As a brewery owner, you’re likely busy perfecting that flagship IPA or expanding your taproom. However, there’s plenty going on behind the scenes to keep your business safe and protected. Specialty brewery insurance combines the more ‘standard’ pieces of a business insurance program, such as property insurance and general liability insurance, with other risks that are unique to breweries, such as liquor liability or business interruption insurance. Here are five common insurance mistakes craft breweries frequently make and how to fix them.
1. Undervaluing Your Sales and Property
Many breweries intentionally under-report revenue or property values to lower premiums. That might seem nice when the bills come through, but setting lower-than-actual limits can leave you seriously underinsured. If you declare $100K in taproom income when you actually bring in $250K, and a claim arises, your payout will be based on the lower figure. If you were to get audited, your carrier might also require you to repay the difference.
What to do: Be honest and transparent about your sales, equipment, and build-out values. Be sure your policy reflects full replacement cost, not just purchase price including labor.
2. Skipping Liquor & Alcohol Liability Coverage
If you brew and serve alcohol onsite, whether it be in taprooms or at offsite events such as a fundraiser or festival, you’re exposed to serious liability. You can be held responsible if an overserved guest causes an injury or accident.
What to do: Invest in robust liquor liability coverage. Consider expanding limits, such as covering nearby parking lots or event venues, to account for slip-and-fall or intoxication-related risks.
3. Neglecting Spoilage, Contamination, and Recall Coverage
Brewing accidents happen, such as contaminated yeast, faulty labels, and exploding cans. Standard policies often stop at product still in-house. Any lost inventory that is already distributed to wholesalers wouldn’t be covered. It’s important to explore options for withdrawn or recalled stock.
What to do: Ask your agent if your policy includes spoilage or contamination protection. If needed, purchase a separate product recall or recall expense endorsement. This makes sure that both internal and distributed inventory is insured.
4. Overlooking Business Interruption & Loss of Income
If a fire, power outage, or other event stops production, regular policies might not cover lost revenue or payroll. Many breweries suffered with this issue during pandemic closures.
What to do: Secure a “loss of business income” endorsement. Opt for add-ons that protect against government shutdown orders, third-party utility failures, or supply chain disruptions. In the hospitality industry, even small disruptions can be hard to recover from! The right coverage can help maintain cash flow and payroll during tough times.
5. Failing to Cover Auto Exposure Properly
Your brewery staff may drive rented vehicles or run errands on behalf of the brewery in their personal vehicle. Take an employee who transports liquor to an offsite event, for example. If an accident happens during that ride, and you lack proper coverage, your business could be liable.
What to do: Carry commercial auto coverage that includes employees’ vehicles while performing job duties. Include owners and volunteers if they may operate vehicles in connection with business operations!
Agents who understand craft brewing can tailor your policy and avoid hidden gaps. Ultimately, they’re going to help you keep pace with your growing brewery. If you’re looking for someone to help protect your livelihood, get in touch with one of our agents who can help you create your personalized craft brewery insurance program.