What Types of Insurance Do I Need To Run a Winery and Vineyard?
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Winery and vineyard owners should consider multiple types of commercial insurance including some that are standard across most businesses and others that are specific to the winemaking industry. You can get customized policies that are specifically designed for vintners from multiple insurance companies.
Read below for an overview of the best types of insurance for wineries and what you need to know to purchase the right policy for your business.
Do I Need Insurance To Operate a Winery or a Brewery?
You will likely be required to purchase coverage types like commercial auto insurance and worker’s compensation insurance for your winery or brewery. Car insurance is required by law in most states and you will need a commercial policy to cover any vehicles you use for business purposes. Meanwhile, most states require any business with multiple employees to maintain workers’ compensation insurance.
Potential risks that wine professionals face include damage to their wine inventory, liability lawsuits, having to pay a fine after pesticides or fertilizers run off into and contaminate a nearby water source and becoming unable to operate their wine business after a major storm wipes out most of their crop.
What Types of Insurance Do I Need for a Winery and Vineyard?
If you operate a winery or vineyard, you should consider purchasing the following types of commercial insurance in addition to commercial auto and workers’ compensation coverage.
General Liability Insurance
General liability insurance is perhaps the most fundamental type of commercial insurance, covering medical or repair bills if a visitor is injured or their property is damaged on the premises of your winery. If the injured party sues you due to bodily injury or property damage, general liability insurance will cover legal expenses like defense costs, settlements and compensatory damages.
This coverage type can also pay your legal expenses if you are sued for personal and advertising injury such as defaming a rival vineyard in your marketing materials or printing another company’s copyrighted logo on merchandise that you sell.
Some companies also automatically add product liability insurance to your general liability policy. Product liability insurance covers costs related to a defect in your product such as medical expenses for a customer who gets sick after drinking your wine.
Liquor Liability Insurance
Liquor liability insurance similarly provides coverage for medical treatments, property repairs and legal costs if you are held liable for injury or damage caused by an intoxicated person you gave alcohol to. It is recommended for any business that serves alcohol, so you should consider adding it to your policy if you host on-site wine tastings.
A business owners policy (BOP) is an insurance package commonly sold to small businesses that includes general liability insurance, commercial property insurance and business interruption insurance. Commercial property coverage insures items stored on the premises of your winery or vineyard such as equipment, wine inventory and furniture against sudden perils like fire and theft.
Meanwhile, business interruption insurance covers lost income or relocation expenses if a covered peril temporarily prevents you from operating your business. For example, if an intruder steals all of the glasses you use when you host wine tastings, commercial property insurance can pay to replace the wine glasses while business interruption insurance can make up for any revenue you miss out on while you wait to receive the new glasses.
Inland Marine Insurance
While commercial property insurance covers business property on the premises of your winery or vineyard, inland marine insurance is necessary to insure these items in transit. For example, this coverage type could reimburse you if a truck transporting your inventory to a wholesaler crashed and all of the wine in the truck was ruined.
Cyber Liability Insurance
Cyber insurance can cover legal expenses that arise after your business is subject to a data breach or some other kind of cybercrime. This type of coverage is helpful if you digitally store any of your customers’ personal data such as their email addresses or payment information.
Crop insurance is necessary to insure your vineyards’ grapes before they have been made into wine. This coverage type is available through the federal government and it will insure your grapes against perils like adverse weather, earthquakes, volcanic eruptions, irrigation issues, plant disease and damage caused by insects or other wildlife.
Peak Season Coverage
Peak season coverage is an insurance endorsement that agricultural businesses can purchase to temporarily raise their coverage limits during a specified time range in order to account for the time of year that their crop is in season. Since grapes are generally harvested from August to October each year, you may want to purchase peak season insurance to provide extra protection for your inventory and equipment during this part of the year.
Additional Policies To Consider
The following coverage types could also enhance your vineyard insurance policy:
- Professional liability insurance: Professional liability insurance, also known as errors and omissions (E&O) insurance, provides coverage in case you are sued for a mistake in the performance of your professional duties such as failing to deliver your product to a wholesaler on time.
- Winery property endorsement: A winery property endorsement may provide coverage for losses like wine leakage and contamination.
- Product withdrawal or recall coverage: If wine shops or restaurants are ever expected to remove your wine from their shelves, product withdrawal or recall coverage can cover costs associated with notifying distributors and investigating the issue with your wine.
- Pollution liability insurance: This type of environmental insurance can cover cleanup costs, legal fees and more if your business is found liable for creating an environmental hazard. For example, pollution liability coverage might kick in if an herbicide you use on your vineyard drifts to another farm and damages the owner’s crops.
- Equipment breakdown coverage: Equipment breakdown insurance can cover certain types of sudden damage to your winemaking machinery that wouldn’t be covered by commercial property insurance. It mainly applies to internal failures like short circuits and mechanical breakdowns.
- Special event coverage: If you host weddings or other special events at your winery, you may want to purchase event insurance to cover event-specific liability concerns and expenses that could arise if you need to cancel the event.
- Commercial umbrella insurance: Commercial umbrella insurance can provide excess coverage for any of your liability policies in case a costly claim exhausts your standard coverage limits.
How Much Winery Insurance Coverage Do I Need?
When thinking through the ideal coverage limits and coverage types for your winery, you should consider the specific risks and needs of your business. For example, a massive 1,000-acre vineyard will naturally need a policy with higher coverage limits than that of a simple five-acre vineyard.
Meanwhile, a winery that exclusively makes wine to sell at on-site events will almost definitely need liquor liability insurance but may be able to do without inland marine insurance. However, the reverse would be true for a winery that exclusively sells wine to outside distributors.
How Much Is Insurance Coverage for Wineries?
The cost of insurance coverage for vineyards and wineries varies based on factors like your location, the coverage limits and deductibles you set, the size and scope of your business and the coverage types included in your policy. For example, a 2016 analysis found that a 20-acre vineyard in the Texas Hill Country region would typically pay about $5,760 per year for liability insurance, property insurance and crop insurance.
How To Get Insurance for Wineries
You can purchase insurance that is tailored to the needs of winery owners from major carriers like Travelers and Chubb as well as specialized insurance providers like Winery PAK and Allen Financial Insurance Group. Meanwhile, other companies like American Family Insurance sell customizable agribusiness policies that could meet the needs of your vineyard. Before settling on a policy from any insurance provider, be sure to compare commercial insurance quotes from multiple companies using an insurance marketplace like SmartFinancial.