Wineries’ risks rise when events move beyond tastings

Wineries are drinking to their good fortune, with 13 consecutive years of sales growth and each acre of grapes producing between $15,000 and $75,000 in gross sales value, according to wine industry consultant Jon Fredrikson, also publisher of the Gomberg-Fredrikson Report on the wine market.

As people’s thirst for alcoholic grape juice increases, so does their appetite for attending wine tastings, tours and special events.

With each wine special event — whether a tasting, tour, catered dinner or wedding — there are risks that should be insured.

If the event is hosted on the winery’s property, there are “two big things,” according to Peter Liesenfelt, account executive for Wine American Insurance Administrators.

“If someone at a tour or event slips on the floor and falls, it is covered under general liability. The other thing that comes up is liquor liability, where there is a risk of someone drinking too much getting into an accident.

Liesenfelt’s company’s winery package covers both types of occurrences, along with product liability, should a person get sick from ingesting the wine.

According to Liesenfelt, pricing has been fairly stable for wine packages in the past five years.

Laurie Infantino, president of the Insurance Skills Center, agrees that a winery needs both a commercial general liability policy and a liquor liability policy. The CGL protects against bodily injury for things like slips, while the liquor liability policy protects against negligence in serving liquor either to a minor or to someone who becomes too intoxicated and causes an accident.

“Most tours are fairly straightforward,” Infantino said. “Most winery packages assume that wineries are involved in those sorts of activities [tours], so you’ll see some sublimits.”

Complex combinations

Insuring wineries becomes more complicated when the special events are more than just a tasting, insurance experts say.

For example, if the winery is taking guests on a tour on a mechanized car or train, or has amusement rides, there’s a bigger exposure. Or, if the winery has a house on its property that it rents out to guests, there is additional risk.

If an outside caterer is hired for a special event, wineries should collect certificates of insurance naming the winery as an additional insured and making sure coverage is in force for general liability, workers’ compensation and even auto insurance, advises George Hunt, an agent with United Valley Insurance Agency.

“You want to make sure they have auto in case they back over someone with their vehicle while delivering the food,” for example, “and make sure they have workers’ comp for workers doing the serving so that if someone gets hurt, the person can’t come back against the winery,” Hunt adds.

Hunt says some carriers are afraid to underwrite events in wine caves because of the potential for collapse and fire. “Yet people with caves spend up to $10 million to build a cave and want to show it off, so they might want to host a dinner there,” he said. In that case, it’s important that the winery disclose the event and for the insurance agent to help find a carrier.

With weddings, the winery usually will ask the customer to purchase a special event policy naming the winery as an additional insured, according to Gary Delucchi, vice president of St. Helena Insurance. “For special events where outside individuals want to rent the property, their special event policies should include liquor liability as well, whether they purchase wine from the winery or bring in their own alcohol.”

If the winery hosts a tasting or stages a promotional activity off premises at a convention or hotel, the winery’s insurance policy generally will extend to those off-premises events, Delucchi adds.

There are additional risks to consider if the special event involves a cruise ship, one being whether the cruise ship will be in international waters.

Overall, Hunt said insurance agents need to ask their customers “very specifically” about special events. While a CGL and liquor liability may protect a winery against most tastings and tours on its property, the policies may come up short in some cases.

“You want to know the degree of the event, whether there will be dinner, if the winery is hiring a caterer or a staff chef or people to come in to do the serving. The whole idea of special events can really become quite broad and in some cases difficult to cover. Some insurance companies will charge per event, or even if carriers pick up special events, you have to disclose what [the events] are in order to have coverage,” he notes.

Based on his 33 years of writing wineries, Hunt believes the secret is to have “good communication between the customer and insurance agent.”

The Insurance Skills Center has developed a winery checklist to assist agents. It can be found at www.insuranceskillscenter.com.

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