YOUR LIQUOR BUSINESS
In these continuing uncertain times, insurance should be top of your list for securing the future of your business. Dan Szegota, Senior Broker at ICIB Insurance Brokers, shares insights into commonly available insurances for your on- or off-premise liquor company. MATERIAL DAMAGE INSURANCE All liquor businesses invest a substantial amount of money in capital assets (e.g buildings, fridges, storage and equipment such as stills, tanks, barrels and bottles) which the owners and/or the Board of Directors have a responsibility to ensure are safeguarded. All physical assets are exposed to risk of loss or damage by various perils, including natural perils. Property damage following a fire is one of the major threats faced by any organisation. Research has found that about 80% of businesses that suffer a major fire never recover. Therefore, Material Damage insurance remains one of the major responsibilities of management by way of safe guarding its assets. For wineries and distilleries (and to a lesser extent, craft breweries) that age their products and don’t release them immediately, an Agreed Value basis of settlement for stock should be considered. This means that insurance coverage is provided for a pre-determined amount settled upon by both the insured and the insurance company. 26 THE SHOUT NZ – JULY 2021
All liquor businesses invest a substantial amount of money in capital such as tanks and stills.
BUSINESS INTERRUPTION INSURANCE A Business Interruption insurance policy can cover liquor businesses for loss suffered as a result of an interruption or interference to the business which results in a reduction in gross profit. Such interruptions or interferences to liquor businesses can include fire, natural disasters (such as earthquakes), malicious damage, flood and other perils which
are insured under the Material Damage policy. It is important to note that Business Interruption insurance is triggered by an initial loss under a Material Damage policy (for e.g, loss in profit due to a fire) and is rarely available as a standalone policy. In many cases, the loss of gross profit for a business is more significant financially than the associated physical loss. Even if there is only partial damage to the building and/or machinery and equipment, it could potentially stop operations at the premises for a considerable period of time. Therefore care must be given to set the correct level of cover for your liquor business and for a suitable amount of time. Typically 12 to 24 months covers are available. CARGO & TRANSIT INSURANCE The basic purpose of Cargo Insurance is to provide cover against physical loss or damage to goods in transit to or from the insured’s premises. This coverage is important for liquor exporters. For exports, these policies typically track what ‘incoterms’ a product is sent or
