How to know if you need insurance for your brewery? Not sure if insurance is a requirement for a small business? When it comes to insuring your brewery, there are so many questions. Here are the basics:
Do I Need To Insure My Brewery?
Yes. While a Personal Liability policy alone may cover homebrewers, running a brewery - or any small business - requires extra insurance. A Commercial General Liability Policy (CGL) covers the basics.
How does a Commercial General Liability Policy Work?
Generally a CGL covers against physical injury or property damage. In the insurance world, coverage means your insurer has a duty to defend and indemnify you in the event of a claim or suit for damages.
Local Laws for Brewers?
Aside from general coverage, insurance requirements vary at a local level. Check your state’s laws to check if you need to obtain extra coverage for Worker’s Compensation or Employee Disability. These rules can apply even if you only have one employee.
What About Other Insurance Risks?
While a CGL can be comprehensive it doesn't cover every situation. Brewers can combine a CGL with further coverage to build a Business Package Policy.
To get that in place you'll need to cover every aspect of your business. For example, if you're a brewery that also hosts tours and tastings then including extra third party coverage will be useful.
Do I Need to Insure My Brewery's Equipment and Supplies?
Yes. Your brewery's equipment and supplies are an integral part of operations and therefore need to be covered by insurance. Coverage can be based on the actual cost of your equipment or the replacement cost. Even items like bottle caps to fermenters need to be covered.
Insurance to Cover Brewery Operations?
What if your brewing system breaks? Will your brewery business be covered for the amount of income lost during the delay in production? What if it's your glycol chiller or bottle labeler? When you think about your brewery's bottom-line, it pays to be protected against loss of income, production or other eventualities. Once again, insurance can help protect you from the worst of operational malfunctions.
Distribution and retail can entail their own risks like product liability, false/misleading advertising liability and property in-transit liability. These will depend on how you plan or are currently operating the retail arm of your business but are all part of the total risk mix.
Where do I start with Insurance?
Choose the level of coverage that protects what's important for your business. It's not a one size fits all solution.
Once you've chosen and received your policy, make sure you read and understand it! It pays to have a clear understanding of who, what and when things are covered. Policies, particularly CGLs, have exclusions and limitations on coverage.
Insurance contracts are full of technical jargon but your insurer has an obligation to explain each aspect clearly. If you can, get all of your coverage questions in writing to avoid issues down the line.