Craft Breweries’ Insurance Exposure Risk Factors: Everything You Need to Know
In the past 30 years, the number of brewers in the U.S. has grown from less than 100 to more than 2,400 and counting, 98 percent of which are considered regional craft brewers, microbreweries or brewpubs. As this niche of the industry continues to grow at an exponential pace, so, too, does the need for expansive insurance options to cover the unique and varied risk exposures.
Given their size and average output, craft breweries have very different needs than those of traditional breweries. While larger breweries can primarily be described as manufacturing outfits, it is not uncommon for craft breweries to be run in conjunction with restaurants or pubs, often operating in the same location. As a result, craft breweries must consider the myriad of risk exposures when determining adequate insurance for the business.
Top 5 Risk Exposures for Craft Breweries
- Property: As a craft brewer, you deal in a range of combustibles, from fuel sources for the equipment or machinery used in processing and dust from grain to the finished alcohol products and packaging materials. With varied ignition sources (e.g., electrical wiring, heating and air conditioning systems, production equipment, machinery and refrigeration equipment), you have an increased exposure to fire loss.
- Equipment breakdown: As a smaller brewery, you likely rely on automated machinery and equipment. The problem is when one breaks down, you’re on the hook for the costly repairs or replacements. Plus, without fully operational equipment, you may be looking at increased downtime and lost income.
- Supply chain: Many craft breweries do not keep large stocks of ingredients on hand, making regular shipments from suppliers essential. If something happens with one or more of your suppliers and they cannot provide the materials you need, you may be left dealing with decreased production or higher production costs.
- Products: If a batch of beer is contaminated during the brewing or packaging process or spoils before distribution, you may be faced with increased production cost or lost revenue—or both. If the contaminated batch isn’t caught before shipping and the beer makes it to store shelves, you’ll be looking at an even more costly recall.
- Liquor liability: If you serve alcohol in any capacity—from simple tastings to a full-service bar, you can be held liable for injuries or death caused by an intoxicated person to whom you served alcohol. This might include drunk driving-related injuries, assault and battery, sexual assault or harassment or even slips, falls and personal injuries and the associated legal fees, settlements and medical costs.
Best Insurance Coverage for Craft Breweries:
With such a diverse range of exposures, you need to not only be vigilant in how you manage your operations, but you also need to protect your business should the unexpected happen. Here are some common types of insurance for craft breweries:
- Boiler and machinery coverage: Helps with repair or replacement costs for damaged equipment and resulting losses from an interruption in production
- Supply chain coverage: Covers losses resulting from decreased production or increased production costs should you encounter a problem with one of your suppliers
- Spoilage and product recall provision: Covers you for the initial production cost and lost revenue associated with spoilage, and can help offset the cost of removing and replacing a tainted product in the event of a recall
- Liquor liability insurance: Covers damages to persons and property caused by patrons who were over-served at your establishment
The world of craft brewing is rapidly expanding, and so are the associated insurance requirements. We can help you determine which options are right for your business, no matter how unique, to deliver the most comprehensive coverage at the most affordable price.
For more information about insurance and risk management for your craft brewery, contact one of our insurance experts.
