Insight on How to Insure
Wineries and Vineyards
Designed for the Insurance Community Center
By
Insight Insurance Consulting
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Disclaimer
Not only are policy forms, clauses, rules and court decisions constantly changing, but
forms vary from company to company and state to state.
This material is intended as a general guideline and might not apply to a specific
situation.
The authors, Insurance Skills Center, Inc., and any organization for whom this seminar
is conducted shall have neither liability nor responsibility to any person or entity with
respect to any loss or damage alleged to be caused directly or indirectly as a result of
information contained in this book.
Insight Insurance Consulting
(714) 803-5830 Laurie@insightinsuranceconsulting.com
www.insightinsuranceconsulting.com
Copyright Insight Insurance Consulting 2010
All Rights Reserved
This approved course number may only be taken once within your two year renewal
period.
www.afisdesignation.com
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70 Countries Produce Wine
Food & Agriculture Organization
France
5,329,449 tons
Italy
5,506,648 tons
Spain
3,934,140 tons
United States
2,232,000 tons
Argentina
1,564,000 tons
China
1,300,000 tons
Australia
1,274,000 tons
South Africa
1,147,895 tons
Germany
1,014,700 tons
Chile
788,551 tons
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http://en.wikipedia.org/wiki/List_of_wine-producing_countries
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Wine Update
• U.S. wine exports, 90 percent from California,
passed the $1 billion milestone for the first
time with $1,008,259,000 in winery export
revenues in 2008
• Wine is California’s second leading export
product by value
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Wine Industry 2008
• There are more than 23,000 farms that grow grapes,
of which 90 percent are on plots smaller than 100
acres
• In 2007, while total U.S. grape bearing area rose a
modest 0.5 percent to 939,250 acres , total grape
production rose 5.7 percent to 6.73 million tons
• About 60 percent of total grape production is wine
grape production and that portion rose 3.5 percent to
3.76 million tons
• http://www.ita.doc.gov/td/ocg/wine2008.pdf
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Since 1999, the number of wineries has
increased by 81 percent from 2688 to 4867
 California 89.25%
 New York 4.37%
 Washington 3.11%
 Oregon 0.64%
 Florida 0.27%
 New Jersey 0.26%
 Kentucky 0.19%
 Ohio 0.18%
 Virginia 0.15%
 North Carolina 0.14%
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Wineries and Vineyards
Wine Stock
Planting
Growing
Plant Disease
Harvesting
De-Stemming
Crushing
Transportation
Fining/Filtration
Blending
Storage
Storage
Labeling
Sales
Bottling
Corking
Harvesting
Storage
Testing
Lots of Fun
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The Process For Review Each Step Has It’s
Exposures & “Perils”
1.
2.
3.
4.
5.
Grapes Growing
Grapes Harvesting
De-stemming,
crushing, pressing,
racking
Fermentation
Pressing and Tank
Cleaning
6.
7.
8.
9.
10.
Barrel and Tank Aging
Blending
Fining Process
Bottling/Labeling
Storage
11. Transportation/Shipping
12. Selling
13. Consumption & More
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1.Grape Growing
• Intellectual Property (Root Stock, Bench
Grafts, ENTAV-Clones)
• Weather
• Pests
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Rootstock
• The use of separate rootstock - essentially a clump of
roots - onto which the vines are grafted was made
necessary by the arrival of Phylloxera. The solution graft vinifera plants onto Phylloxera-resistant
rootstock. The vast majority of modern vineyards are
planted using grafted material.
• http://www.thewinedoctor.com/glossary/a.shtml
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Rootstock/Grafting
• Problem:
– Misuse/misappropriation of rootstocks
• Problem:
– The United States Supreme Court on
12/01declared that it is legal to claim utility
patents on plants.
• Problem:
– Patent holders are suing for patent infringement
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Wine Patents--Google
• Patent #4351851
– Method for freeze stabilizing wine
• Patent #4874615
– Process for preparing wine
• Patent #5718263
– Patent for wine aerator
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Vintage Nursery Case
• Sunridge Nurseries of Bakersfield, along
with three other California nurseries, is
suing Vintage Nurseries of Wasco, saying
Vintage sold tightly regulated French
clones without a proper license.
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Vintage Nursery Case
• If the clones which Vintage have offered for sale are
not the clones stated in their marketing materials and
catalog, then Vintage is alleged to be engaged in false
advertising.
• If the clones which Vintage has offered for sale are
the clones stated in their marketing materials and
catalog, then Vintage is alleged to be engaged in an
unfair business practice, since these clones have only
been sold under an exclusive license, and sold only to
customers who agree not to propagate or distribute
them any further.
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Insurance Issues and Solutions
• Intellectual Property
– Patent Infringement
• Offense
• Defense
• Intellectual Property Insurance
– IPIS
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Pests and Disease Phylloxera
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Phylloxera
• Phylloxera is a small yellow root feeding aphid.
It lives on both European and American grape
vines.
• The pest can be spread by wind or the insects
crawling from one plant to the next, but long
distance movement of the pest is usually
caused by humans transporting infected plant
material or soil from vineyard to vineyard
perhaps inadvertently in machinery or on
boots.
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Pests & Disease
• There are many pests and diseases that can
attack and kill grape vines. Red spiders, moth
grubs and various mites, bugs and beetles can
all prey on the plant above ground. Most of
these may be controlled with either sulfur
sprays, or by newer "green" methods, such as
introducing predacious insects and protective
cover crops between vine rows.
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Pests & Disease
• In climates with summer rainfall, molds such as
oidium, mildew, white rot, grey rot (see box at
left) and black rot may be prevented by regular
sprayings of a solution of copper sulfate, slaked
lime and water (Bordeaux mixture).
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Pests & Disease
• New vineyards are particularly
susceptible to destruction from gophers
and moles. There are many methods of
control and eradication, including
attracting predatory raptors, trapping,
poisoning, flooding and even a device
that implodes burrows.
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Sniffer Dogs (Insect Detection Dogs)
• “An innovative project underway since
2006 at the Assistance Dog Institute
combines elements of the Institute’s
research with the result of dogs trained
to sniff out the vine mealybug (VMP).
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Pests and Disease
Problem: Growing Crop
Solution: Crop Insurance but not for
Phylloxera
Problem: Vines
Solution: NOT Crop Insurance
Solution: Live Assets Insurance
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Unusual Solutions
Live Asset Coverage
• Not only is there limited coverage in terms of
amount available and coverages, the winery's
financial lenders are unwilling/unable to
provide credit to the grower unless there is
viable live asset coverage.
• Solution - Vineyard & Winery Insurance for
the Vines, Trellises, Clips & Irrigation System
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Unusual Solutions
Live Asset Coverage
• For more details regarding the program,
contact David J. Teed, CIC. Managing
Director of Live Asset Insurance at 800644-0178
• www.liveassetinsurance.com
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Crop Insurance
• Crop insurance has a limited response on the
Multiple Peril Crop Insurance, Grape Crop Form
2000 NCIS717.
• Cause of Loss
– (1) Adverse Weather
– Insects except (10.b1)—Phylloxera regardless of
cause
– Plant disease but not due to insufficient of improper
application of disease control measures.
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Causes of Loss
Table Grape Provisions
•
•
•
•
•
•
Adverse Weather
Fire…
Wildlife
Earthquake
Volcanic Eruption
Failure of irrigation water supply if
caused by any insured cause of loss
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Market Value
• For grapes the value is set at the time the
policy is issued based on the previous values
based on prior averages and future
promulgation.
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Insurable Crop and Eligibility
Requirements
• The vines must have reached 4th growing
season after being set out or 3rd year after
grafting
• Acreage must have a minimum average yield
of 2 tons per acre
• Growers can select which grape varieties they
want to insure
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Insurable Crop and Eligibility
Requirements
• Growers can insure any varieties but must
insure all acres of any variety selected in the
country on which they receive a share of the
crop
• When vineyards are rented out as crop share,
either the landlord or operator, or both can
insure their share % of crop
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Crop Insurance Products
www.rcis.com
•
•
•
•
•
•
•
Multi-Peril Crop Insurance (MPCI) –
Catastrophic (CAT)—lowest amount
Group Risk Plan (GRP) —not on grapes
Crop Revenue Coverage (CRC) not on grapes
Indexed Income Protection (IIP) not on grapes
Group Risk Income Protection (GRIP) not on grapes
Adjusted Gross Revenue Insurance (AGR)—Available on
Grapes
• AGRI-Lite
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Climate and Natural Disasters
A Constant Threat
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Weather & The Vine
(Grapes/Wine)
•
•
•
•
•
•
•
Flooding
Drought
High Winds
Freeze
Landslides
Earthquake
Fire
Noble Rot Botrytis
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Climate
• The average growing season climate and
temperature extremes such as very hot
days can affect vine and fruit
development
• Generally prices are substantially higher
for fruit from moderately cooler regions
Practical Winery
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Center& Vineyard March/April 2008
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Climate
• For example, Cabernet Sauvignon from
the Fresno district sold for about
$260/ton in 2006 compared with fruit
from the Napa district which sold for
over $4,000/ton
• This 15 fold difference in price as
accompanied by only a 2.7C (5F) cooler
average annually temperature
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iMetos - Real Time Monitoring using the
Internet
iMetos is a new product line using the
latest internet technologies to have
real time access to field data.
With iMETOS, all relevant agriculture
weather data are measured
permanently and sent to the Internet
climate database every two hours.
The internet browser (Explorer) and
your personal log in password to the
site http://www.metos.at/fieldclimate
will get you online to data, reports and
graphs observed in your own vineyard
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2. Grapes are harvested
• Too much maceration in field from mechanical
harvester (no coverage)
• Grapes begin to ferment early during transport to
winery (no coverage)
• Low yields from mechanical harvesters (no coverage)
• Grape pickers' health problems
(i.e. heat stroke, exhaustion, dehydration) (Workers
Compensation)
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2. Grapes are harvested
• Damage to Mobile Equipment used in
harvesting and growing operations
– Mobile agricultural equipment – including
equipment used for operations such as
planting, fertilizing or irrigating and a
separate limit for the continuing rental cost
of mobile agricultural equipment (Chubb)
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Could This Happen To You?
www.chubb.com
• A critical piece of your harvesting
equipment is damaged during harvest
and you have to pay for a replacement.
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3. De-stemming, Crushing,
Pressing, Racking
• Contaminations left in wine juices from
poor pressing procedures (Some limited
contamination provided by some carriers
but typically in processing)
• Losses from inefficient racking procedures
(typically not covered unless covered
causation occurs)
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Could This Happen To You?
• You own a winery overseas and the
bottling facility is contaminated by an
unknown bacteria, causing you to find a
replacement bottler.
• www.chubb.com
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Wine Spoilage
• Throughout all stages of the
winemaking process, spoilage microbes
can negatively impact wine quality
• Wine spoilage can present itself in
several different fashions
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Wine Spoilage
–
–
–
–
–
–
–
Off Aromas
Off Flavors
Acetic Acid
Ethyl Acetate
Ethylphenol
Trichloranisole
Bitterness
– Mousiness
– Cosmetic Issues
•
•
•
•
FILMS
Sediment
Viscosity
Off color
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Issues and Solutions
• Product Contamination
– Accidental
– Malicious
• Products Recall
• Replacement Costs and Rehabilitation Expense (AIG)
• 3rd party Business Interruption and Recall (AIG)
• Product Tampering
• Product Extortion
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4. Alcoholic Fermentation
• Stopped Fermentation
(Fermentation process stops short of total conversion
of sugar to alcohol)
• Excessive heat "cooks" wine
• Contaminated Yeast Culture
• Non-sterile conditions
• Improper pump-overs from one tank to the other
• Not enough SO2
• Too much SO2
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5. Pressing and Tank Cleaning
• Low yields from pressing
• Workers exposed to high amounts of
sulfur in tanks
• Tank cleaners suffocate while inside
tanks cleaning
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6. Barrel/Tank Aging
Vinegar acids in barrels
Wine oxidation from oxygen
exposure
Non-sanitary conditions in
tanks
Leaking Barrels (wine
leakage limited coverage)
Barrel bores eating away the
oak causing barrels to spring
leaks
Broken barrels from unsafe
maintenance operations
Forklift Accidents
Topping off barrels with
wrong wine
Evaporation of wine through
staves
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7. Blending
• Leaking hose fittings
• Blend the wrong wines together
• Blend a contaminated wine with a good
wine
• Oxygenation of wine through transfer
pipes
• Wine Leakage
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7. Blending
• An employee doesn’t turn off a tank valve
and you lose 20,000 gallons of wine due
to leakage. (Chubb)
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8. Fining Processes
• Contaminated fining agents
• Improper titration methods
• All solids not removed from wines,
clarity problems
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9. Bottling/Labeling
• Contaminated/dry corks
• Bad seals around corks and bottles
causing wine to oxidize over time
• Unclean bottles
• Bottling line jams
• Unintended fermentations in bottle
resulting in a "carbonated" wine
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Could This Happen To You?
• Contamination from cleaning solvents
used in the bottling process ruins $60,000
worth of wine.
• www.chubb.com
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Corks are the main culprit of TCA
contamination
• Cork taint is a problem. traditional closure
ruins a significant percentage of wine
bottles . While in some cases this is due to
the mechanical failure of the cork, in most
instances it is through the contamination of
the wine with tiny (but still detectable)
quantities of trichloroanisole (TCA).
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Corks are the main culprit of TCA
contamination
• Semi-quantitative estimates of cork taint
consistently come up with figures in the range of
2-7%, although most of these studies don't
involve chemical verification of the presence of
TCA in offending bottles. Even so, this is an
alarmingly high failure rate and one that many in
the wine industry consider to be intolerable.
Patent # 4812317 Transparent Wine Bottle Closure
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Labeling
• Vintners have been using byproducts from
milk, eggs, wheat and even fish gut in the
winemaking process for centuries.
• The FDA adopted the Food Allergen Labeling
and Consumer Protection Act in 2004 which
requires labels on every food or drink that
contains one of eight major food allergens:
milk, eggs, fish, crustacean, shellfish, tree
nuts, peanuts, wheat and soybeans
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Could This Happen To You?
• Ink used on your label runs during the
bottling process, forcing you to buy new
labels and reapply them.
• www.chubb.com
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Labeling Intellectual
Property
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Kendall Jackson vs. Turning Leaf
• Since its inception in 1983, Kendall-Jackson
has sold over ten million cases of its Vintner's
Reserve line of premium wines. By 1994,
Kendall-Jackson was selling over $100 million
worth of Vintner's Reserve wine a year, and its
chardonnay was the number one selling
chardonnay in the United States.
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Kendall Jackson vs. Turning Leaf
• Kendall Jackson featured on its Vintner's
Reserve wine labels a downward-pointing,
stylized grape leaf design using various shades
of green, yellow, orange, red, and brown. In
addition to using the leaf design, KendallJackson tried to distinguish its Vintner's
Reserve wine by packaging the wine in
recognizable bottles.
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Kendall Jackson vs. Turning Leaf
• Gallo introduced a chardonnay named Turning Leaf
which had a label that looked very similar to Kendall
Jackson’s. Kendall-Jackson sued Gallo asserting claims
under the Lanham Act, for trademark infringement,
trade dress infringement, trademark dilution, and
trade dress dilution; unfair competition claims: false
advertising, unfair competition, and palming off.
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1998 CGL (A.I.) Definition
14.“Personal and advertising injury” means injury,
including consequential “bodily injury,” arising out of
one or more of the following offenses.
d. Oral or written publication of material that
slanders or libels a person or organization or
disparages a person’s or organization’s goods, products
or services;
e .Oral or written publication of material that
violates a person’s right of privacy;
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1998 CGL (A.I.) Definition
F. The use of another’s advertising idea in
your “advertisement”; or
G. Infringing upon another’s copyright,
trade dress, or slogan in your
“advertisement.
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Intellectual Property
Categories
• Copyright
• Trademark
• Trade Dress
• Trade Secret
• Patent
Policy Considerations
• Defensive
• Offensive
• License Agreements
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Insurance Issues
•
•
•
•
Advertising Liability
Web Site advertising
Warranties and Representations
Labeling
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10. Storage
• Issues include storage of grapes, grape
by products
• Includes storage of owned and nonowned
• Includes storage of finished goods
owned and non owned
• Review Contracts
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10. Storage
• Storage in owned locations
• Storage in non owned locations
– 3PL (Third Party Logistics Handlers)
• Storage outside the United States
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Lessons Learned From Mare
Island
• 10/12/05 fire consumed at least half of a
240,000 warehouse storing wine on Mare
Island in Vallejo
• Approximately 150 customers, comprised
mostly of Bay Area wineries and private
collectors, stored wine in the 63-year-old
building
• Estimated $100 million worth of wine was in
storage
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Lessons Learned From Mare
Island
• The blaze could not be
controlled by firefighters
because the Mare Island
building -- a 1942 structure
that once housed Navy
torpedoes -- had steel doors
and 3-foot-thick concrete
walls and a concrete roof
that could not be
penetrated."
• There is some concern wine
spilled into storm drains,
perhaps affecting city water
supplies
• Fire proven to be an arson
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Lessons Learned From Mare
Island
• Issues:
– Valuation
– Location
– Contaminated?
– Salvage
– Obligation of the Warehouse
– First party rather than third party response
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Warehouseman’s Legal Liability
• Where does the obligation lie?
– Many court decisions have been rendered as
a result of this question between owner and
warehouseman.
• Question of whether the wine was
actually “warehoused” by definition or in
temporary storage?
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Warehouseman’s Legal Liability
• The standard of care is imposed upon a
warehouseman by Section 7-204 of the
Uniform Commercial Code
– Most contracts follow this duty of care
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UCC § 7-204. Duty of Care;
Contractual Limitation of
Warehouseman's Liability
(1) A warehouseman is liable for damages for loss
of or injury to the goods caused by his failure to
exercise such care in regard to them as a
reasonably careful man would exercise under
like circumstances but unless otherwise agreed
he is not liable for damages which could not
have been avoided by the exercise of such care.
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11. Transportation & Shipping
•
•
•
•
•
Owned Vehicles/Trucks
Air
Rail
International
International Airspace/Waterways
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11. Transportation & Shipping
• Concerns:
– Across all industries, moving products in
shipping containers can expose the goods to
severe temperature fluctuations. In many
cases this can cause irreversible damage to
the product resulting in lost sales and
expensive insurance claims
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11. Transportation & Shipping
• Even minimal fluctuations can result in
such problems as loss of bouquet,
product oxidation and even leakage
through cork dryness.
• Shipping during extreme weather
conditions
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Excerpt from Wine Shipping
Agreement
• “Please note that shipping insurance does not
cover damage due to heat or freezing. We
endeavor to ship in such a way as to avoid such
damage, but in questionable circumstances will
attempt to contact you about alternatives.
Please notify us immediately is you believe such
damage has occurred.”
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11. Transportation & Shipping
• A Lloyd’s policy would typically cover all risks of
physical loss or damage, but usually excludes
loss due to changes in temperature or humidity
unless it is as a result of an insured peril such as
fire or flood. Policies won’t cover against
corked wine or ullage (when some evaporation
occurs) either. Loss of label insurance can also
be bought separately.
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12. Selling
• Methods
– Internet
– Winery Location
– Membership
– Retail Stores
– Restaurants
– Wine Futures
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Selling Challenges
• Direct shipping restrictions from BATF and
state laws
• Poor winery-distributor relations
• Winery is too small to get prime shelf space in
stores through major distribution companies
• Competition from other wineries, local and
national
• Loss of Brand
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Court Questions On Interstate
Commerce
• On May 16th, 2005, the United States Supreme
Court ruled that states may not discriminate
against out-of-state wineries seeking to ship
wine directly to consumers if they allow their
in-state wineries to ship directly to consumers
Granholm v. Heald . The High Court reasoned that
state laws banning such shipments were
discriminatory and, therefore, unconstitutional.
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Court Questions On Interstate
Commerce
• A decade ago, just four states were allowed to
do direct interstate shipments.
• Now, that number has increased to 30 states.
• In some states, the penalty for a burglary
conviction is equivalent to that of shipping a
bottle of Chardonnay to an adult under 21
years.
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Direct Shipment Laws as of 9/21/09
Wine Institute www.wineinstitute.org
Direct shipment Not Permitted
Onsite Rules Special Labeling Required (Reciprocity
States) Winery must ensure that shipping label contains
required language set forth by state or region it is
shipped to
Aggregate Volume Rules.
This is a limit on volume of total shipments from a
winery to all consumers in the region over a specified
period of time
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Wine Industry Code for Direct Sales
(www.wineinstitute.org)
• Out-of-state licensees may direct ship wine sold
to adult consumers, for personal use only in
states where it is legal to do so.
• Out-of-state licensees must not ship to an
address in an area identified by an appropriate
state department of alcohol beverage control as
a "dry" or local option area for such shipments
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Wine Industry Code for Direct Sales
(www.wineinstitute.org)
• Cartons used to direct ship wine to adult
consumers must be conspicuously labeled with
a minimum notification "signature of person
age 21 or older required for delivery" and must
include a return address and other language
required by specific state laws.
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Wine Industry Code for Direct Sales
(www.wineinstitute.org)
• Licensees must verify the purchaser’s age at the
point of online purchase before completing any
transaction. Some state laws now require age
verification using a state approved vendor, or by
receiving a copy of the purchaser’s drivers
license, prior to the completion of the
transaction.
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Disclaimer on Site
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Web Site Review
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Web Site Analysis
•
•
•
•
•
Does the winery have a web site?
Is the Web Site for Advertising (Presence) only?
Does the winery sell their wine via the internet?
Does the winery sell items other than wine?
Does the winery offer any other services on their
website?
• Are there any foreign operations?
• Are there any links or frames?
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Web Site Analysis
• Are there any warranties or representations
made?
• Is there any form of social networking?
• Is there a bulletin board?
• Is there a chat room?
• Is there protection for credit card use?
• Is there a clear privacy statement?
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Wine Affiliations
Links
Bulletin Board
Introducing Paraduxx Direct
We invite you to join Paraduxx Direct and enjoy the
convenience of automatic shipments of this boldly
elegant Napa Valley Red Wine. Create your own
annual portfolio by choosing three, six or twelve
bottles, and we will take care of the rest, ensuring that
you will never miss a vintage.
Join Paraduxx Direct...
We will be introducing Goldeneye Direct on March
1st and Duckhorn Vineyards Direct on April 1st. If
you are currently not on our mailing list, Join the
Family to be notified of these programs.
New Release - 2003 Paraduxx Napa Valley Red
Wine
We are pleased to introduce our tenth vintage of
Paraduxx!
Our 2003 Paraduxx Napa Valley Red Wine is a
medium bodied wine with ample tannins and
structure to evolve well for several years. Aromas
exude ripe fruit with flavors of strawberry jam, rich
blackberry, cedar, dill, and oak. Limit 12 bottles,
please.
Order the 2003 Paraduxx...
See Slide
Of Events
Share Your Experience
Shopping Cart
Disclaimer
Language
Automatic
Shipping
Newsletters
There own and
Others
Duckhorn Vineyards • Paraduxx • Goldeneye
News & Events Order Online
Share Your Experience
Questions? Contact Us
Duckhorn Wine Company 1000 Lodi Lane St. Helena, CA 94574
Insurance Community Center Site Usability
©2006 Duckhorn Wine Company. All Rights Reserved.
Security/Privacy Policy
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March 17 & 18, 2007
Napa Valley Mustard Festival
The Marketplace - The Signature Event
Featuring Duckhorn Vineyards and Paraduxx
COPIA: The American Center for Wine, Food & the Arts
Napa, California
April 28, 2007
Great Chefs of Marin
Benefiting Lifehouse
Featuring Duckhorn Vineyards, Paraduxx and Goldeneye
Fireman's Fund Insurance Company
Novato, California
415-472-2373 x305
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September 12 - 24, 2007
Crystal Cruises' "Adriatic & Aegean
Adventures"
Join Margaret Duckhorn on this voyage from
Venice to Athens
Featuring Duckhorn Vineyards, Paraduxx and
Goldeneye
Cruise Itinerary
For Reservations, call Fine Wine Voyages at
888-946-3885
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Duckhorn Wine Company Affiliations
This section offers insight into organizations within the California and International wine
community that Duckhorn is either a member of or with whom we share similar interests
on issues that have an effect on the wine industry.
Napa Valley Vintners
Napa Valley Vintners promotes and protects the Napa Valley as the finest winegrowing
region in the world through the preservation and enhancement of its resources.
Wine Institute
Wine Institute is an organization whose goal is - "to initiate and advocate state, federal and
international public policy to enhance the environment for the responsible consumption
and enjoyment of wine.“
Free the Grapes
Free the Grapes is a consumer advocacy group whose mission is to educate the laws and
issues pertaining to the direct shipment of wine to consumers.
AIWF
The AIWF is a non-profit educational organization that is devoted to improving the
understanding, appreciation and accessibility of food and drink through a lively and
comprehensive exchange of information.
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E-Commerce Issues
Intellectual
Property
Crime
Cyber-Liability
Advertising
Foreign
Liability
Umbrella
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13. Consumption & More
• Wineries do a LOT more than just process
and sell wine
• They do just about everything
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Tasting Rooms
• Most of the 3,000
wineries in the country’s
50 states begin their sales
and marketing efforts
primarily through their
on-premise tasting
rooms. In California
alone, wineries are
receiving nearly 11
million visitors annually.
 www.wineinstitute.com
• CGL--Products
• Umbrella
• Liquor Liability
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Wine Tasting
• Do they promote and
conduct private wine
tasting off their
premises at such
places as restaurants
or private social
gatherings?
•
•
•
•
CGL--Products
Umbrella
Liquor Liability
Additional Insured
Status
• ***ADA Compliance
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Wine Festivals
• More than 300 wine festivals
and events take place each
year in Virginia. Listen to jazz
or blues, dine on Virginia
down-home cooking or
haute cuisine, taste a new
release right from the barrel
or sip a vintage vino. The
choice is yours. See you
there!
•
•
•
•
Premises Liability
Products Liability
Umbrella
Insured Status—Additional
Insured
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Tradeshows
• January 25-27 Unified Wine & Grape Symposium
Sacramento, California
American Society for Enology and Viticulture (ASEV)
and the California Association of Winegrape Growers
(CAWG). The largest wine and grape show in the
nation. By combining a trade show with a broad
spectrum of seminars, the Unified Symposium
provides attendees direct access to all the latest
information. It also provides an excellent forum for
active networking between registrants and suppliers,
winemakers and grapegrowers.
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What else is happening at the
winery?
• Do they sell products
other than wine?
– Other types of
liquor—may also
have a distillery
– Food Products
– Gift items (books,
cooking additives,
tea shirts, wine
glasses, etc)
• Do they have a
restaurant or sell food
at their location?
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Wineries Trying To Diversify
And Innovate
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What else is happening at the
winery?
• Do they have
tours of their
premises open
to the public?
• CGL
• Umbrella
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What else is happening at the
winery?
• Do they have other
activities at their
winery such as
– Rent it out for
special occasions
such as weddings?
– Have rides on
premises
•
•
•
•
CGL
Umbrella
Special Event
Additional Insured
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What else is happening at the
winery?
• Opened in June 2002, Cherry Hill Vineyard
became the first ever seasonal camp of its
kind. Those who stay at Cherry Hill become
part of the vineyard team, participating in a
Vine and Wine training and monitoring
program. All "workers" reserve their own
cabins, and Cherry Hill provides the cuisine,
three meals each day of your visit.
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What else is happening at the
winery?
• Do they have valet
parking?
• Garage
• Garage Keepers
• Business Auto
• Do they shuttle
customers from one
location to another
in their own vehicles
on or off the
premises?
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Insurance and Risk Control
Considerations
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Risk Management
•
•
•
•
•
•
Risk Analysis
Risk Review
Risk Identification
Risk Transfer
Risk Sharing
Risk Control
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Regulation Compliance
• As an alcohol production business, any winery faces an
array of state and federal statutory and regulatory
requirements. Issues such as licensing, zoning, bonding
of the winery, label approval, trademark and copyright
registration and, in some instances, antitrust
compliance, trigger regulatory requirements at both
state and federal levels and must be addressed before a
winery begins operation.
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Regulation Compliance
• In addition, there are a multitude of issues that arise
during operations, such as shipping regulations and
restrictions, e-mail and Web site sales and distribution,
advertising, and trademark or copyright enforcement.
State liquor control laws vary widely. For example in
Washington, the "tied house" statutes and regulations
make it particularly difficult for wineries to operate
both a winery production and restaurant/retail facility.
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Different Exposures—Different
Players
•
•
•
•
Hobby Winery
Boutique Winery
Larger Winery
Vineyard Operation
•
•
•
•
Farm Owners
Definition
Definition
Farm Department
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Property
Buildings and Structures
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Types of Buildings
• Residence
• Garages
• Guesthouse (with dining
room for visitors and grape
pickers)
• Bed & Breakfast buildings
• Storage buildings
(Supplies)
• Storage buildings (Finished
Product—case storage)
• Fermentation buildings
•
•
•
•
•
Bottling plant
Cellars (1st yr, 2nd yr…)
Caves
Tasting room (building)
Non Owned Location
Considerations
• Gift Stores
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Building Coverages
• Building
– Homeowners
– Commercial Building Coverage
– Increased “Other Structure Coverage”
• Replacement Cost, Reproduction Cost,
Functional Cost
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Building Coverage
•
•
•
•
•
•
•
Building Ordinance
Cause of Loss—Special Form
Earthquake
Flood
Increased trees, shrubs and plants
Signage
Pavements, Walkways, Foundations
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Equipment
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Types of Equipment
• Mobile Equipment
versus Auto** New
Definition
• Gondola trucks
• Hoists
• Conveyors
• Crushers
• Fermenting tanks
• Juice separators
• Pumps
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Types of Equipment
• Storage containers
– Oak; redwood;
lined concrete,
iron or steel
• Piping systems
• Filtration units
• Heat exchangers
• Pasteurizers
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Types of Equipment
• Fining tanks,
• Yeast propagators
• Refrigeration and air
conditioning
equipment
• Presses
• Centrifuges
•
•
•
•
Ion exchange columns
Blending devices
Flow meters
Washing, bottling,
corking, labeling and
casing equipment
• Computers
• Phone Systems
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Computers and Equipment
• Computer Hardware
• Peripherals
• Computerized
Equipment
• Telephone Systems
• Remote computer
sensor equipment
• Computerized
equipment in the fields
• Software **
• Proprietary Software **
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Equipment Insurance
•
•
•
•
•
Property
Boiler & Machinery
Off Premises Utility Interruption
EDP
Perils Coverage
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Stock & Merchandise
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Where Is The Stock?
•
•
•
•
•
Wine and products on site
Wine and products in warehouses
Wine and products at conventions
Wine and products in transit
Wine and products in the care, custody
and control of a salesperson
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Stock
• Grapes
• Wine during
processing
• Wine during
fermenting
• Wine during aging
• Wine ready for sale
• Wine sold but not
delivered
– Pre-sold prior to
production—wine
futures
– Pre-sold after
production—after
wine is introduced
• Wine that is unsold
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Stock
• Collector Wine
• Wine accessories produced by insured
– Lavender Products from Matanzas Creek
Winery
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Stock
• Merchandise of others for re-sale
– Gift items: decanters, books, shirts
– Food products
• VALUATION is the key!
– Market Value
– Selling Price
– Replacement Cost
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Property Coverages
Stock (Wine)
• Manufacturing Selling
Price
• Retail Selling Price
• Brand & Label
• Control of Salvage
• Preclusion of Salvage
• Trade Shows
• Wine Leakage Coverage
•
•
•
•
Political Risk
Intellectual Property
Peak Season
Personal Property of
Others Considerations
• Spoilage
• Boiler & Machinery
• Off Premises
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Other Property Considerations
• Fine Art Collections
• Antiques
• Library Collections
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Transportation Issues and
Solutions
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Transportation
Long haul trucking presents the most serious
exposure. Bulk loss of wine is a major
concern.
– What is the value of the wine shipments?
– Does the insured transport in owned,
leased, rented trucks?
– Does insured use common or contract
carriers?
– Does the insured use released bills of
lading?
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Transportation
• Cargo is subject to hijacking. An Alarm
must be installed with warranties
required.
• Where are the trucks stored and how
are they protected?
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Inland Marine Coverages
• Transportation
Floater
• Motor Truck Cargo
• Ocean Marine
Cargo
– Warehouse to
Warehouse
• Valuable Papers
•
•
•
•
Accounts Receivable
EDP
Fine Arts
Bailee Coverage
– Warehousemen
• Farm/winery
equipment
• Signs
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Business Income
It’s A Risk Management Issue!!!
• Business Income and
Extra Expense
• Extended Period of
Indemnity
• Agreed Value
• Off Premises Utility
Interruption
• Boiler & Machinery
• Spoilage Clarification
• Dependent Property
Coverage
• Transit Business
Income
• Building Ordinance
Increased Period of
Restoration
• Mobile Ag Extra
Expense
• Mobile Ag Rental
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Dependency Issues for
Business Income
• Dependency—Property/Liability
– Supplier of goods
– Supplier of Services
– Recipient of goods
– Recipient of services
• Location of recipient/supplier (global)
• Alternate Suppliers/Stockpiling
• Time frame for goods/services
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Dependency--Product
•
•
•
•
Barrels
Packaging
Wine Bottles & Repackaging Services
Bottles (Specially designed/Decorator
bottles)
• Corks
• Labels
• Machinery & Packaging Supplies
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Dependency--Services
• Storage-- Dry & Temperature Controlled
Warehousing
• Shipping
• Repack Services
• Bulk Wine Brokers
• Energy Service Providers
• E-Commerce/Internet
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Crime Insurance
• Employee
Dishonesty
• Money Coverage
• Depositors Forgery
• Computer Fraud
• Surety (Federal)
– Alcohol, Tobacco and
Firearms
– Bond—Liquor
License
– Sales Tax Bond
– Internet Sales State
Specific Bonds
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International Considerations
• Exporters Package
Portfolio
• Political Risk
• Trade Credit—
Credit Insurance
• Political Risk
• Foreign Liability
• Foreign Auto
• Worldwide Dependent
Property
• Trade Disruption
• Admitted Insurance
• D.O.C—Difference of
Conditions
• D. I. C—Difference in
Conditions
• D. I. L. Difference in
Limits
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Liability
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Could This Happen To You?
www.chubb.com
• During a wine tasting held in your
underground storage caverns, a
customer slips and falls and sues
your winery.
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Could This Happen To You?
www.chubb.com
• Someone becomes ill in another country
as a result of consuming your wine.
• An employee accidentally drives a forklift
into a wine tank, causing the tank to
collapse and the wine to
spill out, potentially causing $100,000 in
damages.
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Liability Coverages
•
•
•
•
CGL
Umbrella
Products Liability
Product Tampering,
Contamination
• Product Recall Including
Voluntary and
Involuntary
• Advertising Liability
• Personal Injury
• Intellectual Property
• Liquor Liability
• Pollution Liability
(Environmental
Impairment Liability)
• Herbicide/Pesticide
Cover
• Directors & Officers
• EPLI
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Liability Coverages
• Railroad Protective
• Special Events
Coverage
• Wind drift or
overspray liability
• Agricultural
Chemical Liability
• Error in labeling,
bottling or
packaging
• Personal liability
for sole proprietor
or partnership
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Automobile Exposures
• The winery’s own vehicles, delivery
trucks and trailers
• Some wineries have a wholesale license
and own a fleet of many different size
trucks to distribute wine directly to
retail outlets or distributors.
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Automobile Exposures
• A large winery may use flatbed truck to
deliver cased wine.
• Wineries may be delivering both intra and
inter state.
• Valet Parking—Garage and Garage
Keepers Legal Liability.
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Automobile/Mobile Equipment
Exposures
• Slow moving trucks and gondolas which
are used to transport grapes to the
crusher, can cause traffic tie ups. This
equipment may be owned either by the
winery that operates its own vineyards or
by independent grape growers who sell to
the winery.
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Business Auto & Garage
•
•
•
•
Business Auto
• Garage
Non Owned Auto
• Garage Keepers
Hired Auto
Pollution exception for
mobile equipment
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Workers Compensation
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Workers Compensation
• Foreign Voluntary
Workers
Compensation
• 24 hour coverage
and repatriation for
employees
• Medex assistance for
medical emergencies
abroad
• Stop Gap
• USL &
H/Longshoreman
• Other States
• *Florida Approved
Workers Comp
Carrier
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