NAPA, WINE COUNTRY - Insurers are closely monitoring worker's comp, storage exposure and other trends across the industry as they navigate the current economy with clients.

Meanwhile, an East Coast insurance carrier opened a new wine specialty product line and office in Napa specifically to address the industry's needs.

The lead person in the new venture and 20-year industry veteran Nick Faragasso said coverage for the sector has become even more complex in this economy.

The Fairmont Specialty Group - a division of the New Jersey-based Crum & Forster Group - opened the new branch Aug. 18 at 851 Napa Valley Corporate Way. Mr. Faragasso, who was recruited from Fireman's Fund, will sell property casualty and workers' compensation to wine industry brokers along with two other local sellers. A supervisor out of Crum's San Francisco office will also rotate time in the Wine Country location.

The   Fairmont Specialty Group is also licensed in Oregon and Washington, and it hopes to expand nationally.

Mr. Faragasso said the wine industry is one of the most difficult sectors to write, and several recent market conditions have even further muddied the waters.

"Wine tends to have exposure far, far different than any other manufacturing-type sector. To begin with, it's a live product, susceptible to destruction, contamination and fire," he said.

"Then it has to be moved, crushed, stored. And with rapidly changing valuations and stock - the potential for being inadequately insured is great," he said.

Other brokers agreed changing valuations and storage issues continue to be the most difficult factors in writing coverage, which has been further compounded by trying to stretch tight budgets.

Also, because the sector is such a high-risk workers' comp class - heavy equipment use, exposure to heat, issues with cave ventilation - the expected market-wide rate increases could be steep for wine.

"In good years, the wine business bases coverage on an average of the year's asset variance, which can be drastic depending on the season, and a few dollars might get left off the table. Now people are less willing to do that and going through the trouble of monthly inventory reporting to get the exact amount of coverage," said St. Helena Insurance Commercial Lines Manager Mike Applegate.

Also, in the wake of the widely publicized Mare Island fire that destroyed an estimated $100 million in wine, carriers are paying more attention to tracking exactly where wine is stored and in what kind of facility.

"The Mare Island fire definitely made carriers more cautious," said North Bay Insurance Brokers President Tony Schmoll.

"It is still a soft market, and there are still some deals out there. I just think the carriers are just wising up a little bit and asking exactly where all the storage is and how much is there."

Vantreo Insurance Brokerage Vice President and part-owner Pam Chanter, who just led the development of a new wine division within the company, cautioned wine business owners from undervaluing wine to save on coverage costs.

"One thing I've seen a lot of in this downturn is underestimating value. Wineries should follow the market price of the wine when they think it will be ready to sell. Although prices are depressed right now, it will be different in two years," she said.

"If a business has all of its wine in one location worth $1 million but valued at $500,000 in the policy and it's all destroyed, they are out of business for two years and lost half their value."