Insuring wine between harvest to shelf, and earthquakes and floods it may encounter on the way, and covering liability for cyber data breaches are top of mind for wine producers these days, according to wine experts.
[caption id="attachment_96725" align="alignright" width="394"] Tony Guerrero of George Petersen Insurance Agency and Annie Jaconetti of Wells Fargo Insurance Services[/caption]
Availability of stock-throughput policies, also called inland marine coverage, has expanded from just a handful of carriers several years ago to a more common feature from property coverage carriers.
"It follows the stock around the world, whether it's in storage or on the ocean or in the air," said Annie Jaconetti, assistant vice president of Wells Fargo Insurance Services (707-769-2900, wfis.wellsfargo.com) and specializing in wine industry accounts. "What's nice is that the client does not have to report where it is at any point in time. It also insures the stock at the ultimate selling price of the wine in the bottle, so the client is fully recuperating not only the cost but their profit."
The brokerage has been offering such policies for five years, mainly from Lloyd's of London, which popularized "floater" coverage of high-risk mobile business property a few centuries ago.
But now there are a number of carriers underwriting these sorts of policies, and there can be differences in requirements for reporting changes in property value and location -- for example, monthly, quarterly or at the time of policy creation -- as well as expanded coverage for perils, in California namely earthquakes and floods, according to Tony Guerrero, partner of George Petersen Insurance Agency (707-525-4150, gpins.com).
"If you have $2 million in inventory, an earthquake policy may have a 15 percent-of-value deductible, so if you have a $10 million total exposure you may have to absorb the first $1.5 million," he said.
Stock-throughput policies aren't cheap. It may not make financial sense to get such wide-ranging coverage for a wine company producing less than 25,000 or 50,000 gallons a year and with a business-property policy premium less than $10,000 annually, Ms. Jaconetti said. She recently wrote such a policy that had a $4,500 premium for a wine company with $20 million in annual sales.
An emerging insurance interest for wine companies in the past few years is network security and privacy coverage, also called cyber liability insurance, the experts said. It has been largely available since the dot-com boom of the late 1990s and got another boost in 2005 with the extension of patient electronic records privacy requirements to the Health Insurance Portability and Accountability Act, or HIPPA, but now wine companies are seriously considering insurance that would cover a number of costs that could result from a breach of data on customers, Ms. Jaconetti said.
"Most of them have a wine club and tasting room and are taking personally identifiable information from customers in many states, and each state has standards and thresholds for what is identifiable information and requirements for notification about a breach," she said.
Even going through the policy application process is enlightening winery top management about what is lacking in their current systems, Mr. Guerrero said.