Brewery insurance:

Coverage for distilleries, microbreweries & more

Innovation. Quality. Efficiency. To compete, breweries must stay on the cutting edge of trends, consumer tastes, and regulations.

It’s a rewarding career – but with reward comes risk. With the right insurance and risk management plan, you can protect your business, employees, and customers.

In this guide, we’ll cover:

• Who needs brewery insurance?
• Why do breweries need insurance?
• What kind of insurance do breweries need?
• How much does brewery insurance cost?
• Do breweries need alcohol surety bonds?
• Managing risk as a brewery
• Choosing a risk partner that understands your brewery

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Who needs brewery insurance?

Any business in the brewery or distillery industry needs brewery insurance. This includes:

• Breweries
• Distilleries
• Microbreweries
• Craft breweries
• Brewpubs and taprooms
• Beer distributors

Why do breweries need insurance?

Breweries need insurance to protect them from financial, legal, and reputational risks.

Businesses face a variety of risks in the brewing industry. One of the biggest risks: product liability.

If a customer claims that your product caused bodily injury or illness, you could be on the hook for costly settlements, judgments, and legal costs.

Other risks in the brewery space include:

• Equipment failure and breakdown
• Regulatory compliance
• Property damage
• Alcohol-related risks like liquor liability

Insurance policies can help you safeguard your assets and mitigate potential liabilities.

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What kind of insurance do breweries need?

There are many types of insurance that could benefit your business. That’s why it’s important to follow a consultative approach to understand the full scope of your exposures. Then, your agent can help identify insurance solutions to mitigate your risk.

The policies we typically recommend for breweries are:

• General liability insurance
• Workers’ compensation insurance
• Business interruption coverage
• Commercial auto with HNOA endorsement
• Commercial property insurance
• Cyber insurance
• Employment practices liability insurance
• Equipment breakdown coverage
• Liquor liability insurance
• Product liability insurance

Let’s explore each policy and when your business might need it.

Required insurance for breweries

Legal insurance requirements are determined by your state’s Department of Insurance, health regulatory agency, and lease contracts. Thus, the coverage required for your business depends on which state(s) you operate in and your contractual obligations.

Your insurance agent can help you identify the specific requirements for your business.

General liability insurance

General liability insurance covers claims that your business caused third-party injury or property damage. It helps protect your company from financial losses due to lawsuits or other legal claims stemming from your operations such as a trip and fall, illness, or even personal injury.

When we recommend general liability

Some states require certain types of businesses to carry general liability coverage. Even if not required, GL provides fundamental protection for your business. We recommend it for every business that interacts with the public or customers.

Workers’ compensation insurance

In most states, businesses with a certain number of employees must carry workers’ compensation. Workers’ comp covers medical bills and lost wages for employees who are injured or become ill on the job.

When we recommend workers’ comp

This no-fault insurance policy protects you and your employees from the financial impact of workplace injuries. Each state has different workers’ comp requirements, but we recommend it for most businesses with employees.

Essential insurance policies for breweries

These policies are likely not required, but we consider them essential coverage for breweries.

Business interruption insurance

Business interruption coverage, also called business income insurance, protects businesses against financial losses due to unexpected interruptions to their operations. It typically covers:

• Lost profit
• Payroll
• Rent or mortgage payments
• Utilities
• Ongoing business expenses

Examples of covered interruptions include natural disasters, power outages, and unforeseen equipment failures.

When we recommend business interruption insurance

We recommend business interruption coverage for any business owner who wants to mitigate the risk of disruptions caused by unexpected events.

Commercial auto with HNOA endorsement

Commercial auto insurance covers vehicles used for business purposes. In most states, it’s required for commercial and personal vehicles. In case of an accident, it helps cover the cost of:

• Repairs to your vehicle
• Medical costs
• Damage to property
• Legal expenses if someone sues you

If your employees use their own vehicles for business or deliveries, their personal auto policies might not cover accidents on the job – or may not sufficiently cover your business. A hired and non-owned auto (HNOA) endorsement covers your business for liability-related claims stemming from the use of vehicles not owned by your business.

When we recommend commercial auto and HNOA

We recommend commercial auto for businesses that use vehicles for business purposes, such as deliveries. If employees are using personal vehicles for business, we also recommend the HNOA endorsement.

Commercial property insurance

Commercial property insurance protects your building and physical property from events like:

• Fire
• Theft
• Vandalism
• Hail, windstorms, lightning
• Natural disasters

It covers financial losses from property damage, lost income, and other expenses while recovering.

When we recommend commercial property

We recommend commercial property coverage for most businesses that own or rent property, including buildings, equipment, inventory, and supplies.

Cyber insurance

Cyber insurance covers losses caused by a security failure or data breach. It’s beneficial for any business handling customer data. It covers a range of expenses, like:

• Credit monitoring
• Public relations
• Legal fees
• Regulatory fines
• Business interruption
• Deceptive and fraudulent instruction

When we recommend cyber liability

Nearly every business is exposed to cyber risk. We recommend cyber insurance for any business that uses technology to conduct business or store sensitive information.

Employment practices liability insurance

EPL insurance covers employee claims of wrongful employment practices like discrimination, harassment, or wrongful termination. It covers:

• Legal defense costs
• Settlements
• Judgments

When we recommend EPL

We often recommend EPL insurance for businesses with larger numbers of employees, but any company with employees faces the risk of employment-related claims.

Equipment breakdown coverage

Equipment breakdown is an endorsement that can be added to your commercial property policy. It covers unexpected mechanical or electrical failures of your essential equipment. It covers:

• Repair or replacement costs for damaged equipment
• Losses from business interruption due to breakdown
• Spoilage or contamination due to equipment breakdown

When we recommend equipment breakdown coverage

We recommend an equipment breakdown endorsement for any business that relies on expensive and highly-specialized equipment like HVAC systems and walk-in coolers.

Liquor liability insurance

Liquor liability insurance protects you from legal claims and financial losses arising from alcohol-related incidents. This essential coverage is required by many states and commercial leases.

It typically covers:

• Legal defense costs
• Settlements
• Judgments

When we recommend liquor liability

In most states, a liquor license and liquor liability insurance are legally required if you serve alcohol to be consumed on the premises. 

Even if your business’s primary purpose is not serving alcohol, if you serve it at special events, you should consider liquor liability coverage.

Product liability insurance

Product liability insurance covers claims that your product caused injury or property damage. It’s a common policy for businesses that manufacture or sell products. It covers costs related to a product liability claim, such as:

• Legal defense
• Settlements
• Judgments

When we recommend product liability

We recommend product liability coverage to any business that manufactures, distributes, or sells physical products – like food and drink.

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How much does brewery insurance cost?

Insurance companies calculate your premiums using several factors:

• Business size and revenue
• Location
• Claims history
• Coverage limits

Because insurance costs can vary, it’s important to work with a risk manager to find the best solution for your business. Businesses with complex risk profiles will find the most value from partnering with an independent agent that will help them proactively manage risk for long-term success. Learn more about the benefits of integrated risk management.

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Managing risk as a brewery: 5 common risks

1. Product quality and contamination

As a brewery, your product is everything. Contamination, spoilage, or production errors can lead to product recalls, reputation damage, and potential legal claims.

To maintain excellent quality and avoid these issues:

• Perform regular quality testing on raw materials, production processes, and finished products
• Train staff on sanitation protocols and proper storage conditions
• Carry adequate product liability insurance coverage

2. Equipment failure and breakdown

Your brewing equipment is essential to your operations. A breakdown or failure can disrupt production, cause delays, and lead to financial losses. Plus, it’s expensive to fix.

To avoid these negative impacts:

• Perform preventive maintenance and regular inspections on all equipment
• Keep critical spare parts on hand to minimize downtime
• Get equipment breakdown insurance for financial peace of mind

3. Regulatory compliance

The alcoholic beverage industry regulates licensing, labeling, health and safety, and distribution. It’s up to you to navigate these complex regulations. Failure to comply with requirements can lead to costly fines, legal liabilities, and even license revocation.

To avoid compliance issues:

• Stay up-to-date on the laws and regulations that impact your business
• Establish robust record-keeping and consider hiring dedicated compliance personnel
• Partner with a risk advisor specializing in the alcohol and hospitality industry

4. Property damage

When you have specialized equipment and facilities, the costs to repair and replace damaged property can skyrocket quickly. Breweries often house flammable materials which increases the risk of fire. There are also weather events and accidents to contend with.

To reduce your risk of losses from property damage:

• Properly maintain all systems like fire protection, electrical, plumbing, and HVAC
• Provide employees with safety training including material handling, hazard identification, and emergency response
• Carry adequate commercial property insurance

5. Alcohol-related risks like liquor liability

Also called “social host liability,” liquor liability is a concern for any brewpub or taproom serving alcoholic drinks. If your business overserves a patron, they can pose a significant risk to your business if they injure themselves or others, drive drunk, or damage property.

To mitigate these risks:

• Train staff on responsible alcohol service including recognizing intoxicated individuals, verifying IDs, and refusing service or offering non-alcoholic drinks to an overly-intoxicated person
• Implement security measures like dedicated security personnel, prompt intervention when a patron shows aggression and visible surveillance systems
• Carry robust liquor liability insurance coverage

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Choosing a risk partner that understands your brewery

To protect the business you’ve worked hard to build, insurance alone is not enough. It’s crucial to identify the most critical threats and make strategic decisions that will allow you to grow your business without disruption.

When it comes to risk, breweries face unique challenges. We’re right there with you – we work in the food and beverage industry too. We just happen to be on the risk management side. When you partner with POWERS, we’re more than your insurance agency. We’re a true business partner invested in your success. Our philosophy combines: