While means and methods will vary, one item that all craft brewers share is dependence on their equipment. That’s why it’s important to make sure you include equipment breakdown coverage (EBC) as part of your insurance portfolio if you’re in the business of brewing craft beer.
When most of us think about insurance protection, we think of insuring against fire, theft, vandalism, weather-related damages or injury to other parties due to our negligence. But what about an electrical arc that interrupts the power supply, a sudden compressor failure on a glycol chiller or the unexpected breakdown of your mash tun or centrifuge? These can be expensive items to repair or replace — and the downtime may prove more costly due to the lost revenue and time it may take to get replacement equipment.
Most traditional property insurance policies exclude the sudden and accidental breakdown of mechanical, processing and heating and cooling equipment. A separate equipment breakdown policy or endorsement (a policy addition) is often required to insure these items properly. Many machinery and equipment policies include coverage for ammonia contamination and product spoilage due to temperature or humidity changes when vital equipment is suddenly damaged.
Consider these scenarios:
• A spent grain/barley storage tank experienced a breakdown due to pressure buildup from overfilling. When the storage tank was emptied each week, employees did not confirm the tank was completely emptied. Eventually, the tank level increased and overfilled until the atmospheric vent became clogged. Pressure then built up, rupturing the top head of the tank in several places. The brewery had coverage for equipment breakdown and its policy paid out $7,870.
• A gear in a bottling line suddenly broke, shutting down production of bottled beer for two months. The replacement gear was a custom part and had to be shipped from overseas. This brewery carried EBC coverage on their policy which included expediting expenses for shipment of the part. The estimated loss of business revenue was $40,000 while the cost to fix the bottling line ended up being $3,000 and cost to expedite was $1,000.
In addition to covering the specialized equipment used in your craft production facility, you should also consider routine breakdown of equipment common in many business categories such as: air conditioning equipment, air tanks, electric motors, electronic data processing equipment, fans and blowers, water heaters and more. All of these can be covered under an equipment breakdown policy or endorsement.
Consider this important coverage to round out your insurance protection. By insuring your equipment against failure or breakdown, you can greatly reduce the financial impact to your business when failures occur. For more information, feel free to contact Jason Jordan
at email@example.com. •
As a classically trained chef and insurance expert in the craft beverage industry, Jason has honed his palate for flavors as well as his skills in risk assessment. And he prides himself on his expertise in delivering the quality of service and knowledge, carefully crafted and tested over time, which his clients expect and deserve.