After the pandemic dealt a big blow to the beer business, it has gotten back on its feet. In 2020, sales at craft breweries went down by 9%. Even though 2022 wasn't as good as 2021, it was still a good year. IRI data showed that off-premise beer sales reached $44 billion, and the U.S. Tax and Trade Bureau said that a record 14,112 brewery permits were issued in the U.S.
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| There are 7 Crazy Insurance Claims that could Happen to your Brewery |
Even though growth is always a good sign for the industry, good news often means that safety operations must be put on hold.
As the year 2023 goes on, breweries need to keep a close eye on safety. We often talk about some of the more common risks at breweries, like those caused by broken equipment or technology, dram shop laws, staffing issues, etc. But what are some of the less obvious risks to operations?
1. A broken kettle
One business had a mash kettle tank that was three years old and had started to leak. It had to be turned off so it could be looked at. When the technician looked at the tank, the stainless steel jacket had spider cracks. Because of this, the insured had to stop making things.
The stainless steel jacket was so badly damaged that the cracks couldn't be welded, so the tank had to be replaced. This tank was also so big that the roof of the building had to be removed, and a crane had to be used to pull it out. This took several weeks and cost the business money.
The total loss was $778,530, a huge amount for any business, but their equipment breakdown policy protected the insured.
Along with equipment breakdown coverage, it is important to have a well-thought-out risk management plan that can help limit exposure. Lastly, brewery owners should take the time to think about the problems that could arise when fixing and installing large tanks and make a full plan in case something goes wrong.
2. Boiler error
One of our clients was making a batch of beer when they found several problems with the boiler. This stopped production while they waited for repairs to be made. The technician found that the pilot assembly and the flame guard had broken down mechanically and needed to be replaced. The insured lost $138,063 in business income and had to pay $20,912 for labor and replacements.
In this situation, we suggest that brewery owners talk to their insurance partners about an equipment breakdown policy that covers everything. We also suggest that business owners have a maintenance and inspection partner regularly check all important brewing equipment. Lastly, owners of breweries should consider keeping spare parts on site to cut down on downtime.
3. Chip got lost
An insured person found a piece of oak in their centrifuge filtration machine. The staff member then took the machine apart to get the chip out and clean it. When they were done, they put the machine back together and put it through a cleaning cycle. After 10 to 15 minutes, the worker noticed that the machine was making louder sounds, so they pressed the button to turn it off quickly. Then, they found several of the centrifuge's internal parts badly damaged. The cost to fix the centrifuge was $125,100, but this was covered by their policy when the equipment broke down.
The people in charge of a brewery can avoid this claim by ensuring that the equipment is cleaned and put away regularly and that there is no junk in the lines connecting the different pieces of equipment.
4. Defective manway door gasket
One of our insured customers recently had a problem with a manway door gasket seal on one of their stainless steel fermentation tanks. The tank collapsed in on itself because a wingnut wasn't tight enough. More than 14,000 gallons of finished product got spilled because of the accident. It cost the brewery $73,672 to replace the tank and $31,092 to replace the lost product.
Could it have been stopped? Yes, the disaster could have been avoided if regular safety checks and maintenance had been done. Gaskets and valves should be checked for wear at set times by the staff. Management should also ensure that important valves and gaskets are regularly checked twice or even three times.
5. Outdoor accident
Taprooms that are located outside have shown explosive growth in popularity over the last several years. Regrettably, a car crashed into an outdoor taproom belonging to one brewery, causing severe damage to the taproom and the fence and retail signs surrounding it. The owner of the brewery had to pay for the repairs. Not only did the beer garden seem to be in disrepair, but the property damage loss was $34,010, with the fence and the signs accounting for $23,404 of that total, and the loss of revenue brought the total to $34,010.
Both losses, however, were thankfully paid for
In light of this, the situation serves as a useful reminder for brewers to ensure that any outside renovations and additions are discussed with their respective insurance companies. In addition, when it comes to outdoor facilities close to automobiles, managers should consider placing bollards to safeguard their clients and their property from the possibility of accidents.
6. An abundance of germs
One of the insured discovered that there were an excessive number of microorganisms when they were in the process of bottling the finished product and putting the product into holding tanks. This caused the batch to be spoiled.
This policyholder was paid for part of the lost goods thanks to their policy endorsement covering wineries, distilleries, breweries, and cideries, respectively. Even though there were an extra $7,000 in damages, this covered up to $5,000 worth of foreign microbiological contamination.
We highly urge that company owners establish robust lab and yeast programs in addition to clean-in-place (CIP) programs to reduce the risk of incurring losses similar to these due to microbial infection.
7. Regarding the smell
When the crew of one brewery suddenly discovered that something smelled odd, they were in the middle of fermenting a 20-barrel batch of pale ale. Since the odor was so unsettling, they were forced to throw away the batch and take the beer to the lab so it could be tested. The results of the tests revealed the existence of wild yeast strains and the development of bacteria.
After that, the brewery gave their brew house and fermentation containers many thorough cleanings. They repeated the brewing process and discovered no new problems, which led them to conclude that the containers and lines were the sources of the contamination. The whole loss amounted to $3,569.
Thankfully, the brewery had coverage for wild yeast and cellar taint, which allowed them to avoid financial hardship in the event of a loss. Owners of breweries should be aware that the scope of this coverage is often capped at $5,000. So, in addition to having insurance, breweries should also have a solid "clean-in-place" program to make every effort to prevent a scenario like this one.
As you can see from the accounts of these claims, even the most unbelievable things are possible.
The good news is that adequate insurance, offered by an expert familiar with the specific types of risk exposures that brewers face, may assist in rescuing the day. Breweries must be ready for new hazards and dangers as the sector continues to expand; to do so, they must have appropriate safety measures and insurance policies.
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