Congratulations! You’ve funded your 1st
location or a recent expansion, and you’re enjoying all the new—the shiny stainless steel, the glossy bar top, the pristine tap room.
Something that’s probably not on your mind is insurance, which is why I'm focusing on it this month. It’s a requirement for your loan, and it isn’t a cheap or easy decision, so I’ve asked a few of my friends and business partners for their thoughts and advice.
Tige Hoper (Asheville, NC), Kyle Rheiner (West Chester, PA), Jason Cook (Kansas City, MO), and Matt Hughes (Denver, CO) each shared one tip a craft beverage company should know, one unknown about insurance coverage, and one common mistake and how you can avoid it.
Something Every Craft Beverage Company Should Know
Tige said, “My top insurance tip is to work with an agent who is knowledgeable in your industry and that you can build a relationship with. Most insurance agencies of any size represent the same insurance companies and have the same pricing structure, so your main choice is picking your agent.”
Kyle said, “Don’t assume your insurance agent is familiar with the coverage you need. Breweries have specific needs, and there are specific insurance programs designed for them. Being blindsided by an uncovered claim can be detrimental. If your agent doesn’t specialize in brewery insurance, they don’t know what coverage to ask for, and an underwriter isn’t going to just hand it over. Then, once you have brewery-specific coverages, it still doesn’t mean they’re tailored to your needs. Just like buying pants off-the-rack, your coverage may need to be tweaked to fit correctly. Do your research and work with an agent that has access to 3-5 brewery-specific insurance programs.”
Jason said, “One of the better tips I can offer breweries who serve alcohol on premises is to have cameras that save recordings to the cloud. Most dram shop laws make reference to the serving of a "visibly intoxicated" patron, so recordings can help show that a patron was not overserved by your staff (it obviously works in the inverse if you're not doing what you should be).”
Matt said, “The most important piece of advice that I’ve given to any brewery owner is to work with a broker that has worked or is currently working with other breweries or businesses in the craft beverage space. Those brokers know the specific markets and tailored coverages that breweries need. The person that handles your homeowner's insurance is probably fantastic at what they do, but an independent broker with knowledge in the industry should be able to provide you multiple options with the specific coverage contracts that you need. Talk to a few breweries you like and see who they work with—that’ll give you a good start in finding someone.”
One Unknown Insurance Coverage
Tige: “The coverage that I don’t see enough businesses buying is Employment Practices Liability. This covers things such as wrongful termination, discrimination, etc. No matter how solid your Human Resources policies and procedures are, you are still at risk of a claim.”
Kyle: “There are multiple ways to value your building, your liquid
, and your equipment under the roof. Make sure you understand how each of these options pays out in the event of a claim. While many businesses think that less coverage equals less premium, you can actually be penalized for not carrying enough coverage when a claim occurs. This will lead to a smaller-than-expected claim payout, frustration with your agent, and lack of funds to rebuild.”
Jason: “One lesser-known coverage that I've unfortunately seen is when a head brewer dies or becomes disabled, the policy will provide financial assistance to the brewery in their efforts to replace them.”
Matt: “One of the most commonly missed coverages that I see is failure to insure the value of your brewery’s buildout if you are leasing the building. Building a brewery isn’t cheap. Nothing is cheap these days. But if your property policy doesn’t contemplate the work that you’ve done on the space and you suffer a property loss, your landlord will likely collect insurance claim dollars for damage to the building and you could be left holding the bag.”
Common Mistakes and How to Avoid Them
Tige: “The biggest mistake I see breweries making is not telling their agent when they purchase new equipment. It’s important to speak to your agent regularly to make sure that your coverage is up to date.”
Kyle: “Assuming you have insurance coverage for everything. Know what’s needed for insurance coverage to kick in. Oftentimes, the triggers are physical damage, injury, or equipment breakdown. Without those, you may not have coverage.”
Jason: “The biggest mistake I see is choosing the wrong agent because it usually cascades into a series of mistakes (wrong carrier, missing coverages, overpricing, the list goes on). A brewery doesn't have to choose an agent with significant experience working with breweries, but it generally helps.”
Matt: “The biggest insurance mistake I’ve seen is related to workers' compensation insurance. All states have different laws regulating workers' compensation, but many will allow the owner to opt out of workers' comp coverage. This is usually done to save a few bucks, and many owners have nice health insurance policies that they think will respond if they’re hurt. First, it’s relatively inexpensive to insure an owner for the year. And the policy is unlimited in terms of what it will pay to treat your workplace injury. Second, many health insurance policies will exclude workplace injuries since they are expecting workers' compensation to respond. If you choose to exclude yourself from coverage, at least do the work to make sure that any injuries and subsequent treatments won’t be excluded if they happen at work.”
Hopefully hearing from these industry-focused insurance advisors has you thinking about your coverages. Are you covering the right things? Does your agent know your business? Are there coverages you’re missing?
Having a team of excellent advisors surrounding you can make operating your brewery a whole lot more fun and profitable. These four advisors are spread out across the US, and they are more than happy to be a resource for you and your craft beverage company.