First, find an agent you can trust. Even after reading this article, you’re not going to be able to decipher the hieroglyphics that are your winery insurance policy. If you merely find an agent to deliver the bottom line lowest price, you may find yourself in trouble at the time of a claim. Why? Because insurance policies are different and the policy with the lowest price may be a result of the having least amount of coverage. A trustworthy agent will find the proper coverages while simultaneously seeking the best prices available. Good insurance agents are just like good people: they look out for your best interest. If your agent is someone you can trust: great!
Second, here are the top five mistakes as I see them.
One – Not having leakage coverage. You may look at your policy and see that the wine in your barrels or tanks are covered, but you may not realize that if the wine simply leaks out of those holding units, there is no coverage for that. Why? A standard commercial policy does not recognize wine on the ground as a “damaged property.” It’s still there, unharmed, it’s just on the ground. With leakage coverage, it is stated that leaked wine is covered. Make sure you have leakage coverage.
Two – Not having contamination coverage. This is a big one. Like the paragraph above, you may have the right limit of insurance for your wine, but may not realize that if the wine becomes contaminated with a fungus or bacteria, there’s no coverage. Why? Because the standard commercial property policy excludes damage resulting from fungi or bacteria. With contamination coverage, your wine will be covered from those two things and more.
Three – Not having coverage for wine processing errors. You spend a lot of time crafting your wines, and you’re very careful, but what if you or your employee accidentally blends two or more wines? How much would that cost? What if you over sulphur a wine? Or accidentally add water? Or what if you over/under do it on adding any chemicals or other ingredients? This could be costly and not something you would find coverage for on a standard property policy. You need to have coverage for wine processing errors.
Four – Improperly valuing your wine. Undervaluing your wine could cause you to get short changed on a claim, even on a partial loss that didn’t wipe our all your inventory. What you want to do is this: cover your cellared, vintage, or irreplaceable wines at the selling price. For wine that is still in process, whether in bottles, barrels, or tanks, figure it at the lower of these two valuations: 1) The three year average wholesale and/or retail market price of the wine or 2) The price the wine could have been sold for as case goods. The second part of this step is to make sure that your policy will pay the market value of your wine.
Five – Not having business income and/or extra expense coverage. If you value your wine as recommended in the paragraph above, you’re not actually going to need this coverage because when your insurance company pays you the market value of your wine, you’re already getting business income coverage. BUT: many wineries sell other things besides wine. Restaurants, gift shops, special events, tours, and hotels are a part of many wineries’ operations. Many of these wineries would be surprised to know they don’t have business income or extra expense coverage
So those are a few of the big ones that I see. And believe it or not, there are a lot more coverages that are critical to properly insuring a winery, coverage which I will undoubtedly write about in the future.
I’m the commercial producer and owner at Gillespie Insurance Services.
Gillespie Insurance Services helps people and businesses in California, Arizona and Nevada.