More and more microbreweries are incorporating on-site events into their growth and marketing strategies. Hosting events can be effective, but it also may expose breweries to an additional risk known as “vicarious liability.” Before you hold an event at your brewery, make sure the brewery’s microbrewery insurance covers this additional risk.
Will a Festival at My Brewery Be Covered by the Brewery’s Microbrewery Insurance?
Understanding Vicarious Liability
Just as it’s possible to live vicariously through another person, it’s also possible to be liable vicariously through another party. When your microbrewery gives event vendors permission to set up on the brewery’s property, the brewery may take on vicarious liability.
Vicarious liability means that your business might be held financially liable for accidents caused by event vendors. Even though the brewery and vendors remain entirely separate entities, the brewery may assume some responsibility for vendors’ actions -- and accidents -- because the brewery invited them.
Thus, your brewery should be prepared for potential lawsuits arising from property damage and/or personal injury that’s sustained in vendor-caused accidents. There are a few ways you can prepare your brewery.
Require Vendors to Carry General Liability Coverage
First, you can require all vendors who will be at the event to carry their own general liability coverage. By having all vendors carry their own general liability coverage, you might be able to reduce the chances that your brewery is sued over a vendor-caused accident.
To see why, consider an incident in which a vendor cause significant physical harm to an attendee. This is how a resulting lawsuit might play out:
If the vendor has general liability that covers the incident, the affected attendee may receive their desired compensation from the insurance policy.
If the vendor doesn’t have insurance, the affected attendee might collect some money directly from the vendor but desire more compensation. They might come after your brewery for the remaining amount.
While not a perfect strategy, working with vendors who are insured increases the chances that they can fully pay on any claims that might otherwise spill over to your brewery. To make sure vendors are insured, ask to keep a copy of their insurance certificate on file.
Require Vendors Name Your Brewery as an Additional Insured
Second, you can also require vendors to list your microbrewery as an “additional insured.”
Having your brewery named as an additional insured may extend vendors’ liability coverage to the brewery in certain situations. Don’t expect coverage to use vendors’ coverage in claims where your brewery is solely named and responsible, but you might be able to use vendors’ coverage for claims that involve both parties.
Using vendors’ liability coverage instead of your brewery’s own when possible has multiple benefits:
Payments made by vendors’ policies normally won’t count toward your brewery’s limits
Claims made against vendors’ policies normally won’t raise your brewery’s premiums
Deductibles in vendors’ policies may have to be paid by the vendor
(Exactly how being named as an additional insured on a vendor’s policy would benefit your brewery in an incident depends on the particulars of the policy and incident.)
Purchase Microbrewery Insurance with Robust Liability Coverage
Finally, your microbrewery should probably carry its own microbrewery insurance policy that comes with robust liability coverage. Specifically, there are two primary liability coverages to consider in light of vicarious liability risks:
General Liability Coverage typically protects against a range of common accidents
Commercial Umbrella Coverage typically provides supplemental liability protection
An independent insurance agent who specializes in microbrewery policies will be able to review the definitions and limits of these coverages to help determine whether they offer sufficient protection. If a particular policy’s general liability and commercial umbrella coverages are lacking, the agent will know how to adjust the coverages or find a more protective policy.
To speak with an independent agent who knows microbrewery insurance, contact World Insurance Associates. Our independent agents have helped many breweries, and we’d be happy to check your brewery’s coverages for an upcoming event.