewery insurance. This coverage is important for several reasons. First, it contains protection for liability claims that someone was hurt or had property damaged because of the negligence of your brewery. It will also protect your company from allegations of advertising or personal injury (libel). Typically, general liability carries product liability too.
Beyond the very broad coverage general liability offers, it usually has several important endorsements. Some of these are:
Keep in mind that what endorsements are offered will come down to the actual provider.
Unless your brewery is deep in the heart of Texas or South Dakota—the only two states without broad workers’ comp requirements—then at some point, you’re going to need this insurance. The requirement threshold varies by state so you’ll want to look into when it is required. For example, in Illinois, if your brewery has one employee—even a part-time cashier—you are required to carry workers’ comp. But if you’re located in Georgia, the threshold is three or more employees.
Regardless of any requirement, it is a good idea to carry workers’ comp because it will help employees who become injured or ill because of the work. Let’s say you have an employee who has celiac disease and they become ill by breathing in dust from your dark roast malt. Your workers’ comp policy will help them during the downtime with a wage replacement and payment for any medical bills they may incur. Fortunately, workers’ compensation has employment liability protection for your brewery.
Whether you rent a space or own a building, breweries come with some expensive fermentation equipment. Odds are you’ll be required to get insurance for financing purposes but even if that isn’t a requirement, you should really consider making sure everything is properly covered.
Commercial property insurance is first-party coverage, meaning it is something you buy for the property you own. It can also be thought of as an umbrella term. For your tanks, you’ll want to consider some specialty policies like tank leakage and tank collapse. Both deal with specific issues that could result from damage to one of your fermentation tanks.
Another important type of commercial property policy to consider is equipment breakdown coverage. This important coverage for a brewery will help repair or replace expensive recruitment if it breaks down, including the labor for the repair and lost income.
If you purchase a business owner’s policy, sometimes abbreviated to BOP, you may very well have a chance to get all of this coverage in one policy. A BOP is a bundled policy of general liability, property, and lost business income. It often comes filled with endorsements specific to an industry. For example, a BOP for a brewery may have the optional endorsement of contamination in case you end up with wild bacteria in your brew.
While the heart of a brewery operation remains the same for each business, the type of brewery and scale of operations will impact the types of coverage you need. Here are a few additional types of coverage you should consider for your brewery.
Despite its name, liquor liability isn’t just another form of distillery insurance. It covers losses involving all types of alcohol: wine, cider, beer, and liquor. If your brewery has a tasting room and serves alcohol on its premises, this coverage immediately becomes an important part of your business.
Here’s the thing: 43 states have dram shop laws that govern how negligence can be applied in incidents involving alcohol. This means that if you serve someone who later gets into a fatal car accident, your establishment could be held liable for the loss. While that is an extreme example, it is an unfortunate circumstance where you could then file a claim on your liquor liability policy.
You aren’t going to find an actual policy called “distribution.” But, if your brewery distributes its product to local stores and restaurants, there are a few extra coverages to check out. If you distribute by company-owned vehicles, you will need commercial auto insurance. If a third party transports your goods, you’ll want to look into cargo insurance in case something happens during the trip from your brewery to the final stop.
An often overlooked but important coverage is a short-term liability policy called special event coverage. If your brewery hosts special events, you’ll need a special type of policy to cover those events. This is because standard liability policies are designed to cover typical operations and a special event doesn’t fall under that definition.
However, if your brewery hosts regular tours to the public, even ones with tickets, then your regular general liability should be sufficient; the regular aspect would make this part of your normal business.
So, finding providers that will give you a quote online for a brewery is very difficult. That makes it difficult to come up with any accurate average brewery insurance cost. That said, many insurance companies and agents publish a range of figures for how much brewery insurance costs. While it is a pretty big range, you can expect to pay between $500 to over $1,000 per month for brewery insurance. This range would be for several policies including general liability.
When you’re looking to purchase brewery insurance, be prepared to go into some detailed answers about your business. Some questions you will be asked will involve:
If your brewery serves alcohol on site, then there will be some more specific questions around that including:
Information captured from these data points helps providers accurately assess risk and determine a premium. It is important to answer these questions honestly as it will not only influence the premium but also the type and amount of coverage the insurance company thinks would be best for your brewery.
Why purchase brewery insurance? Well, here are some examples of how it can help you.
A lightning strike to your building causes the temperature control element on your fermentation tank to stop working. The current bath was ruined and the tank needs to be repaired. Thankfully, you can file a claim for equipment coverage and lost business income while the brewery is closed for repairs.
Or during a brewery tour, a visitor trips over a misplaced cord and falls, injuring their ankle. This is the type of “slip and fall” claim that general liability is purchased to handle.
While these examples are fictitious, I’ve handled several losses in the past that are very similar. Unfortunately, no matter what precautions you take, things will happen. That’s why brewery insurance is so important.
You don’t have to wait until opening day to purchase brewery insurance, you can select the date you’ll need coverage to begin so that the two coincide. There are three options to purchase brewery insurance: through an agent, broker, or provider.
There are two different types of agents. Some agents work only for one insurance company, and others are independent agents, meaning they work for multiple companies. Another option is a broker. The advantage of a broker is they don’t actually work for any specific company, and instead, work for the customer. This is usually the format that lets you compare quotes from different providers.
The final option is to get insurance directly from a provider. Some insurance companies will sell directly to customers. An advantage of going this route is the policy is usually cheaper because there is no commission or fee for an intermediary. Sometimes, you can save as much as 20% when going directly with a provider.
Craft brewery insurance is a key part of a successful business plan. Craft brewery insurance is a policy, or combination of policies, that will help your business in the event of a claim. General liability, workers’ compensation, and different types of commercial property are the most important policies for your brewery. Whether it is a double IPA or a Saison currently in the tank, it is comforting to know that you’re protected if something happens. Insurance can help remove the worry of a loss so that you can focus on delivering the perfect brew.
Nathan Weller is a licensed insurance adjuster, with more than a decade of experience in commercial insurance. He has helped build a claims department at an insurance start-up, and currently advises small business owners about insurance topics. In between his time working at different insurance carriers, he spent 8 years running a small, non-profit organization. Nathan understands small business pain points alongside the complexities of insurance.
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