Wineries are working together to ensure properties are fire safe by fostering a resilient, fire-aware community.
By Larry Chasin
The wine industry has undergone significant changes in response to environmental challenges, particularly the devastating impact of recent wildfires. The recurring devastation caused by massive conflagrations has necessitated a shift in priorities in terms of financial business decisions and resource allocation. Today, there is a heightened emphasis on risk mitigation and loss prevention as winery owners adapt to the new realities of their environment.
This shift toward a safety-oriented culture is not limited to wineries; it resonates within the insurance industry as well. The profound financial repercussions of wildfires have compelled both the winery and insurance sectors to actively engage in advancing wildfire safety and developing impactful preventive measures. As these industries heal from recent events, their dedication to comprehensive risk assessments and the deployment of solid mitigation strategies has intensified. Looking ahead, it is through a spirit of community cooperation and mutual resilience that both industries will power through this enduring crisis, jointly fostering a safer and more stable future.
Progress and Best Practices
From 2017 to 2020, California wildfires caused $37 billion in insured losses, affecting homes, farms, ranches, wineries and more. As winery owners now prioritize wildfire mitigation, community-based approaches are becoming increasingly popular, thus helping wineries implement affordable strategies that benefit the entire community.
Since the 2020 fires, Sonoma County wineries have collaborated on fire safety training, basic firefighting and creating defensible space. The Sonoma County Winegrowers association has organized workshops and educational sessions on fire prevention and response. Initiatives such as the Sonoma County Wildfire Resilience Program enhance preparedness through winery and fire department collaborations. Wineries work together to ensure properties are fire safe — participating in efforts to clear vegetation and create firebreaks — thus fostering a resilient, fire-aware community.
Implementing Risk Mitigation Systems
Wineries are also adopting advanced risk management strategies, incorporating not only traditional protections for assets such as tasting rooms, but also focusing on vital infrastructures such as electrical power, fiber optics, irrigation systems and wastewater facilities. This shift has been further enhanced by wineries collaborating with leading specialty insurance providers that can perform proprietary risk assessments using cutting-edge technologies.
Examples include deploying drone technology and geospatial mapping during regular property inspections, which can provide detailed and accurate data about a winery’s layout and potential risk areas. An IRAD (insurance risk assessment drone) allows for a comprehensive analysis of a property, identifying vulnerabilities that might not be visible during ground-level inspections. The aerial imagery captured by drones provides a unique perspective on the spatial distribution of vegetation, buildings and other structures, helping to pinpoint where fire breaks or additional protections might be necessary. Overflying large properties drones are also able to identify infrastructure, outbuildings and other often overlooked values. Having such complete and comprehensive data captured up-front keeps all parties on the same page and should eliminate any surprises in the unfortunate event of a loss.
Moreover, drone technology lets insurers customize insurance policies based on precise risk assessments, ensuring that coverage is aligned with the specific needs and potential risks faced by each unique winery. This method not only improves the accuracy of risk evaluations, but also enhances the efficiency of the insurance process, leading to faster, more proactive adjustments in coverage and risk management practices.
Staying on Top of Replacement Costs
The practice of reassessing replacement costs and property values has become a critical aspect for wineries in regions prone to wildfires. Given the substantial costs associated with rebuilding and recovery, ensuring that insurance coverage accurately reflects the best estimate of current replacement costs of buildings and property is essential. This involves regular updates to property and inventory valuations, carried out in close collaboration with insurance specialists who understand the unique risks and values inherent to winery operations.
An effective reassessment process begins with a thorough and detailed evaluation of all winery assets. This includes not only the main structures, such as tasting rooms and production facilities, but also extends to ancillary elements including power, infrastructure, irrigation systems and specialized equipment. By maintaining up-to-date records of these assets, wineries can avoid significant underinsurance issues that often arise when replacement costs outpace the limits of outdated policies.
Additionally, the volatility of the construction market, especially in the wake of widespread natural disasters, underscores the necessity for frequent reassessment. Costs for materials and labor can fluctuate dramatically, and without regular updates to insurance policies, winery owners might find themselves inadequately covered when they need it most. Engaging in periodic reassessment helps to align the insured values with the real-world costs of rebuilding, ensuring that policy limits are sufficient to cover potential losses.
The Way Forward
Proactive risk management not only safeguards winery operations but also enhances their appeal to insurers, potentially leading to more favorable insurance terms. The partnership among winery owners, insurance agents and carriers is essential for fostering a resilient industry. By working closely together, we can implement effective risk mitigation strategies and ensure comprehensive coverage tailored to the unique needs of wineries.
Look for insurers dedicated to promoting a culture of preparedness and resilience within the wine industry. Collaborative risk assessments and customized insurance solutions can protect wineries from the increasing threat of wildfires, ensuring their continued success and growth. Forming this type of partnership leads to development of innovative strategies that address specific risks faced by wineries, providing them with the support they need to thrive.
Insurers can play a vital role of insurers in not only responding to disasters but in actively preventing them. Fostering a collaborative relationship among winery owners, agents and insurers can build a robust framework for managing risks and ensuring the long-term sustainability of wineries. Working together, we can create a safer, more resilient future for the wine industry.
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Larry Chasin
Larry Chasin is president and CEO of PAK Programs, which provides insurance programs for wineries, vineyards, breweries, wine & liquor retailers, cideries, meaderies, distilleries, liquor & wine importers and distributors. He can be reached at larryc@pakprograms.com.
