Craft breweries and distilleries are popping up everywhere these days. What was once a garage project or test kitchen hobby is now a major industry across the country. In South Florida alone, 11 new breweries and hard-cider makers are set to open during the first few months of 2017, per the Florida Brewer’s Association. Through different combinations of production warehouses and public tasting rooms, small neighborhood breweries and distilleries are changing the way that consumers experience tasting their new favorite small-batch beverages.
With the rise of these types of businesses that combine a major industrial production process with the option for anyone off the street to visit and taste the product right on site, there is also a unique set of risks that arise due to the intricate operation of these facilities. Those choosing to open this type of business should be aware of these risks and understand the insurance needs associated with doing business in this growing industry.
Craft Brewery and Distillery Insurance Considerations
When examining the insurance needs of breweries and distilleries, there are three main risk categories that dominate the common claims made regarding this type of operation: general liability, equipment and property liability, as well as workers’ compensation.
1. General Liability – When a business is open to the public, it is always important to consider that there are inherent risks with people physically coming in and out of your doors.
In addition to the risks of serving alcohol at your business, there are also additional liability considerations that may not be as obvious. If you operate a brewery you should make sure your General Liability policy includes product recall. Which Property Casualty 360 cites as one of the more common claims for a business in this industry. In addition to being properly covered for this kind of event, it is also important for operators to have rules and signage in place to help guide and protect customers who visit the facility.
2. Liquor Liability – When you are dealing with serving alcohol, it goes without saying that it’s absolutely necessary to carry Liquor Liability coverage. It’s extremely important that staff is adequately trained on the risks associated with serving alcohol to avoid any potential claims of negligence, but also that the business is insured to handle the inherent risks of customers consuming these beverages on site.
3. Equipment and Property Liability (production) – When you are the owner and operator of large production equipment, there are additional risks with regards to operation and product quality that must be considered. Per Property Casualty 360, some of the top equipment and production claims from breweries included items such as: bottles broken during distribution, moldy beer under the cap due to improper sealing, contaminated beer due to unsanitary production conditions, and kegs freezing and exploding in the walk-in cooler. These are all risks associated with a production facility onsite, and must be covered when considering insurance needs for your brew business.
4. Workers’ Compensation – This risk may have some overlap with the previous when there are claims made from workers who may have experienced an injury during production of the product. Concerns over burns from the brewing process or injuries related to improper lifting techniques are some of the common claims according to Property Casualty 360. Brewing craft beer and spirits is a physical job; requiring workers to be properly trained on safe handling techniques, and requiring business owners and operators to have safety procedures in place to protect themselves and others against accidents or negligent behavior. Unique to this industry are the insurance needs that accompany a highly physically demanding operation.
5. Additional Policy Considerations: EPLI & Cyber – Employment Practices Liability (EPLI) and Cyber Insurance are two other coverages breweries need to consider when reviewing their Risk Management Portfolio. EPLI provides coverage to employers against claims made by employees alleging discrimination (based on race, sex, age or disability), wrongful termination, harassment, and other employment related issues. Cyber insurance covers a business’ liability for a data breach in which its customers’ personal information is stolen, the associated costs of forensic analysis of the severity of the breach and notifying your customers of the breach.
If you are considering operating a brewery or distillery business, please contact Andy Fajardo at 305-666-6636 to learn more about the unique risks and insurance packages available to cover you in the event of one of the above-mentioned claims. We can help you decide the right combination of coverage for your business.