Top 5 claims in breweries and wineries & how to prevent them
Review the factors that drive claims in this space and valuable tips to help prevent losses.
Brewery and winery owners, whose resilience was severely tested in recent years, had a reason to raise their glasses in celebration in 2021. Craft brewery sales volume grew by 8% year-over-year, with retail dollar sales of craft now comprising nearly 27% of the $100 billion U.S. beer market. Premium wine enjoyed 21% year-over-year sales growth — the highest in six years — with 2022 expected to be strong as well.
While the rebound is much needed, brewery and winery operators also face economic and logistical challenges that are tormenting a variety of industries. Supply chain crunches, labor shortages and other pressing issues have changed the risk profile for these businesses, leading to a shift in the types and frequency of top claims. Agents and brokers should be aware of the shifting landscape so they can advise their clients on the most current and appropriate risk mitigation strategies.
Let’s look at the top five most frequent claims we are seeing across the winery and brewery spaces and explore how to prevent them:
1. Hired and non-owned auto liability
This is one area of risk where higher business volumes and worsening labor shortages meet head-on. When brewery and winery managers are short staffed for experienced drivers and need to make a timely delivery, they may ask frontline employees to do it themselves. Sometimes, these employees aren’t trained for the task. Even worse, they often use their own vehicles.
If an employee driver is involved in an accident, not only is that employee’s wellbeing at risk, the brewery or winery business could face a series of financial and reputational headaches. A commercial auto liability only covers vehicles owned by the brewery or winery. If your client’s employee’s vehicle isn’t insured, or if the employee carries low levels of coverage, it becomes a hired and non-owned auto liability claim that will impact the business. Companies also face similar liabilities for employees who make deliveries with vehicles not licensed for road use, such as bicycles and golf carts.
The most obvious and simplest way to protect business owners from this risk exposure is to limit drivers from using their own vehicles for errands. If a business doesn’t do this, then they should make sure to review their employees’ motor vehicle records, require proof of insurance and ask employees to carry liability limits above the state minimum. It’s also wise for brewery and winery owners to work with an agent or broker with access to a specialty insurance program staffed with experts who can connect them with driver screenings, as well as training and management resources in addition to providing hired and non-owned auto liability coverage.
2. Spontaneous combustion
Craft breweries and wineries carry an elevated risk for localized fires within their facilities. These explosions can be fueled by chemical agents sitting too close together in storage. They can also spark when employees pile up chemical-soaked rags into a corner haphazardly. As those rags absorb heat, they can combust, creating potentially devastating results.
Preventing spontaneous combustion claims starts by arming your client’s employees with knowledge. Make sure they receive thorough training on best practices and understand the risks associated with localized fires. Education should cover OSHA Good Housekeeping Guidelines, including best practices related to safe storage of chemicals and disposal of cloths and rags, along with proper precautions for using any flammable materials.
3. Leakage
As brewery and winery owners and operators expand their businesses, they sometimes choose to purchase larger tanks. This, however, can lead to problems if they don’t upgrade the pad underneath the tank. If an existing pad can’t hold the weight of a new, heavier tank, the tank could leak or collapse, possibly endangering other tanks around it as well.
Training is an important step toward limiting leakage risks. Without proper training, incidents of team members driving forklifts into tanks, or not closing hatch doors properly have been reported. If the leakage creates inverse pressure, the tank can crush itself like an aluminum can.
Insurance coverage for tank collapse and tank leakage can help business owners protect their equipment from such events and reclaim the costs of any lost product. Another smart tip: Agents and brokers should remind their brewery and winery clients to avoid overfilling tanks, which can lead to a vacuum failure and a potential leak or collapse.
4. Can corrosion
Canned cocktails, hard seltzers and kombucha have become very popular nationwide in recent years. Wineries and breweries across the country have since been diversifying their product lineup with everything from mojitos in a can to tequila-spiked seltzers. Issues quickly arise when these new concoctions are packaged in the same cans a brewery would typically use for their beer or a winery would use for their consumer-friendly canned rose. All these different cocktails and seltzers have varying ranges of pH levels and acidity. When canned in your run-of-the-mill beer can they may quickly or gradually corrode away at the cans lining, which has led to claims ranging from leakage all over a distributor’s liquor store or bottle shop to the entire collapse of pallets in warehouses. If corrosion does not reach the point of leakage, it still has the potential to taint the contents and compromise flavor.
Before you begin producing a new product, first always reach out to your preferred packaging and canning vendor or provider. They will know best which packaging best meets the needs of the product and will recommend the best solution that will not compromise the integrity of the can or the quality of the beverage.
5. Event claims
From outdoor concerts to beer festivals, summertime events bring breweries and wineries plenty of additional revenue. They also create extra risk. Agents and brokers can work with their clients in this space to review any potential security needs carefully and decide whether they need to hire extra event staff. Other best practices include:
- Alerting area EMTs before large events.
- Making sure there are enough portable toilets to handle attendee capacity and that they are anchored to prevent tip overs.
- Requiring certificates of insurance for any vendors or partner companies for the event.
- Hiring designated drivers or working with a service to ensure customers aren’t driving while intoxicated.
- Creating drainage areas to limit slip and fall risks.
- Regularly training staff so they are aware of common signs of intoxication and can respond in case of any accidents.
And above all, agents and brokers should work with their clients to ensure they have additional events coverage to keep their business protected.
While these top five claims for the brewery and winery space may have changed in recent years due to economic and logistical challenges, some safety practices are timeless. Agents and brokers should always recommend that brewery and winery owners conduct routine maintenance and safety checks and check their policies to ensure they’re covered for the most common of risks. For an extra level of protection, agents and brokers can connect business owners with insurance specialists who are skilled and experienced in the brewery and winery space. Taking these steps can help brewery and winery owners enjoy a safe summer and reap the well-earned rewards they deserve for persevering through the pandemic.
Larry Chasin is president and CEO of PAK Programs, which provides insurance programs for wineries, vineyards, breweries, wine & liquor retailers, cideries, meaderies, distilleries, liquor & wine importers and distributors. He can be reached at larryc@pakprograms.com.
Opinions expressed here are the author’s own.
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