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Heads-up! Here's how to insure your new craft brewery

If you have a knack for making good beer and always dreamed of opening your own craft brewery, now is a good time.

Starting a small beer-making business is a trend that's been brewing for years — and these establishments are opening at a rate of 1.2 per day, according to 

Before opening your doors, learn about the insurance needs of your new brewery.

Craft breweries are on the rise

According to the Brewers Association, 2014 was a great year in craft brewing, with 11 percent market share. The rate of breweries that opened increased by 19 percent over the previous year, with now more than 3,450 now operating in the United States.

Why is craft beer so popular? Craft breweries make smaller batches than the industry giants, allowing room for experimentation and creativity. Retailers and bars around the country are responding to customer demand and stocking craft beer, which gives consumers an opportunity to try these brews. And many craft breweries are canning instead of bottling their beer, making it easier to transport long distances.

Insurance needs for craft breweries

The market is there for craft beer — and as a craft brewer, you'll need insurance coverage to protect your business.

The following is a list of typical insurance policies your brewery will need.

General liability. General liability is basic coverage every brewery needs. This insurance usually covers liability costs stemming from physical harm done to a third party as a consequence of your business. The extent of your general liability coverage depends on your business and the perceived risks. For a brewery, the primary consideration is harm caused by machinery and equipment. Liquor liability is not included in general liability policies and must be purchased separately.

Business property. Beer-making is an elaborate enterprise, and business property insurance protects you if equipment gets lost, stolen or damaged. Everything you need to make your beer will be covered, including the ingredients, machinery and facility if you own the property.

Equipment breakdown coverage. This provides coverage if your product is destroyed due to a machine malfunction. Peter Whalen of Whalen Insurance identifies equipment breakdown coverage as an integral part of any craft brewery insurance package. The policy will generally cover machine repair and the cost of rebrewing and transporting the beer.

Property-in-transit. Property-in-transit insurance — often called inland marine insurance — covers physical loss or damage to your product as it's being transported. This coverage is essential if you expand your sales to locations outside the brewery, such as bars and stores.

Workers' compensation. If an employee is injured on the job, this no-fault, state-required coverage compensates employees for lost wages and medical costs.

Liquor liability. Liquor liability insurance covers claims relating to personal injury or property damage caused by intoxication from your product. "If the brewery is going to serve its products onsite, the owners would be really smart to make sure they have coverage in the event a patron gets overserved," says attorney Timothy Davis, whose firm represents breweries.

Insurance costs

The costs of coverage vary depending on the size of your brewery and how much revenue you generate annually.

And not all types of insurance cost the same. General liability insurance, for example, is often cheaper than other types of insurance, while premiums for liquor liability insurance can range from $965 to $3,360. Primary liability limits for liquor liability insurance can range from $300,000 to $1 million.

There's never been a better time to open your own craft brewery. If you decide to go into business, make sure you have the right insurance protection. 

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