The majority of craft breweries are small, and coming from an insurance standpoint, therefore hold several special risks. The size on its own significantly increases the impact of unexpected events. If something unfortunate takes place, small-scale breweries may be forced to halt output or even shut down the brewery altogether until the issue is solved. Craft breweries also are generally independent businesses, many of them owned by the brewer themselves, which creates further risk compared to larger companies.
Understanding Microbrewery Insurance
Although sorted with related fields like wineries, large brewers, and restaurants, microbreweries possess distinctive risks such as tour liability. With brewery tours gaining popularity, a number of larger brewing manufacturers have picked up on the trend, however they generally avoid the production floor or bringing visitors through sections under current operations. Microbreweries on the other hand often bring people through fermentation tanks and machinery at times of full operation. This means brewery owners need to ensure the safety of customers on the operating floors. Due to wet floors and stairwells, slips and falls are the most common injuries, but more severe occurrences can arise because the public is so near machinery; a worst-case scenario being an explosion. Brewers should obtain general liability insurance with sufficient coverage for bodily injury of tourists or any potential property damage they may cause.
The equipment involved is also an insurance hazard for craft brewers. Boiler and machinery liability coverage will handle replacement or repair costs, and property insurance can cover some loss of income from a breakdown in manufacturing. Whenever the amount of beer being produced is small to start with, even a short-term stop in output can have extreme repercussions. Machinery also bears the risk of injury, a boiler explosion can impact production, profits, as well as harm workers, contractors, or customers.
Although somewhat obvious, craft brewers possess a few extra situations which increase the risk of liquor liability. Customers might be drinking alcohol during tours which adds risk, but liquor liability coverage also protects from claims caused from sales, samples, or liabilities off premises as well- for example product being purchased at a liquor store or bar, or participation in a festival or any other circumstances where brewers might choose to open a stand or food cart.
Another component which influences production and profits is ingredient supply. Supply chain liability is greater for microbreweries because if there ever was an ingredient shortage, larger breweries can pay more and outbid smaller businesses. Supply chain insurance could curb losses to the brewery by means of coverage for either loss of production or cost increases.
All productions have to deal with theft liability, but theft during transport may be considerably more detrimental to smaller breweries due to the fact every theft is a greater percentage of their overall production than larger companies.
Spoilage is another common liability in any production concerned with perishable goods. Beer in particular is vulnerable to “infection,” and any unintended strain of wild yeast can lead to unwanted alterations in products, which may be detrimental with a beer in demand. Product spoilage liability insurance coverage can protect a number of the costs or profits lost as a result of recalls due to infection.
Another scenario unique from comparable industries that craft breweries encounter is intellectual property risks. With so many craft breweries on the market, it’s difficult to be original, and intellectual property infringement happens frequently. Usually, instances such as these are not serious because the infringement is commonly unintentional and harmless. Even if a breweries name, beer line, or the images or fonts used are identical or like another’s, markets may be in different regions and therefore not in direct competition with each other. Still, American trademark law categorizes wineries, breweries, and distilleries together, meaning the wordplay and alcohol related imagery pool is significantly restricted and much harder to find something new. There is defense insurance coverage to defend brewers from infringement cases or to handle cease-and-desists; plus there is also pursuit coverage which will aid policyholders in pursuing those infringing on their intellectual property. Without coverage, larger breweries may be able to exploit smaller breweries inability to afford defense.
Microbreweries must make sure they are covered from many of the unique risks craft brewers face. Small businesses of any kind are riskier than larger ones because any injury, production halt, or unpredicted incident may have significantly more effect on the brewery. To discuss insurance coverage options for your microbrewery, feel free to reach out to our team of experts here at InsureTheBooze.com!
Learn more here: Micro-Brewery Insurance
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