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What is distillery insurance?

Distillery insurance is a set of coverages meant for alcohol manufacturers of various shapes and sizes – whether you produce gin, vodka or whiskey.

Given the complex nature of distilling – involving flammable materials, expensive equipment, and public consumption – a standard business insurance policy is often insufficient. Distillery insurance bundles essential coverages and offers specialized options to provide comprehensive protection for your unique operations, including protections for your property, equipment, inventory and liability exposures.

What distillery insurance includes

Distillery insurance would usually cover you in the following areas:

• Commercial general liability (CGL): Also known as ‘slip-and-fall’ coverage, this is crucial for any business in Canada, not just distilleries. It protects you against claims for third-party bodily injury or property damage that may occur on your premises or as a result of your operations. For example, if a visitor slips and falls during a tour.
• Product liability: Essential for any business that manufactures products for consumption, including alcohol. This covers you if your product is alleged to have caused illness or injury to a consumer. Note that this is different from liquor liability, which involves consuming alcohol on site (if you offer such services).
• Commercial property: Protects your physical assets, including your building, distillation equipment, inventory of spirits and office contents, from risks like fire, theft and vandalism. Think of it as home insurance, but specifically for your distillery.
• Equipment breakdown: Covers the cost to repair or replace essential equipment, such as stills, boilers and bottling lines, if they break down unexpectedly. Again, given that distilleries can’t run without their equipment, this coverage is essential.

Recommended add-ons for distillery insurance coverage

While the basic coverage may seem comprehensive enough, there are numerous other protections that you may want to consider, including these:

• Business interruption: If a covered event, like a fire, forces you to temporarily shut down your distillery, this coverage helps replace lost income and cover ongoing expenses like rent and payroll.
• Liquor liability: If you serve alcohol on site (e.g., in a tasting room or at events), this is a must-have. It protects your business against claims arising from property damage or injuries caused by an intoxicated patron.
• Contamination and spoilage: Covers losses if your product is contaminated or spoils due to equipment failure, power outages or other specified perils.

Common types of distillery insurance claims

Here are some examples of the kinds of claims distilleries tend to file:

• Slips and falls: A visitor on a distillery tour slips on a wet floor, resulting in an injury and a subsequent lawsuit. General liability insurance can cover the medical and legal costs.
• Product contamination: A batch of spirits becomes contaminated during production, making it unsalable. Contamination and spoilage insurance would cover the financial loss of the spoiled inventory.
• Equipment malfunction: A critical piece of distillation equipment breaks down, halting production. Equipment breakdown insurance would cover repair costs, and business interruption insurance could cover the lost income during the downtime.
• Theft: Your distillery is broken into, and valuable inventory and equipment are stolen. Commercial property insurance would help cover the cost of replacement.

How much does distillery insurance cost?

There’s no flat rate that we can quote when it comes to distillery insurance, given how customizable your coverage can be. That said, on average, your distillery should expect to pay between $1,500 and $10,000 per year (sometimes more), depending on the size of your operation.

Some of the factors that may impact your insurance premium include:

• Type of coverage: Basic policies with standard coverage will cost less than comprehensive policies with multiple add-ons.
• Coverage amount: The types and limits of coverage you choose will affect your premium.
• Location: Your province and specific location can impact rates. If the area where your distillery is located has a lot of crime, for example, then there is a higher likelihood that your equipment or inventory would get stolen.
• Business size and revenue: Larger operations with higher revenues generally have higher premiums.
• Safety and risk management practices: Implementing strong safety protocols can sometimes help lower your premium.
• Claims history: If you have recently filed a claim, then there is a high chance that you’ll file another one in the future. Insurers take this into account and adjust their premiums accordingly. As you might expect, more claims in the past equal to higher premiums in the future.

How to get the cheapest distillery insurance rates

Finding affordable distillery insurance doesn’t mean you have to compromise on coverage. Here are some tips to get the best rates:

• Shop around: Compare quotes from multiple insurance companies to find the best deal.
• Bundle policies: Purchasing multiple insurance products from the same provider can often lead to a discount.
• Choose a higher deductible: A higher deductible (the amount you pay out-of-pocket on a claim) can lower your premium. Ensure you can comfortably afford the deductible you choose.
• Maintain a good record: A clean claim history can lower your premiums.