Over the years, the number of craft breweries in Ontario, including microbreweries and brewpubs, has grown to over 240. According to Ontario Craft Brewers, this number is expected to grow to as high as 500 craft breweries in the next 10 years.
Craft beer sales by volume increased by 70% from 2014 to 2018 meanwhile non-craft beer sales decreased by 5% over the same period.
As a result of this trend, insurance companies are beginning to offer more products to address the unique exposures faced by this expanding section of the brewing industry.
Given the smaller size and lower output of craft breweries, their needs vary greatly from their larger national counterparts. While larger breweries can primarily be described as manufacturing outfits, it’s common for smaller craft breweries to be run alongside restaurants or pubs, often operating in the same location.
Selecting the Right Insurance Coverage for Your Craft Brewery
In addition to the commercial general liability (CGL) and commercial property insurance coverages that every business should carry, the following policies also help protect against common exposures faced by craft brewers.
- Equipment Breakdown
- Contingent Business Interruption Insurance
- Spoilage and Product Recall
- Host Liquor Liability
- Brands and Labels
- Key Person Insurance
- Copyright Infringement and Advertising Liability
Equipment Breakdown (Boiler and Machinery Coverage)
Many smaller breweries aren’t able to handle the production interruption caused by the loss of a key piece of equipment.
This coverage can help with the repair or replacement costs for damaged equipment as well as cover losses from production interruption and downtime.
Contingent Business Interruption Insurance
Many craft breweries don’t keep large stocks of ingredients on hand, making regular shipments from suppliers essential. Business interruption insurance for craft brewers will cover losses resulting from decreased production or increased production costs if one or more of your suppliers is unable to provide the materials you need due to an insured loss.
Spoilage and Product Recall
If a batch of beer is contaminated during the brewing or packaging process or spoils before distribution, a provision for spoilage can cover the initial production cost as well as lost revenue.
If a contaminated batch isn’t caught before shipping and the beer makes it to store shelves, coverage for product recall can help offset the costs of removing the tainted product and replacing it.
Host Liquor Liability Insurance
Regardless of whether you have a full-service bar or offer beer tastings after tours, liquor liability insurance is essential to cover damages to persons and property caused by patrons who were over-served at your establishment.
Brands and Labels
In the event your product becomes unsellable due to an insured loss like a fire, a brands and labels endorsement will provide coverage to protect your brand’s reputation when an insurance company attempts to recoup some of the costs at a salvage sale.
The cost to remove your labels or mark the products as distressed can be costly, but a tarnished reputation is even worse.
Transportation or inland marine insurance protects your beer while in transit.
Key Person Insurance
Key person insurance is a life insurance policy on a top executive or owner of the company. Consider this insurance solution if the death of a key person will cause financial hardship to the company.
Copyright Infringement and Advertising Liability
Advertising injury coverage is typically a portion of your CGL insurance and would protect you against various advertising-related lawsuits including libel, slander, invasion of privacy, and copyright infringement.
Building Your Craft Brewery Insurance Program
Based on the unique needs of your operation, by mixing and matching the products listed above as part of your overall insurance solution, you can obtain optimal coverage at an affordable price.
Some insurers offer these coverages in packages specifically for craft brewers that can be further tailored to address the needs of your operation.
If your operation includes a restaurant or other food service, you will need to consider additional coverage for related exposures.
Work with a Craft Brewery Insurance Broker
The world of craft brewing is rapidly expanding, and as it does, insurance companies are becoming more proficient at identifying and addressing their diverse risks. New combinations and specially structured craft brewery insurance programs are continuously being made available.
By working with the business insurance experts at Scrivens, you can be sure that you are being provided with the latest insurance options for your craft brewery.
Contact us today to get a quote for your craft brewery insurance.