INSURANCE CONCERNS SPECIFIC TO MICROBREWERIES AND BREW PUBS

Automobile Liability

• The severity of this exposure depends on whether the insured transports the beer to the distributors and how raw materials are obtained.

General Liability (GL)

• The extent of this exposure depends on whether the brewery offers tours. Some small breweries take visitors directly through the brewing area. Access to machinery, slippery floors and low-hanging pipes are a few GL concerns.
• Breweries may sponsor music or sporting events that increase exposure to law suits.
• Delivery personnel or independent contractors can be injured on the insured's premises.
• If the insured does extensive advertising, an Advertising Liability exposure exists.

Liquor Liability

• The principal exposure will depend on whether the insured offers samples and/or sells beer on the premises. All states have passed dram shop acts, liquor control laws or alcoholic beverage laws that make the seller of alcoholic beverages responsible for the bodily injury or property damage arising out of the selling, serving or furnishing of alcoholic beverages. Things to consider are:
  • Do alcohol servers receive training in spotting false identification and in recognition and methods of dealing with intoxicated customers?
  • After brewery tours, product samples are usually offered. To avoid furnishing alcohol to minors, alcohol servers must check identification of all patrons of questionable age.

Product Liability and Completed Operations

• Product Liability exposures involve the beer itself and the container. Claims could arise from foreign bodies or materials in the product, exploding, chipped or broken bottles and sharp edges on cans and tops. While there is very little with beer that can create a product liability, the brewer should cautiously chose and protect the raw materials, including fully researching the water obtained for the brewing process.

Workers' Compensation

• There are hazards for workers in any setting that owner should be aware of and, while working at a microbrewery or brew pub is not highly hazardous, the owner/manager should be cautious of the following perils:
  • Breweries used to allow beer breaks, but that is becoming the exception and should be prohibited.
  • A greater than average slips and falls exposure exits because of the wetness inherent in a brewing operation. Floors should be surfaced with nonslip materials and workers should wear nonslip shoes.
  • A major source of claims in this industry is back injuries. Employees are subject to back strains from lifting cases and kegs of beer. Are employees instructed in the correct lifting techniques?
  • What is the brewer's program for maintenance and inspections of the forklifts and the proper training on how to use them?
  • Escaping steam can cause burns and scalds. Safety locks on steam valves will prevent the accidental release of scalding steam.

Boiler and Machinery

• The brewer usually needs a brew kettle and a refrigeration system to cool wort after cooking and before it is fermented. Many property forms exclude certain losses from systems like this. Is that system insured properly?

Crime

• There is a high crime exposure for this industry because stolen beer is easily sold. What kind of security system does the work site have? Brewpubs have a large cash exposure that can be covered when crime coverage is properly placed.

Fire

• How does the insured heat the brew kettles?
• What kind of fire protection/maintenance does the brewpub have for the cooking area to prevent grease fires?

Business Interruption

• How quickly would the insured be able to repair or replace machinery or storage vessels?
  
• Extended downtime may also result from damage to the refrigeration system.
  
• Summer is a peak season for this industry because people drink more beer in hot weather. Consequently, a loss during this time would be more severe.
  
• The owner may wish to arrange coverage for the salaries of employees such as brewmasters, who may know brewing process secrets and whose positions may be difficult to fill.

Other coverages all businesses should consider

EPLI
D & O
Umbrella
Bonds

*Source for much of the coverage infomation is from A. M. Best Company, "Best's Underwriting Guide" - by permission.

Copyright © 2001 Firkin Insurance