There's no question that Americans love beer. In fact, Americans consume about 6.3 billion gallons of beer each year.
It might surprise you that beer consumption varies significantly by region in the US. While Northeasterners drink the least amount of beer, the Midwest leads with the most beer consumption.
The total gallons of beer consumed by the state often mirrors the population of the state. Ohio ranks 7th in beer consumption.
With so much love for beer, it's not surprising that the craft beverage industry has taken off with fervor. Brewery insurance for these craft beer establishments is unique.
If you're interested in joining the craft brewery craze, you might need to know what brewery insurance you'll need to protect yourself and your business. Read on to learn more about insuring your craft brewery business.
Craft Brewery Craze
Before taking a closer look at brewery insurance, let's consider why you might be interested in this business, to begin with. While Americans love beer, it seems they are becoming quite the connoisseurs and like their specialty beers even more.
In 2021, the craft brew industry grew in sales by 8%. Independent beer makers were able to increase their market share of beer sales to 13.1% in 2021.
The craft brewery market accounts for sales of around $100 billion annually. Craft beer sales accounted for $26.8 billion of that beer economy, growing their market share by 21%.
In 2021, craft brewery production was up 7.9%, compared to regular production, which increased by only 1%. Craft brewery production can get broken down this way:
- Regional breweries at 65.7%
- Microbreweries at 18.4%
- Brew taprooms at 8.1%
- Brewpubs at 6.4%
- Contract brewing companies at 1.4%
Between brewpubs, microbreweries, taprooms, and regional breweries, there are at least 9,124 brewery locations across the US.
With such a boom in the brewery business, there's also a market to correctly insure these niche businesses. Now, let's take a closer look at the insurance these businesses should have to protect themselves.
Who Needs to Get Brewery Business Insurance?
While plenty of small brewers make beer, many even start pursuing a hobby in their garage. Who should consider getting insurance as a brewer?
Any brewer who can fit themselves into one of these categories should not only get insurance but should be pursuing insurance with an agency that can help them with their unique industry needs. These include:
- Craft breweries
- Craft hard cider brewers
- Beer chains and franchises
- Manufacturing plants
Anyone who brews, sells, and or packages beer, ales, lagers, stouts, or hard ciders should consider their unique insurance needs and seek insurance to cover their brewery business.
Craft Beverage Business: How Insuring Is Unique
As you might already have guessed, insurance for the craft beverage business is unique and may require additional coverage from traditional small business coverage.
Specialized insurance coverage you should consider is based on the type of beverage, the means of production, and distribution.
For example, you may have different insurance needs if you brew craft beer and distribute it for sale versus operating a craft brewery and selling it on the premises.
Because this industry is exploding and industry standards are quickly evolving, it's important to have a strong relationship with your insurer to ensure you have the right coverage at all times.
As the brewer, you need to be vigilant in addressing any potential risks or exposures that might arise in your brewing business. At the same time, you need an insurance agency that will work with you to diligently address those needs and ensure you're covered.
Types of Insurance for Breweries
As you begin to pursue insurance for your craft brewery business, there are several categories of insurance you'll want and need to consider.
The first area is business owner's insurance. These are the general categories of insurance that all business owners might seek. This would likely include general liability, property, and worker's compensation insurance.
This protects you as a business if a customer or an employee gets injured on your premises. For example, if beer spills and there is a slip-and-fall accident, this type of insurance would protect you.
Then you'll want to get some liquor liability insurance that gets more specific to the fact that you make and sell products with alcohol in them. This will likely include insurance like liability for someone getting sick from your beer or a brewery tour that goes awry.
Finally, you'll need to consider what are your commercial property needs. Again, these might be unique because of your niche. For example, you might need to protect against a leak in your storage tanks or a brewery tour that goes awry.
More specifics on each of these needs later on.
Cost Impacts of Microbrewery Insurance?
As with any business, several factors will impact the cost of your insurance. Craft brewing is no exception.
Risk always factors into the cost. Since you're serving alcohol, of course, the risk is higher. The size of your business, the number of employees, and the size of the property will all impact the cost of insurance.
Specific to craft brewing, some factors will impact the cost. These include:
- Do you have a restaurant as part of your business model?
- Do you have a tasting room or bar area?
- What is the size of your brewing business? What volume of beer do you produce?
With cost, you also want to consider how much coverage you seek in each area and what deductible you can cover if you need to make a claim.
Risks to Consider When Seeking Insurance
Any underwriter considers the risk when arranging an insurance policy. Of course, the brewery business does offer some unique associated risks.
Both you and your insurer will want to consider your risk factors in several areas, including:
- Craft beer production
- Craft beer consumption, both on and off-site
- Beer storage
- Potential beer aging issues
- Food service needs
- Serving alcohol in taprooms, brewpubs, and gastropubs
- Transporting beer for sale
- Hosting special events
- Catering or off-site beer sales
Again, it becomes critical that you have a firm handle on risks in each area of your business and work with your insurance agency to help establish what insurance you'll need to protect your interests.
Now, let's take a closer look at the specific types of coverage you might seek for your brewery insurance business.
Basic Business Insurance
Let's start by considering the basic business insurance your brewery will need. These are the categories of insurance that any business, no matter what they do, would need coverage for.
Then later will look more specifically at the brewery insurance-specific types of coverage to consider.
The first, and probably one of the primary, types of insurance a business will need is general liability insurance. General liability insurance covers a business from non-professional negligent acts. What does this mean?
It protects your business from liability because of property damage or personal injury caused by your services, business operations, or employees' actions.
Let's take a look at a few examples of liability coverage:
- A customer comes in to sample beer and falls in the parking lot
- An employee inadvertently leaves a refrigeration unit open, and masses of products are destroyed
- Your business reputation suffers when someone says something on a public forum about your product
In most scenarios, the insurance policy covers your legal defense in a liability claim. It also pays out any damages as a result of a liability case. Of course, as the insured, you would be responsible for any deductible that is part of your policy.
Commercial Property Insurance
Whether you own the building you brew beer in, rent, or lease it; you need commercial property insurance coverage.
This type of coverage protects the building and its contents if something happens to it. This might include coverage for:
- Storm damage
- A flood
- Burst pipes
While liability insurance typically covers human claims, commercial property insurance covers the physical contents of your business's building. This would include things like:
- Furniture and equipment (including beer making, more on this later)
- Exterior signs
- Fence and landscaping
- Others' property
The cost of commercial property coverage is based on several factors. This would include things like the location of the property and the age of the property.
This may impact cost if you're in a flood, earthquake, or hurricane zone.
The level of security your building has and its contents (alcohol) can also impact the cost of this type of policy. Again, you'd also need to decide on a deductible amount. The higher the deductible, generally, the lower the cost of premiums.
Commercial Auto Insurance
If you use any vehicles, yours as the owner or others for business purposes, you need commercial auto insurance coverage. This type of coverage protects you and the business if there's an accident in a company vehicle.
Any accidents that are connected to the commercial vehicle are covered. This includes injuries, deaths, or property damage due to the accident. Most policies like this have coverage limits which you will need to be aware of when obtaining the policy.
Most commercial auto policies typically offer coverage in the following areas:
- Liability insurance (different than the previous liability coverage, remember that it was related to the premises)
- Medical coverage for the driver or those impacted by an accident
- Uninsured motorist coverage protects you if another vehicle at fault doesn't carry insurance
- Comprehensive and collision coverage to cover damages to the vehicle or other property
You might wish to include towing and labor, rental reimbursement, and lease gap coverage, so you can quickly rebound and get a new car or a rental until yours is repaired.
Workers' Compensation (Employers Liability)
Worker's compensation insurance is required insurance by most states in the US. This insurance protects your business and your employees at the same time.
If an employee is injured or becomes ill on the job, they can get medical coverage. So, instead of the business covering medical expenses, the insurance covers them.
The truth is that a terrible accident could bankrupt many businesses, and the injured would have no coverage.
If the employee gets injured, you call the insurance company and make a claim. Often the insurance company will require your employee to see an approved medical provider.
Your employee must complete paperwork and provide medical documentation of their injury.
This type of coverage not only covers medical expenses but it also covers lost wages and rehabilitative care that might be necessary. In a worst-case scenario, it also covers death benefits for an accident.
Employment Practices Insurance
As an employer, you are responsible for creating a legal and safe work environment for your employees.
This type of insurance coverage might protect the beer-making employer from a claim like:
- Wrongful termination
- Hostile work environment
- Discrimination (age, gender, race, etc.)
- Harassment (sexual or otherwise)
- Wage and hour issues
This is not required insurance, and many employers will opt out of getting it. However, statistically, it's good to know that when a claim like this is made against a business by an employee, a majority of the time, the case is won by the employee.
Without employment practices insurance, you'd be responsible for any claims out-of-pocket.
Now that you're aware of general business insurance, you'll want to look at brewery-specific insurance. This insurance is important for the specific type of business you're building.
Because beer making involves alcohol and often alcohol consumption on site, these add-on insurance options become very important to protect the business.
Let's take a closer look at what brewery insurance you should include.
Patron Intoxication Insurance
As a business that may serve alcohol, it's essential to consider patron intoxication insurance. This type of additional liability insurance protects you if someone who drinks beer at your establishment causes an accident or damage.
You might serve samples following a tour or have a brew pub or bar area. It's critically important for your business to protect itself by carefully training your staff.
You want to do everything possible, from having customers overserved. If an intoxicated customer causes property damage or injury, intoxication insurance helps to protect your business from liability.
Liquor Liability Insurance
This is a type of add-on insurance to both your regular liability coverage and the intoxication insurance.
If the intoxicated individual causes damages to your business or others on the premises, liquor liability insurance would help to cover the damages.
Again, you decide on the amount of liability you want protection from and the amount of deductible you'd pay if there's a claim.
Brewery Tours Liability
One of the appeals of many craft breweries is to get a behind-the-scenes look at the beer-making process. Patrons like to visit craft breweries and go on brewery tours.
There is also some inherent risk in allowing non-employees into the beer-making areas of your operation. Again, carefully training your employees and those giving tours is key to reducing your risk.
You can also add to your liability coverage by including brewery tour liability coverage. So, your protected from an accident or injury while a customer is on a tour in your brewery.
Brewery Equipment Failure Insurance
Creating craft brews does require some specialized equipment. Most craft breweries are relatively small operations with limited equipment.
If there's an equipment failure, it can be catastrophic for a small craft brewery, especially if supply chain issues impact a repair.
If equipment breaks down, your production schedule and the ability to make a profit can be significantly impacted.
This type of insurance can protect you from costs for equipment repair and, in some cases, protect you from profits lost due to equipment failure.
Brewery Supply Chain Interruptions
Often craft beer is highly specialized and thus requires specialized ingredients. In today's world, it's not uncommon to experience supply chain issues related to ingredients.
As a small brewer, you may not have the same buying power as a more significant business making it even more challenging to source needed beer-making ingredients.
Again, this can significantly impact your ability to produce and sell your product.
A small brewery could opt to keep some extra materials on hand. However, that isn't always an option. Most small businesses don't have a considerable cash flow and may be unable to afford this option.
They might also not be able to store lots of extra materials.
While supply chain interruption insurance might be a little specialized, it could help keep a business afloat and open doors if they face supply issues.
Some small breweries always choose to add restaurant services to their offerings. It's nice for patrons to grab a bite while enjoying a brew.
You should know this requires an extra type of insurance. It may even depend on what kind of food you offer, how much, and what restaurant insurance you need to add.
Running a restaurant in addition to brewing and serving beer adds more potential risk, so at a minimum, you'd likely need more liability coverage.
Product Recall Coverage
As a brewer new to the industry, this might be important insurance to protect you and your business.
If something goes wrong and there's a recall of your product, you could be open to some liability. Product recall coverage protects you against damages you may incur.
Considering the implications of a recall is important, especially if you send out your beer product to be sold at other locations.
Spoilage & Leakage Coverage
Another pretty specific brewery insurance is spoilage and leakage coverage.
If you were to lose refrigeration and have a product go bad, not only do you lose the product, but you also lose the invested time and the profit that would have come from that product.
Since beer gets made and stored in tanks and barrels, another brewer-specific insurance might be for leakage. You lose product and have clean-up issues.
Other Beer-Specific Insurance
As a brewer, there are also some additional beer-specific insurance options. These might include:
- Beer stock
- Specialized beer loss valuation
- Barrels and tanks
- Equipment breakdown coverage
- Beer in transit
Many of these brewer-specific insurances might be specific to your brewing situation. It might depend if you brew and sell at another location or if you have a bar or brewpub on site where you're serving what you're making.
Depending on how your policy is written, some of these specific brewer insurance options might fall under the umbrella of your liability coverage. Or, you might opt to add additional liability coverage to ensure you're covered for every possible outcome.
Choosing an Insurance Agent
Often brewing beer and getting into this industry is a passion career investment. You'll pour your heart and soul into making your beer brewing successful.
Part of a successful business is ensuring you're protecting yourself and your business. You need to work with an insurance agency that understands your business's unique features and demands.
You need to work to have good communication with your insurance agent, so they can secure all the brewery insurance you need to protect your business.
If you seek out quotes on insurance and an agent isn't willing to learn about the unique features of making beer, you need a different agent.
Protect Your Craft Beer Business With Brewery Insurance
You wouldn't be making and selling beer and doing the hard work if you weren't invested in being a successful business. Get the brewery insurance you need to protect your business.
If you're looking for insurance, we can help. Let us help create an insurance package that gives you all the necessary coverage. Contact us today so we can put together a quote for your craft beverage business.