Brewery Business Plan: Correcting Coverage Gaps

By: Ben Cavallo, CIC, AAI, CISR

Together with partner Keith Signoriello, Ben Cavallo is the principal and co-owner of C&S Insurance.

After all the love and energy you’ve poured into making your craft brewery a success, the last thing you want to hear is what you’re missing, right? Sorry, but that’s our job… We wouldn’t be doing it well if we didn’t second-guess some of the brewery business plans that cross our desk.

Because even though craft brewery openings have increased 800 percent over the past 10 years, the number of breweries closing each year also continues to grow proportionately, which begs the question:

  • Is your brewery up against any of the risks these businesses experienced?
  • Is there anything you could be doing to avoid said risks?

For some, the answer may be “yes,” and it may be rooted in insurance coverage gaps. Below are a few of the biggies. If your agent isn’t asking the right questions—or doesn’t have access to today’s leading brewery insurance programs—you may be operating on the brink. Call our insurance specialists (508.339.2951) to help firm up your brewery business plan. Meanwhile, keep reading…

Lacking Key Man (or Woman) Insurance

Got a right-hand man at your brewery? Couldn’t live without him? Couldn’t even turn on the depalletizer without him? Sounds like a “key man.”

Purchasing key man/woman insurance means your business will receive a payout if your brewmaster or head brewer dies or becomes disabled. The policy is designed to offset any resulting business interruption and the loss of income you would likely experience. It can also sustain you throughout the brewmaster replacement search and transition period.

According to the NAIC, nearly three-quarters of small businesses (71 percent) are very dependent on one or two uniquely talented people—e.g. the person who formulates your recipes, acquires your raw materials, and maintains your equipment. Unfortunately, only 22 percent invest in key man insurance. Craft breweries should take note.

Settling for Generic Commercial Coverage

“It’s pretty much standard business coverage…” This is NOT what you want to hear as the owner or chief exec of a craft brewery.

To the untrained eye, a neighboring bar or restaurant’s policy might seem like it addresses all your property risks, and yet “standard” property coverage is lacking at least a half dozen features that could make or break your microbrewery after a loss event—including coverage for processing water, tank collapse, tank leakage, and product recall.

Do you have coverage for valuable property (i.e.thousands of gallons of premier beer) when you’re attending a festival, traveling across the state, or recovering from a blackout? Insurance agents who specialize in craft breweries understand what’s at stake if you can’t keep your tank cold during fermentation, or if you cold storage fails. They can help you bundle features like spoilage coverage, property in transit, and property on exhibition into one, tailored policy.

Sleeping on Safety and Workers’ Comp Opportunities

Between lifting kegs and transporting bulk brewing grains, craft brewery employees are often at risk for ergonomic/handling injuries—including back injuries, wrist injuries, and foot injuries.

You can introduce certain “engineering controls” to support safer operations (e.g. hand trucks, keg hoists). You should also be sure your training program is comprehensive enough to address the specific workflows happening in your facility. Nationwide, craft brewers have expressed frustration over the lack of substantive resources on this topic. If you’re in the same boat—eager to improve on safety, but lacking the bandwidth or the next-step information—find an insurance partner who will lead the way…and potentially lower your workers’ comp premium.

So whether you’re two years into a successful taproom or two months away from completing your craft brewery business plan, count on us to quality check the details. If you have questions about brewery coverage types, coverage amounts, or any other craft brewery insurance concerns, don’t hestitate to call our team at 508.339.2951.

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