How To Keep Your Business on Tap With Brewery Insurance
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Brewery insurance refers to a collection of insurance products that may be important for breweries. Your brewery insurance package may include a mix of coverage types that are standard across most businesses and coverage types that are specific to the needs of the brewing industry.
Keep reading to learn about the types of coverage you might need for your brewers’ insurance program and how you can make sure your company is protected from liability risks.
Do I Need Insurance To Run a Brewery?
Depending on the size of your company and the state you live in, you may be required to purchase commercial insurance for your brewery just as you would for any other business. For example, most states require businesses to have workers’ compensation insurance and commercial auto insurance.
Of course, it’s worth considering other coverage types, especially those that are specific to the brewing industry, even though these generally won’t be required by law.
Some insurance providers may even allow you to handpick the coverage types included in your brewery insurance program in order to tailor it to your business’ specific needs. For example, national brewing companies with multiple locations will need brewery insurance programs that account for different risks than microbrewery insurance programs for one-off locations.
What Types of Insurance Do I Need for a Brewery?
See below for examples of some of the most common types of commercial insurance for brewery owners to consider.
General Liability Insurance
General liability insurance covers your business if it is held responsible for injuring someone, damaging their property, defaming them or violating their copyright through an advertising campaign. In these situations, general liability insurance can cover medical bills, repair costs and legal expenses if a claim escalates into a lawsuit against your business.
This type of coverage is especially important if you operate a brewpub or any other type of brewery where customers are regularly on the premises since there is a greater chance of a patron getting injured or having their property damaged and blaming your company. Regardless of the type of brewery you operate, general liability insurance is important to protect your business from personal and advertising injury claims targeting your marketing materials.
In addition, some general liability insurance policies automatically include product liability insurance that covers your brewery if it is accused of harming someone through a defective product. For example, product liability insurance might cover your legal defense costs if you were sued by a patron who got sick after drinking your beer.
Liquor Liability Insurance
Liquor liability insurance similarly covers medical bills, repair costs and legal expenses if you are held liable for the actions of a drunken person who damages property or injures themselves or others. Most states have dram shop laws that allow businesses to be sued if they serve alcohol to a minor or someone who is already visibly intoxicated. As a result, this coverage type is crucial for any brewery that has an attached bar, restaurant or taproom that serves beer.
Pollution Liability Insurance
Pollution liability insurance covers medical bills, repair costs, legal expenses and cleanup costs if your company is held responsible for damaging the environment. For example, pollution liability insurance could pay a legal settlement if wastewater from your brewery contaminated a nearby body of water and killed several fish.
Commercial umbrella insurance is a type of excess liability coverage that kicks in if you exhaust the coverage limits on another type of liability insurance included in your policy. For example, if you have $1 million worth of general liability insurance but have to pay $1.5 million in medical bills after multiple guests are injured in an accident during a brewery tour, your umbrella coverage would pay the extra $500,000.
Umbrella insurance is unique in that it can apply to multiple types of liability policies at once. As a result, if you reach your coverage limit on your general liability, liquor liability or pollution liability insurance, your commercial umbrella insurance could cover any remaining costs.
A business owners policy (BOP) is a coverage package that is popular among small and mid-sized businesses because it bundles general liability insurance with commercial property insurance. Commercial property coverage insures both the structure of your brewery and the contents stored inside against perils like fire, explosions, theft, vandalism, burst pipes and storms.
BOP insurance also typically includes business interruption insurance, which covers lost income and temporary relocation costs if a covered peril forces you to shut down your business. For example, if a vandal broke into your brewery and damaged all of your fermentation tanks, commercial property insurance would pay to replace the equipment while business interruption insurance would provide money for you to continue paying your employees while you are unable to make beer.
Equipment Breakdown Coverage
Equipment breakdown coverage pays to repair or replace equipment that stops working due to a sudden mechanical or electrical failure. It kicks in if your equipment is damaged by short circuits, motor burnouts and several other sudden losses that aren’t covered by commercial property insurance.
Commercial Auto Insurance
Since a personal car insurance policy typically excludes coverage for business activities, you will need to purchase commercial auto insurance for any cars your brewery uses. Along with insuring the vehicles your company owns, you may also want to buy hired and non-owned auto coverage endorsements.
Hired auto coverage insures cars that your employees rent, lease or borrow for business purposes. Meanwhile, non-owned auto coverage insures your employees’ personal vehicles if they ever use them to conduct business activities.
Cyber Liability Coverage
Cyber liability coverage insures your business against financial losses from digital crimes. For example, cyber liability insurance might pay for legal expenses after a data breach enables someone to steal the credit card information of a wholesaler you frequently sell to.
Workers’ compensation insurance pays to reimburse employees who are injured or become sick on the job. A workers’ compensation policy can cover medical bills, rehabilitation costs, lost wages, disability payments and death benefits. Every state has laws mandating workers’ compensation coverage for certain companies, usually based on the number of employees they have, although Texas only requires this coverage type for companies contracting with the government.
Spoilage and Contamination Insurance
Spoilage and contamination insurance can cover the costs that arise if your product spoils or becomes contaminated due to a prolonged power outage, equipment failure, a virus outbreak or even employee negligence. This coverage type may pay to replace contaminated beer, clean equipment, purchase medical tests for employees and run advertising campaigns to restore your business’ reputation if necessary.
Additional Policies To Consider
Other coverage types that may be worth adding to your brewery insurance package include the following:
- Commercial flood or earthquake insurance: Commercial property insurance policies commonly exclude damage from floods and earthquakes, so it may be worth purchasing extra coverage if your brewery is in a region prone to these natural disasters.
- Employee practices liability insurance (EPLI): EPLI can cover the legal expenses surrounding claims of sexual harassment, discrimination, wrongful termination and other violations of employee rights.
- Errors and omissions (E&O) insurance: E&O insurance, also known as professional liability insurance, covers financial losses due to an error in production or the performance of commercial activities. For example, it might cover legal expenses if a wholesaler sues your brewery for failing to deliver its product on time.
- Product withdrawal or recall coverage: This coverage type pays any costs associated with a product withdrawal or recall such as notifying distributors and investigating the source of the issue.
- Tank collapse and leakage coverage: You may want to add extra coverage to pay for property repairs and lost income in case a tank collapses or leaks due to something other than a peril covered by your existing policy.
- Marine insurance: Ocean marine insurance covers cargo that is being transported by sea while inland marine insurance covers cargo that is being transported by land.
How Much Brewery Insurance Coverage Do I Need?
General liability insurance for brewers commonly comes with a $1 million coverage limit per occurrence and a $2 million aggregate limit. However, you may need higher limits depending on the scale of your business and other characteristics of your brewery. In general, the bigger your company is, the more liability insurance you will need to purchase.
You should also consider buying commercial property insurance with high enough coverage limits to replace your brewery and all of its equipment in case of a total loss. As a result, you should regularly evaluate the replacement cost of your property and update your coverage limits as necessary.
Similarly, you will need to evaluate how many types of coverage it makes sense to purchase for your business. For example, a brewery that sells all of its beer to external distributors and never serves alcohol to customers on site may be able to get by without liquor liability insurance but will most likely need errors and omissions insurance.
What Risks Could I Face Without Brewery Insurance?
If you don’t buy business insurance for your brewery, you risk having to pay for medical treatments and property repairs out of pocket anytime someone is injured or has their property damaged at your brewery. Meanwhile, you would bear the full financial burden anytime your equipment stops working and you have to temporarily shut down the brewery.
You also risk having to pay for your own legal defense if your company is sued for selling contaminated beer, failing to fulfill contractual obligations, polluting a nearby water source or defaming a competitor, among other things.
How Much Does Insurance Cost for Breweries?
Microbreweries can typically expect to pay between $500 and $1,500 per month for a program that includes general liability insurance, liquor liability insurance, commercial property insurance and workers’ compensation coverage according to Myles Trempe, a licensed agent with Wallace & Turner Insurance. Of course, your brewery insurance cost will rise as you add more coverage types to your policy, while other factors can impact the price as well.
“Brewery insurance costs will depend on various factors such as location, sales revenue, the size of the operation and any other risk exposures that might be present,” Trempe told SmartFinancial in an email. “The total cost of brewery insurance ultimately depends on the needs of the establishment.”
How To Get Commercial Insurance for a Brewery
You should compare commercial insurance quotes using an insurance marketplace like SmartFinancial to find the policy that best suits your needs and budget. Keep in mind that one insurance company may offer your brewery a more favorable rate than another.
Major insurers like Allstate and Travelers offer brewers insurance packages while The Hartford sells manufacturers insurance policies that it specifically recommends for craft breweries, among other businesses. You can also purchase coverage from specialty providers such as Milestone Risk Management’s Brewery Insurance Program.