Brewery Risks and Exposures: What You Don’t Know About Your Insurance Coverage Could Cost You

When Richard Beall got the phone call, the brewer on the other end of the line sounded frantic.

A double batch of one of the brewery’s most popular — and most widely distributed — craft beers had been contaminated by wild yeast.

Beall assured his client that there was little to worry about. When he’d created the brewery’s customized insurance plan, he made sure it included coverage not just for the cost of ingredients that would make up the contaminated batch of beer, but that the valuation of contaminated beer would be based on selling price, so it would include the profit the brewery would have made upon selling that beer.

Contamination coverage and selling price valuation are not included in standard industry forms, but Beall had recommended including both in the brewery’s insurance package. He’d also recommended that the brewery increase its coverage to $100,000 to meet its exposure.

What did that mean for the brewery? Yes, it was out a double batch of beer and would have to scramble to meet the orders for that particular brew. But thanks to its comprehensive brewery insurance package, the brewery would receive not only the total amount paid for the ingredients used to brew that double batch, but it would also receive the total amount customers would have paid to buy it.

“When I told our client that he had that coverage, he said he could sleep at night,” Beall recalled.

Two weeks after filing the claim, the brewery received a six-figure check — money that allowed production to resume immediately, replacing the beer that had been contaminated.

“Contaminated beer is the last thing a brewery wants–but thanks to having the right insurance coverage for its exposures, this situation worked out very well for our client,” Beall noted.

Beall Brewery Insurance works with craft breweries all across the country, and though the risks they face may be unique — from a brewery operating in a historic structure to coastal breweries exposed to risk of damage from hurricane — the challenges of successfully operating a craft brewery are the same.

Take the large regional brewery that contacted Beall Brewery Insurance after experiencing difficulty with a claim their current agent couldn’t resolve. Like the Beall Brewery Insurance client above, this brewery had experienced spoilage of a large batch of beer due to a yeast problem. Unlike the Beall Brewery Insurance client, however, this brewery didn’t have a customized insurance package.

The brewery’s agent, unfamiliar with the risks and exposures of the craft brewery, had offered his client the standard insurance package; trusting the agent, the brewery accepted that package. Not until filing a contamination claim totaling hundreds of thousands of dollars did the brewery discover that its insurance policy only offered the standard spoilage coverage, which totals only $25,000.

Perhaps the brewery believed it could recoup the selling price of any spoiled or contaminated beer through its business interruption insurance — but the fact is, business interruption coverage has a standard exclusion for spoilage or contamination due to bacteria, virus and so on.

“Their agent offered them the carrier minimum, which wasn’t even close to being the proper coverage for an operation their size,” said Beall, who has been helping business owners protect their companies for more than 25 years.

“You’ve got to understand the business in order to understand the coverages — and that’s our specialty: we tailor the coverage for the exposure.”

It isn’t always easy for a businessperson to understand the different types of business insurance that might be needed to protect his business, his workers and his future — and it can be tough to determine how much coverage is necessary to provide that security. That’s where insurance professionals like Beall Brewery Insurance can prove invaluable. Their insurance expertise, combined with knowledge of the brewery industry’s risks and exposures, allow their clients to rest easy and focus on what they do best: brewing great beer.

This Brew Talk was a sponsored article written by Elisabeth Deffne, the Vice President of Bizability Group, in coordination with Beall Brewery Insurance. Their opinions or thoughts do not in any way reflect the opinions or writing of Brewer Magazine, No Walls Media, or its editorial team.

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