Breweries: Is your upcoming party, festival or tasting really covered?
What good is a celebration without a cold craft beer? Craft breweries are as good at throwing parties as anyone, but whether it’s the annual ugly sweater party, off-site beer festival or a “close down the streets” type of affair, an insurance conversation needs to take place. The spirit of the event and increased number of patrons dramatically raises the risk level. Conversely, the magnitude of the planning and the many details involved may not be communicated on multiple levels. This is where we find the basis for a lot of denied claims.
You want to take the party outside, invite everyone and enlist the help of other vendors. Great! First, you’ll need to do some planning and have some discussions about your risks and the insurance coverage. If you’re expanding alcohol service outside of your establishment, consult the Michigan Liquor Control Commission (MLCC) first. They’ll be happy to let you know if your existing license can be expanded to your temporary party boundaries or if a separate special license will be needed. With either scenario, you must notify the insurance carrier regarding the scope of the party to be sure coverage will be provided.
Next up, will your current carrier extend general liability coverage since this party is going to extend beyond your current premises boundary? Some coverage forms can be very limiting and policies can include exclusionary language or forms, leaving you with little to no coverage. The assumption, “I have a policy, so I must have coverage,” has left many policy holders with no coverage. Insurance carriers have basic policies to meet the needs of the typical brewery and limit their risk to exposures common to everyday business operations. A celebration involving hundreds or thousands of people held outside your building is not the norm and may not be covered.
Large-scale celebrations typically enlist the help of outside vendors, food trucks, bands or sound system companies and portable restroom services. These people are now partners in making this party a success and even help to ensure safety. What if they cause or contribute to an accident? Have you considered their insurance coverage? If they don’t carry insurance or what they do have is inadequate, their negligence can leave you with all the financial responsibility. Early in the planning process, insurance requirements should be presented to prospective vendors. All vendors should carry general liability insurance and workers compensation. Ideally, their limits should be equal to or greater than yours. They should be required to list your brewery as an additional insured and you should require a certificate of insurance prior to signing any agreement with them.
The number of beer festivals where multiple breweries gather have significantly increased in recent years. If you are, or want to be, the ringleader, you need to know the MLCC has some serious regulations. First of all, nonprofits only. And you need to supply proof of this status along with a resolution by the membership and/or board. Immediately after securing approval from local government, law enforcement and churches or schools that are within 500 feet, you’ll need the appropriate insurance. A bond of beer festival special license of beer consumption on the premises is required by the MLCC. They’re $50 and most insurance agencies can handle this request in short order. At the time you contact your insurance agent to secure the bond, you should have a discussion regarding general liability and liquor liability coverage. While the bond is the only insurance item required, general liability will protect the organization from claims made by event patrons for bodily injury or property damage. And in the event a patron injures a third party in a auto accident upon leaving the event, liquor liability is the coverage that offers protection.
How about the informal party, say a tap takeover or tasting? What are the risks and exposures of having your salesperson hosting a tap takeover or tasting in some far-off corner of the state? If we assume the event is taking place at an established bar or restaurant, then the establishment will bear most of the responsibility, but not all. Have you thought about, discussed or contemplated the actions and responsibilities of your employee during and after the event? A written procedure for how a sales representative conducts themselves is very valuable, especially if they are conducting a tasting. It is imperative that these reps be Training for Intervention Procedures or TIPS trained so they understand responsible alcohol service. Many times the rep is the one pouring and serving and, should an incident arise, the brewery is potentially on the hook.
Are sales reps enjoying a drink or two during a tasting or sales call? Regardless if they are driving a vehicle owned by the brewery or not, they are working for the company at that time. Should they be involved in an auto accident, don’t be surprised when a lawsuit appears. (Non-owned and hired auto liability would help protect the company from an issue arising from the third party in the auto accident. But a commercial umbrella policy could help pick up this exposure as well, since auto accidents have the propensity to be substantial.)
In reality, most parties – large and small – go off without much of a hitch. But a brewery pays a lot of premium for insurance, so they should involve their agent at the start to ensure most incidents can be covered by insurance. In addition to getting the most value out of your insurance program, you should be receiving and utilizing Loss Prevention services from your carrier. This can save you an immense amount of time in safety planning for your event, procedures for your sales reps and determining the routine exposures for both patrons and employees. If you’re not taking advantage of this typically free service, ask your agent. No insurance program can cover everything and anything that may happen. Instead, involve your employees, contact your insurance carrier to plan and discuss ways to minimize your risks to ensure the most coverage you can so that great celebrations continue in the future.
Mark Irwin, principal of Fischer Insurance Agency, has been a licensed agent since 2002. He specializes in Craft Beverage & High Net Worth. He can be reached at 231-533-6161 or firstname.lastname@example.org