Business owners have an extreme level of control over many commonplace accidents.
By Larry Chasin
We’ve all heard and seen the effects of extreme weather and the damage it can cause to property. Wildfires, hail, windstorms, extreme heat and flooding are occurring much more often than previously experienced. Property damage is also occurring in locations that have never before experienced extreme weather at this scale.
But what about everyday business risks and more common types of losses? Here are a few recent claim examples that illustrate the importance of having specialty coverages designed to address unique exposures.
Tank collapse: When the wingnut on a winery’s stainless-steel tank failed, more than 11,000 gallons of wine flooded the winery and led to a massive tank implosion. Product losses totaled $31,000 and the tank replacement was another $70,000, totaling $101,000 in potential losses.
Thankfully for this particular business, these losses were covered under insurance — specifically, a winery endorsement providing coverage for leakage of wine and, just as important, coverage for the ensuing tank collapse caused by the sudden leakage of wine.
Employee dishonesty: A winery owned a fleet of trucks, which employees used to pick up wine from other wineries for transport. After reviewing the employees’ gas purchase transaction history, it was found they had been using the company fuel card, which was only approved for diesel, to purchase regular gas for their personal vehicles. The records showed they had spent more than $80,000 on regular gas within a year’s time.
Luckily, the winery has commercial crime insurance, including employee dishonesty, and the limit of insurance was sufficient to cover the loss. To make sure their winery is adequately protected, it’s important that winery owners regularly check with their insurer to confirm their coverage limits are adequate.
Lost grapes: A winery experienced a loss while transporting newly harvested grapes contained in bins. As the driver rounded a corner, the trailer tipped, causing nearly $32,000 in grapes to spill out onto the road. While the cost of the grapes was $32,000, the value of the wine to be made from these grapes was significantly higher.
Claims often arise during the transportation process for wineries. This loss was covered by transit insurance and the lost value of the wine was captured in specialty wine valuation provisions.
Wine contamination: A winery had 46 cases of red wine contaminated with acetobacter. The volatile acidity gave the wine a vinegar taste and made it unsellable. Lab results confirmed the wine was contaminated with bacterial growth.
For this incident, the microbial wine contamination was covered under an endorsement with a contamination limit of $5,000 for cellar funk and wild yeast.
Pets on the patio: Pets are often seen on winery patios as their owners enjoy a nice glass of wine and the great outdoors. Unfortunately, one winery hosted a customer with a dog that bit another customer’s child. This loss was in excess of $50,000 and could have been much worse. Responding coverages included third party medical payments, which took care of first aid expenses while the general liability coverage responded to pain and suffering allegations.
Bottom line: have a written dog and animal protocol and make sure all employees are routinely trained to identify problematic situations before they occur; include requiring leashes for all pets on premises.
Keep control with advance planning
It is easy to feel helpless in the face of unexpected losses. That’s why it’s important to remember that business owners have an extreme level of control over many commonplace accidents. A strong emphasis on risk mitigation is key to ensuring your business can weather today’s run-of-the-mill challenges. In tandem with risk management, working with a specialty insurer who knows your industry — and its risks — is critical.
A specialty insurer will understand the various exposures and challenges of the winery industry and can ensure your business has adequate limits and coverage. The right risk mitigation protocols and specialty insurance partner can make all the difference in ensuring a business can continue to produce fine wine, host guests and employees safely onsite and operate efficiently for years to come.
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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.
