Acadia Insurance turned to longtime agency partner James Sanborn for a seasoned perspective on the insurance needs of commercial breweries. As both a microbrew fan with his own beer blog and a 23-year career agent with GHM Insurance, James was the perfect person to tap for insight into this rapidly rising business.
Q: How did you become an insurance expert in the brewery industry?
A: I’ve been a licensed agent since 1995. When the economy was struggling three and a half years ago, I began looking for ways to offset the decline in business from our retail and manufacturing clients. I’ve been a craft beer fan since college, and continue to monitor and comment on the industry on my blog. It was natural for me to apply my general knowledge of insurance to the business I’ve been passionate about for so long.
Q: What is the single-biggest potential liability for a brewery that a well-crafted insurance policy can protect it from?
A: Liquor liability undoubtedly has the potential for largest losses. Tasting and tap rooms have become very popular with many consumers visiting several breweries in a single afternoon. With this there is always the potential for injury or property damage as a result of over-consumption. We work hard to educate our clients about training staff, controlling drink sizes, limiting hours of service, and the use of designated drivers to help prevent or reduce exposure to loss.
Q: What are the key coverages that a brewer should have included in their insurance portfolio?
A: Many areas of coverage are the same ones required for almost any business, including coverage for general liability, property, and auto. Of course there are many others that are specific to this industry, including coverage for things like tank leakage, spoilage, contamination, and product recalls. The latter can have many expensive components, including the cost of shipping product back to the brewery and destroying the problem beer. Comprehensive knowledge of all facets of making and selling beer is needed to create a plan that can cover them all.
Q: Is there a scalable path to complete coverage designed to help a fledgling brewery acquire more coverage as its income and exposure grows?
A: Yes. Growth in this industry has been fast and explosive. I meet with many of my clients every couple of months, just to keep up with their growth. Additional employees, equipment, and systemic changes to their operations may all necessitate the need for policy revisions or expansion. We continually educate our clients on their evolving risks as their businesses grow. But the learning doesn’t stop with them. We constantly keep up with trade journals and magazines that detail the workflows and issues that are evolving with this industry. Our goal is to stay ahead of our clients’ needs by evaluating the impact of the latest industry practices before our customers adopt them.
Q: What is the most often overlooked (or under-funded) area of coverage that brewers fail to have included in their policies?
A: Inadequate business income and extra expense coverage is a constant issue I see for many breweries, primarily because of the dynamic growth of this industry. Determining the proper level of coverage requires accurate sales projections and estimates for the length of time to repair or replace damaged equipment. With the rapid expansion of existing breweries and new breweries opening every day equipment availability is a major concern. Policies need to cover the long waiting times (often as long as 12 months) that many of these businesses must endure before the tanks and other equipment they need are available from manufacturers.
Q: As both the number of breweries and the technological advances in brewing increase, are there new areas of potential liability that existing brewers need to be aware of that are tied to new equipment, processes, increased capacity, etc.?
A: We find that many of these businesses are moving quickly to lease kegs, expand into new spaces, secure a presence in brew festivals, and make a host of other moves needed to keep pace with their growth. All of these changes expose risk, yet many owners sign contracts without the advice of either a lawyer or insurance agent. We work with a network of attorneys and accountants, trading referrals to service the wide needs of these clients. The result is better legal and financial protection for our customers, and the shared education that expands the competence of both brewers and the professionals who support them.
Q: What other aspects of coverage, not mentioned above, are critical for brewers to be aware of to ensure they’re protecting their companies?
A: Employment practices liability is an often overlooked component of a comprehensive plan. Claims of sexual harassment, discrimination, and wrongful termination are increasing, along with the exposure to the huge defense costs often required to litigate these cases. Coverage is matched to the size of the organization, so the per-employee fee keeps policy costs for smaller businesses more manageable than the fees required to cover larger breweries.
Q: What unique benefits does Acadia’s coverage offer? Is the Acadia difference grounded in unique plan features, approach to customer service, both?
A: Acadia takes a holistic approach to coverage that many national underwriters ignore. Auto, workers comp, and general liability all complement the more specific areas of coverage that breweries require. Acadia’s customer service is unparalleled, and is probably the biggest thing that sets them apart. They work hand-in-hand with customers to identify exposures to help prevent loss before it happens. Their tagline is well earned. Acadia’s “closer coverage” promotes the prevention that grants the security that makes everyone happier.
Acadia Insurance is pleased to share this material with its customers. Please note, however, that nothing in this document should be construed as legal advice or the provision of professional consulting services. This material is for general informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness.