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InsuranceMan 2.0

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  1. InsuranceMan 2.0

    Technology Woes

    ***** UPDATE ***** All, I see that this topic still gets a lot of views, and I wanted to inform you all that my cell phone number is still the same. It is 307-752-5961. I am no longer associated with the prior email address and toll free number however, so if you are looking to reach out to me please do so on my cell at 307-752-5961. I am still the number one go to guy for distillery insurance and welcome any of my past clients to contact me as well as the new. I still have the most competitive coverage available with the lowest premiums in the country. Stay Vigilant, Aaron a.k.a. InsuranceMan 2.0
  2. InsuranceMan 2.0

    Tuesday Morning Insurance Tidbit - BOR/AOR

    Happy Tuesday morning, ADI, In today's installment I want to start out by saying I hope everyone had a very wonderful and reflective Veteran’s Day. The recognition of this day is something that I personally hold very near and dear to my heart. I have Veterans in my family, friends that have served, and I am proud to say that I work with many former and active military members who own and operate distilleries. To all Veterans everywhere, you have my loyal thanks and gratitude. Let us never forget all you have done for this country and our freedoms. Now on to the topic at hand: The nasty, low-down, evil, and vile BOR/AOR!!!!!!!! What is a “BOR/AOR” you may ask … Well let me tell you … The acronym “BOR/AOR” stands for “Broker of Record” or “Agent of Record” letter. This is one of the oldest, nastiest, dirtiest, and possibly the most deceitful things that Insurance Agents have in their box of tricks. The function of a BOR/AOR started out, as most things do, as a good and helpful tool in the insurance world. However, it was not long after this process was developed that many chose to use it for evil instead of good. The BOR/AOR process was developed to assist clients in moving their insurance from one agent to another in the case that the current agent was unresponsive, or if the agent and client reached an impasse and could no longer work together for whatever reason. In some instances, it can be useful when a client wants to move a policy to someone with expertise in a certain area. The BOR/AOR process allows the client to reassign their existing policy, via the same carrier, to another agent all while retaining their current coverage and premium. Again, this process was to only be used in unusual circumstances where the client and agent simply could not see eye-to-eye anymore, or an agent possessed a certain expertise or skill set. It should only be used to counteract “Irreconcilable differences” shall we say. The same could be said for the quoting process, and many agents use the BOR/AOR even in the early onset of working with a client, tisk-tisk! Most insurance carriers will only release one quote proposal to the first agent that has submitted the business accompanied by a full application. The reasoning for this is that the carrier does not want to complete with itself across several different agents who may be submitting information that differs from one to the other. One agent may submit information stating that the insured is doing x, y, and z, while another may say they are doing a, b, and c. Completely different things, completely different proposals. Therefore, most insurance companies avoid releasing multiple proposals whenever possible. This is where the nasty agents come in and try to BOR/AOR the quote proposal. The NERVE!!!!!!!! Fast forward to about 5 minutes after this potentially good process was put into practice and you will see THE DARK SIDE! Insurance agents discovered quickly that this process could be abused in order to obtain fully written policies or proposals quickly and without having to put in much work. They found that they could simply have someone sign a letter, submit some information, and BAM! Instant money! Sounds like a pretty good gig, right?!?!?!?!?!?! Well, that all depends on your point of view and how the process is presented. Again, if this process is utilized correctly, then there is nothing wrong with it and it is useful. If your agent is a “hit it and forget it” kind of sales person who wrote your policy and then never spoke to you again, but your coverage is good, and you want to keep it but move it to someone else, then this is a potential way to make that happen. This is not usually how it is presented though. Most agents will tell a potential “easy mark” client that in order for them to quote the business, or open up the markets, that all you have to do is sign this letter to give them access. Many times, they won’t even say that much. They will simply say that you need to sign the letter in order to allow them to work on your behalf. Afterall, you have to sign so many documents anyway, what is one more? So they just slip it in. Many agents will go with the out-and-out lie approach. Now, I will throw in a caveat here … I have probably handled around 100 or so BOR/AOR’s in my career over the last 16 years. Each and every one of them has been on the up-and-up though. I always preface this process in the same way, and in my assertation, the correct way. I ALWAYS say to the client, “By signing this letter you fully understand that you are FIRING your current agent and HIRING me as your authorized representative, correct? Once you sign this letter, the other agent will be notified directly by the company and given 10 days to try to win you back. They will call you, they will email you, and they may even get mad at you. I want you to fully understand that by signing this letter you are giving me the authority to represent you and your coverage to the insuring company.” In my case, with this understanding laid out in advance, I have never had a client say that they did not want to go through the process. With me, it is due to my expertise and abilities that clients will knowingly move their policies. I will say though, that in ever case, I will try to find replacement coverage that is as good or better than what the client has prior to ever even broaching the BOR/AOR subject with them. It is never, and should never be the first thing that an agent does in the process of assisting you with your insurance. That is just deceitful and not how relationships are built. A quick story … about two years ago I had a client that had a partner and that partner agreed to meet with a local insurance agent. They had the meeting (although my friend did not want to) and found out quickly that not only was the other agent not an expert in distilleries (as he had led them to believe), but he was also new to insurance as a whole. They thanked him for his time, and as they were literally getting into the cab back to their office, he ran up to the car and told my friends partner that he needed a quick signature in order to prove to his boss that he was out at a meeting. They both thought this was strange, but the partner signed his name anyway, figuring maybe it would help this guy out. Well, lo-and-behold, it turned out that he was actually having him sign a BOR/AOR letter!!!!!!!!!!! I was notified the next day that my friend had signed over all authority on his policy that we had work on together for years. So, I called him up to find out what was going on. He stated that no one signed any such letter, that they would never reassign my work to someone else. As he reflected on it, he recalled that his partner signed something, but it was just a verification that they had a meeting with this agent. I told him to get a copy of that document and really take a look at it. Sure enough, it turns out it was a BOR/AOR letter, but the other agent had hidden that part under another sheet of paper, and his partner was deceived into signing the policies over. In the end, we countermanded the letter and that agent lost his insurance license and faced penalties and fines for his deceitful behavior. The long and the short of this Tuesday Morning Insurance Tidbit is this … Look at everything you are signing. Know what you are signing. Ask questions about what you are signing, and if you ever find yourself in a similar situation, walk away. If someone is willing to use deceitful practice in order to start a relationship with you where they are supposed to be taking care of you and have your best intentions in mind, the relationship should never be started in the first place. Stay Vigilant, Aaron a.k.a. InsuranceMan 2.0 307-752-5961
  3. Happy Thursday, This week’s installation of the Tuesday Morning Insurance Tidbit is occurring on Thursday as you may have noticed. Tuesday was a bit of a CRAZY day in the land of InsuranceMan 2.0. Suffice to say, as we all know it was election day, and yours truly has been voted in as the newest City Councilman in Sheirdanopolis! So, among about the 1,000,206 other things I had going on that day, that was pretty big and occupied quite a bit of my time. Then there was yesterday ... oh yesterday, you seem so very long away, anyway ... A lot of interviews, blah, blah, blah. Long-story-short, that is why we are just seeing my weekly post today, and in the afternoon no less. But as an ongoing heading, I thought I would keep with the theme since "Thursday Afternoon Insurance Tidbit" does not have the same beautiful ring to it. Speaking of "to it", let's get to it. Special Events!!!!! We all know them, and most of us love them. You get to get out in bigger venues, have people taste your amazing products, and often times it leads to sales. Sales either right then and there, or it brings them to your tasting room, or you notice your products flying off the shelves quicker. Either way, you gotta love sales! The issue however is the special event itself. Most venues come with a few certainties. Usually you have to "pay to play", meaning there is usually a fee associated with having a table or space at a venue. Whether it is a farmers market, or a bacon and something festival ('cause who doesn't love bacon?), or a larger specific type of spirits show, they usually want money for your spot. Then there is the dreaded "insurance provision"!!!!!! 😲 This is the one that can either be a non-factor, or a HUGE DEAL! Smaller venues may ask for a certificate of insurance showing your liability limits and liquor liability limits, and they may specify that they need to be $1,000,000 occurrence, with a $2,000,000 aggregate, or they may be larger than that for some venues, or smaller. It just depends. Often times though, it is not the issue of the correct limits, it is the issue of the venue host asking to be named as "ADDITIONAL INSURED". That is where the ease, or pain in the rear can come in when trying to provide that certificate of insurance they are asking for. If you are with a "standard" carrier, often times there is a proviso stating that there is a BLANKET ADDITIONAL INSURED endorsement, which states (short layman version), "If someone requires additional insured status, either by written or verbal contract" then there is no issue. The agent should be able to issue that certificate, in-house, in less than an hour and then simply notify the carrier. Ah, this is the dream scenario, where you hear soft instrumental music playing, birds chirping, rainbows, and unicorns frolicking in green fields. The certificate of insurance seems to appear out of thin air, float gently to the venue host, where they accept it with a loving nod and a smile. Their smile may even have a sparkle to it with that satisfying "tink" sound. This is how it should be, when everything is right in the world. Then there is the other scenario 😈 You have the above scene pictured in your head, but you pick up the phone to call your insurance agent, with a smile on your face … this is going to be great!!!!!! They answer the phone, listen to your request, and laugh in that maniacal and menacing “BWAHAHAHAHAHHAAHAH!!!!!!!!!!!” way. What?!?!?!? That is not supposed to happen. Where are the unicorns, and the birds!?!?!??!! Not today, pal! Your agent, after laughing now takes on the voice of a demon and tells you that you are with a non-standard carrier, and they are going to charge you to add someone on as an additional insured. You say, “But it is only for one event, one time.” They laugh again, rubbing their hands together and tell you it does not matter. UGH! Could this get any worse?!?!!? Funny you should ask …not only are they going to charge you between $100 and $150, it could take days to get the certificate you need. “BUT I NEED IT FOR TOMORROW!!!!!!!!!!!”, you plead into the phone. Is that the smell of Brimstone I smell??!?!?!? You are in Special Event Hell!!!!!! This is something that you need to be made aware of, PRIOR TO PURCHASING YOUR INSURNACE POLICY!!!!!!!!!!! There is nothing wrong with having your insurance provided by a non-standard carrier, heck, sometimes there are reasons beyond your control that makes it impossible for your coverage to be placed with a standard carrier, and that is ok. No one is going to hold that against you. You do need to know though, what kind of coverage you have and if you are going to be charged for special events. Why does this make a difference???? Because of $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ If you are planning on doing 12 different events throughout the year and each one is going to cost you $100 more in premium, well then, maybe that lower insurance proposal was not worth it. Paying out $1,200 more in premium so you can attend special events is costly and you need to be made aware of it prior too. I will say, there are way to avoid a charge, or minimize it, but InsuranceMan 2.0 cannot divulge all of his secrets here. Long-story-longer, be prepared. Know what kind of coverage you have. Ask pertinent questions about special events and any additional charges that there may be or if they will be covered. Again, there is nothing wrong with a charge for these exposures, but the day before you need a certificate is not the day to find out. You need to know your policy and the details within, so ask questions. OR, you can simply call me, and I can handle all of your insurance needs for you, and have discussions upfront and set the expectation. I will end today saying that if you call me and let me handle your insurance needs, you will have a more euphoric experience than the picture I painted in the first scenario. Dealing with me is like all of that wrapped into one, while you get to ride a flying Alicorn through a rainbow that is made out of your favorite alcoholic sprits … and you get to taste them all! Best, Aaron aka - InsuranceMan 2.0 307-752-5961
  4. InsuranceMan 2.0

    Tuesday Morning Insurance Tidbit - Valuation

    Good Tuesday Morning Everyone, It is time again for the weekly installation of your Tuesday Morning Insurance Tidbit. Today I am going to discuss valuation, and even divulge a bit of a secret that most insurance folks have no idea exists, but can save you some premium dollars. Who the heck does not want to save some moola where they can?!?!?!!??! First, before the big "reveal" on saving them greenbacks, let us discuss valuation. When was the last time you took a good hard look at your insurance coverage, specifically in regards to valuation of your equipment, stock, and just plain, good old fashioned stuff!?!?! Many purchasers of insurance buy a policy (not necessarily knowing what they are buying) and tend to forget about it unless they need it in the case of some unfortunate loss or accident. This happens all the time. As well, if your agent is a "hit it and forget it" kind of sales person, they probably are not asking about any changes that may have occurred throughout the initial start up months, or years for that matter. THIS IS NO BUENO!!!!!! Lets start with the folks that are just new to the distilling world. If you are just starting up, there is a lot of change that takes place over the first several months. You may be adding equipment, you may be adding value in product that you are producing, things change quickly during this initial phase. What are you doing to ensure that you have the proper coverage? That chiller that just arrived that you have been waiting on for months, is that covered under your policy? Do you know? How can you tell? VALUATION! You should have a certain limit of insurance covering for the replacement cost of all the stuff you have in your distillery. If that value was only inclusive of the items in your location at the time you bound the policy, did you pad that number enough to include that new chiller? If not you are under-insured and could face a co-insurance issue should something go wrong. One of the most overlooked items in regards to insurance is valuation and making sure you are keeping it at a level that you need in order to cover a loss. The same goes with product. Day one, the first day you bound the policy, you probably did not have product sitting around (unless you sourced a bunch of stuff, then maybe you would have coverage). Fast-forward a few months ... now you have, let's say, $15,000 worth of hooch that you have made and it is waiting to go out. Is it covered????? More than likely it is not, and it needs to be added to the policy. Or perhaps you just received that big shipment of bottles, caps, closures, boxes ... is that value covered on your policy???? Insurance policies are dynamic, they are not static. You are not stuck with the policy that you bought day one. You can make changes to your policy at any time you wish. Adding or reducing coverage can happen at anytime you wish, but it is up to you to let your insurance person know what is happening (or if you are working with me, I periodically check in, especially in the first year) to make sure you are covered correctly. Yes, there may be more premium associated with making the changes, but better to pay a bit more knowing you have coverage than gamble with your business that you have worked so hard to build. CHECK YOUR VALUES! Stock on hand is a largely overlooked item. That $15,000 in hooch that you have from above has now grown to $50,000 lets say ... but your policy is still only covering you for the original $15,000. Your policy is only covering you for whatever amount is shown in the policy forms/declarations, not a penny more. So if your policy still only shows that you have $15,000 worth of stock coverage, that is all you are covered for. So if you were to lose all $50,000 you are not going to be happy with what the claims folks have to say. The maximum amount shown in this case was $15,000 but you had $50,000 in stock, well the insurance carrier is not going to say, "That's ok Mr. or Mrs. Insured, we can see you had more stock so we will make it all good for you." NO! In fact they are going to say something very different in deed. They will actually say that you were only paying premium on $15,000 when you actually had $50,000 in value so you knowingly under-insured your stock and have violated the co-insurance clause of the policy. So now, not only are you going to be out $35,000 in uninsured stock ($50,000 - $15,000 = $35,000 you did not have insured) but they are going to hit you with the co-insurance penalty, and you will not even recover the full $15,000 that you did have insured. I will explain Co-insurance some other time, but the point is this ... MAKE SURE YOU HAVE THE CORRECT VALUATIONS SHOWN ON YOUR POLICY!!!!! Then there is aging stock ... UGH! Don't even get me started on this one. Almost all carriers and certainly dang near ever insurance agent have no idea what to do when it comes to aging stock. Again, that is where I come in. I built the only (and proprietary) spreadsheet known to man that can accurately depict the daily attained value for aging stock. This is a slippery slope people ... Don't trust just anyone to assist you with this aspect of coverage, here you need to trust a true expert. Maybe we will cover this in detail a few Tuesdays from now, but for the time being, if you have been operational for years and have product put up that is aging, CHECK YOUR POLICY! You do not want it to be covered at the value it was when it hit the oak (or however you are aging it) day one. Three years later, after it has gained value in maturation, if you have a loss, you don't want to be paid on what it was worth three years ago, if you can even get that, damn co-insurance again! OK, on to the "big reveal", the one that can save you some dough, some dead presidents, some cold cash. Did you know that even if you don't own the building you are in, you may still have building value on your policy???? What???? Yes, it is true. Even if you are in a leased space, you may be able to have building value. How you say? "Why is this a thing?", you wonder. Some items in your distillery can actually be classified as "building coverage". If it is permanently affixed to the building via plumbing, hard wire, bolted to the floor, or built into the building, then it can be considered "building". This one slips right past 98% of all insurance folks. So why would you want to insured these items as building as opposed to "contents"? It is WAYYYYYYY cheaper! "Contents" is loose stuff that can be picked up and walk away with, stolen, absconded, to be seen nevermore. So the insurance rate is higher on these types of items. Now, you are smart readers here on the forum so I know you know where this is going already, but I am going to spell it out anyway. Aside from your product, what has the most value and therefore costs the most to insure?????? Your "big ticket" items. Your still, your mash tun, your chillers, your big equipment. So if you are paying "contents" rate on these items, you are probably paying hundreds if not thousands of dollars more than you should be since there items are more than likely not "contents" at all since they cannot just up and walk away. Ahhhhh ... it take the keen eye of InsuranceMan 2.0 to know these things and my super-ability to save you money. That is why I am the superhero insurance agent to so many, year of experience and the supervision to see where you can save money! The last valuation item I want to caution you about is Tenant Improvements and Betterment's, or TIB's. If you have gone into a building and done a ton of work to make it "distillery ready", have you insured against that loss? Even if you don't own the building, you can insure your investment into that property that you have made to make it workable for your business. Some people have tens of thousands if not hundreds of thousands wrapped up in TIB's, but if you are not insuring that value, then you don't have insurance for that value. Check your policies, people! Last but not least is if you do own your building, is the value there correct? Again, it could come in the way of improvements that you have made over the years, or even just the fact that the cost of construction is constantly going up. When was the last time you really looked at what your building is worth and checked your policy to make sure it is reflected with a correct value? If you are like many, it has been quite a while. Again, that is why I am here, to assist you in making sure you have the correct coverage for accurate values. So, until next time, this is the superhuman, insurance powerhouse known as "InsuranceMan 2.0" signing off. Stay tuned for the next installment of your Tuesday Morning Insurance Tidbit, with me, InsuranceMan 2.0. Now, I am off!!!!!!! I hear the cries of some poor soul with immediate valuation needs. Stay vigilant!!!!! Best, Aaron Linden InsuranceMan 2.0 307-752-5961
  5. InsuranceMan 2.0

    Tuesday Morning Insurance Tidbit - Second Opinion

    @Patio29Dadio, that sounds great! I would love to assist you in any way possible. If you have your current information that you submitted to them, I could certainly start working on things for you know if you like. To get a jump on it so that we can keep your downtime between quotes to a minimum. Just let me know your thoughts and I look greatly forward to working with you to give you another set of eyes. Best, Aaron
  6. Happy Tuesday Morning again my Fellow ADI-ers, In today's quick Tuesday Morning Insurance Tidbit I am covering "second opinions". Ah ... whether it is a serious medical condition, or a serious insurance condition, GET A SECOND OPINION!!!!! Over the course of the last week I have experienced similar situations 3 different times with three different clients. In two cases I had provided insurance proposals for their distilleries and they both came back and said, "My local agent seems to have a better/similar price." I asked if I may see the proposals that they were each sent so that I could do a comparative analysis, because that is what I do ... I am a professional after all. In one situation, the other agent was lower in premium by a few thousand dollars ... BUT WAIT FOR IT ........ It was because we may as well have been comparing apples (in the other agents case) to apple red Ferrari's (in my case)! The only similarity between the first two things is that apples and apple red Ferrari's are the same color, and the only similarity (if you could even call it that) between their proposal and mine is that they both were supposedly "insurance". Not to kill you with detail, but suffice to say, I put together the high-end sports car package covering everything this client needed in order to have the coverage they needed, custom fit for them so that they can operate on a daily basis without worrying about loss, damage, injury, etc. The other agent, oh dear me .... "the other agent" ... well lets just say they were only covering the buildings (no property, no General Liability, no products, no stock on hand, no liquor liability, no nada!!!!!), and they did not even do that correctly!!!!!! I pointed all of this out to the client and asked that they go back to the other agent and ask for similar coverage to what I proposed. The other agent said that they could not provide my level of coverage at any premium, so the distillery decidedly went with me for their coverage. The next situation was very similar in that there was a client that asked me to quote their coverage. When I came back with the specifics of what they asked for, they said that it appeared my coverage was within a few hundred dollars of what they were paying. I asked if I may look at their policy, they agreed. What they did not keep in mind was that they just went through a large expansion, and substantial increase of sales over the last year. Due to both of these things, they were able to add new equipment, more product on hand, etc. I quoted them all of the NEW BIGGER NUMBERS that they asked for (as well as the new higher sales figures) and that the old policy did not contemplate. I suggested they go back to their current agent and ask for a proposal that was in line with the values and sales I was given. When the other agent came back to them, they were more than $5,000 higher than my proposal that the client thought was only a few hundred off. The last situation was a distillery that has been in business for a few years, but they have never changed their policy since they day they started. They asked me to take a look at things after we discussed how things have changed over the years. Upon review of their policy I found that they were woefully under-insured in every aspect and that due to their sales being so much higher last year, they were actually subject to an audit payment that was due. We ended up reworking everything and they are now happy to be working with me where they know we will be updating things as need be. The point to all of this is, I have spent 16 years working with insurance, and 7 (almost 8 now) of those years has been specifically working with distillery insurance. I know what to look for, how to obtain what you don't have, and potentially rid policies of premium for things you don't need. I have said it 1,000 times over, I love local. I buy local where I live when I can ... but is your livelihood, your business, your dream, is that something you want to leave to chance with a local agent who has no idea how to insure your distillery??? Are you willing to let them cobble up some policy similar to a shoe store down the street that they write because they may think, "Well, insurance is insurance, it can't be that different. At least I can make a few bucks!"? Then, the worst part of it is, they send you a proposal to look at so that you can tell them if it looks good or not!!!!!!! WHAT!?!?!? If you were the insurance professional, you would do it yourself and I would be out of a job! Get a second opinion!!!!!! If you chose to contact me for a second opinion, or someone else, please, at least do yourself a favor and get someone to look the proposal/policy over. A few set of eyes are always better than one. I will say though, if you found out you may have a medical condition that was pretty serious, would you go to a local General Practice Doctor for your second opinion, or would you seek out the best specialist you could find? Well ... consider me Dr. InsuranceMan 2.0, the most specialized insurance doctor in the country. The difference is, I have no visit/consulting fee. My cost to take a look and offer my opinion is totally 100% free to you. Give me a call, the doctor is in! Best, Aaron Linden (aka InsuranceMan/InsuranceMan 2.0)
  7. InsuranceMan 2.0

    Forking Forklift Questions

    @Patio29Dadio, I would like to give you one other thing to consider as well in the scenario you shared above is you are thinking about buying this with a guy in your building. That is all good and fine and saves money, but you need to think about insurance. How will you insure it, who will be reimbursed if something happens to the equipment? What happens if the other guy is using it and causes damage or injury and your name is on it as well? There are a lot of things to consider when going in on purchases with folks outside your business. There are solutions to all of these issues, but you need to keep them in mind when looking into joint ventures, for sure. I have seen things like this come back to bite folks who did nothing wrong aside from having a co-ownership on something. Best, Aaron
  8. InsuranceMan 2.0

    Tuesday Morning Insurance Tidbit - PPC

    Happy Tuesday Morning Fellow ADI-ers, I wanted to offer a quick Tuesday Morning Insurance Tidbit for all of those looking to start a distillery, move to a new location, or open another location. In the world of insurance there are a lot of factors that come into play when trying to obtain coverage, as well as how those factors directly impact the premiums you pay. Today I want to focus on a topic that has been an issue for quite sometime, Public Protection Class, or PPC. The PPC program is a tool that was developed by the Insurance Services Office (ISO) for property and casualty insurers so that they can assess risk by a rating of "fire protection" services. The ISO pulled information from more than 47,000 communities in order to create this rating program. Essentially, this tool ranks PPC's on a scale of 1 to 10. A class 1 represents superior fire protection, whereas a 10 indicates that not even the minimum requirements are available. So what does that mean, exactly. Well, any of you that know me or have read my other postings know that I am a straightforward, "put it into plain English" kind of guy, so here is what it means; If you are located in a PPC 1 it means the fire department is located super-duper close to you, it has a full time staff, and you have a fire-hydrant pretty much on your property or in your building. So if something were to happen at your distillery and there were a fire or emergency need, the fire department would probably know about it before you do and they would quell any threat of loss before it caused much damage. With that being said, I am sure you have concluded for yourself at this point that a PPC 10 is probably not so good. You are correct! A PPC 10 to an underwriter causes an instinctive primal reaction wherein they shield their eyes, snap their head back, scream in disbelief, and start mumbling incantations. Picture the scene from the "Exorcist", yeah, kinda like that!!!!!! Nearly every underwriter in the known universe will become physically sick at the thought of a PPC 10. Actually, most carriers will not even entertain a risk in a PPC 7 or higher. I have even been told that these locations may as well be on the moon. I wrote a post about that here, actually: So what does this mean to you? It means that when you are considering your location you need to do some research in regards to the PPC. Insurance is not usually the first thing that people have in mind when wanting to open a distillery, but it should be dang near the top of the list. If you do your legwork ahead of time and find out what the PPC is of your proposed location, it is going to make your life much easier, and cheaper in the future. As I said earlier, this one factor alone can affect if you can even find insurance coverage and then what you will pay for it. Property rates on your building, equipment, and stock will be much lower in a PPC 1 then they will in a PC 6, and if it is a PC 7 or higher, well my friend, get your checkbook ready!!!!!!! Now you may be wondering, "OK, I need to find out the PPC of the location I am interested in. How do I do that??" The answer is actually very simple. Pull out your phone, google your local fire department, give them a call and tell them you would like to know the PPC of the address in question and they will tell you what it is. Voilà! Mission accomplished! It really is that easy and it truly can save you a lot of time and money down the road. I hope you have enjoyed this Tuesday Morning Insurance Tidbit, and as always, I am here to assist you in anyway that I can when it comes to your insurance needs. I work with an incredible amount of distillers all over the country and I have seen pretty much everything, so if you have questions, I more than likely have answers. Please feel free to give me a call at 307-752-5961 at any time. Best, Aaron Linden (aka InsuranceMan/InsuranceMan 2.0)
  9. InsuranceMan 2.0

    Amendment to drop DSP Bond Time Line

    Agreed, that is a long time. My experience has shown me that it really should be resolved within 30 days. Most of my clients that have put in for the exemption online through PONL have had it turned around in anywhere from 2 weeks to a month. I would give them a call. Best, Aaron
  10. InsuranceMan 2.0

    Insurance

    ***** UPDATE ***** EVERYONE ... I wanted to let you all know that I am still here, I am still in the game, albeit with a new place to call home ... but nonetheless I am still here and providing the top of the line insurance for distilleries around the country for the best premiums possible. My phone number has remained the same, and thank you to all of you who have recently called me to put your insurance packages together. The amount of support and people that have let me know I was missed in the interim is truly overwhelming!!!! ADI folks are the best folks on the planet! If you have not had a chance to get a hold of me, what is stopping you?!?!?!!? In case you need my number it is 307-752-5961. I look forward to hearing from all of you! Best, Aaron
  11. @Michaelangelo and others, I quite agree with what you have said. It is up to the interpretation of someone behind a desk, whether we are talking about the Fed's, local authorities, or insurance companies. In the case of the latter it is usually an underwriter, who is making decisions based on the companies actuarial team. Have you ever met an actuary in person???? They are like morticians mixed with forensic CPA's, but with less personality 😂 . With that being the case, it really is up to your insurance professional to do the job you need them to do. I always tell people that I need to sell the policy twice; once to the underwriter, and then to the client. In reality the insurance world is based on a string of events. The client must tell me what they are doing and what they need; I have to make sure I have done all of my investigative research and put together the appropriate coverage package; I need to paint the prettiest but most honest picture of that to the underwriter; they have to accept what we are telling them and offer us a proposal based on that information. Therein lies the problem: Human decision making. Appetites of insurance risk are different for all carriers, and underwriters fluctuate wildly from carrier to carrier. So the chances of there ever being a "standard" set of insurance provisos is slim to none. I have had conversations with the TTB, folks from the national IFC-ICC office, and many others asking to introduce some standard of insurance across the distillery world, but to no avail. Here is why, no one can actually make you purchase insurance. Yes, the TTB can require you to have a bond, and your lending institution can tell you that your equipment needs to be insured if there is a loan on it, and your landlord can even require you to provide a liability policy in order to become a tenant. However, in the grand scheme of things, there is no "requirement" that a distillery carry any type of insurance what-so-ever. An example is a friend of mine that makes a very "top shelf" whiskey at his home residence in a very nice area of the country. He owns his buildings, still, everything - outright with no one owed anything. He produces under the yearly withdrawal limit for the Fed's, so he does not need a bond. HE CARRIERS NO INSURANCE! No general liability, no property, he does not even carry liquor liability (this part makes me absolutely crazy) ! Do you know why? Because he does not have to and he sees no value in it. He has said that if his place were to go to the ground, he would find something else to occupy his time. I don't know many of us like that, but the point is that there are no standards or requirements as to distillery insurance because you do not have to have it. You should have coverage, but you are not required to. Each distillery is as unique as the products they are making and therefore, no one distillery has the same needs as another, and no one can make you insure your operation. As to minimum distances and what defines separation, again, there is no hard-fast-rule. The TTB says the following from 27 CFR Part 19 §19.52: §19.52 Restrictions on location of plants. A person who intends to establish a distilled spirits plant may not locate it in any of the following places: (a) In any residence, shed, yard, or enclosure connected to a residence; (b) On any vessel or boat; (c) Where beer or wine is produced; (d) Where liquors are sold at retail; or (e) Where any other business is conducted except as provided in §19.54. So what does this mean ... who knows! Just more grey area really. I will tell you who can define "distance" and "separation" with definitive authority though, since the Fed's cannot or are not willing to ... Your local fire Marshall and your insurance company. Again, this is going to swing wildly depending on the "human decision maker" that happens to be your local Marshall or insurance carrier, but they can and will tell you what they are accepting of and what you can and cannot do. Trust me, if no one cares at a federal level, someone may care at a local level, and if they don't care, I guarantee you that the insurance company will care. I have had carriers say that there must be a minimum distance of no less than 50' between structures, but others have said it didn't matter as long as there was separation (in that case about 10' ). In a nutshell, there is no requirement to even carry insurance, the distances are not clearly defined, and it all depends on where you are and who you are dealing with, but at the end of the day, it is up to the locals and your insurance carrier. They will be the ones that define what is or is not acceptable. Best, Aaron 307-752-5961
  12. @dhdunbar, that is a great question and one that comes up quite often. Interestingly, a residence on the same tract of land as the distillery is NOT an issue. As it turns out, this setup has become quite common among several of the smaller distilleries. they have their home, and then out on the back 40 they have a nice pole building that they have decided to set up shop in to make their product. The COMMERCIAL insurance carriers do not seem to have an issue with this at all (as long as you are not located way out in the boonies. There are then issues with Public Protection Classes (PPC's) that could arise, but that may be for another post). Some separation is preferable, but it has never really been established as to what that distance is. I will say that they do not want the distillery operation in an attached building such as a garage or something of that nature, but I have seen the distillery structure as close as 10 feet away from the home. The reason I said that "COMMERCIAL" insurance carriers do not seem to have an issue is due to the fact that some PERSONAL LINES CARRIERS may have a big issue with this setup. Many homeowners policies do not contemplate any type of commercial exposure, aside from perhaps a small home office or the like. Therefore, most homeowners policies do not like the idea of a business being set up on the same physical location as the home, especially if there is any kind of exposure to "customers" entering and exiting the property, and God forbid there may be a tasting room!!!!!!!!!!!!!!!! That is not reason to despair, or not have your distillery located at your homes physical address, it is just yet another hurdle. Many homeowners carriers, once made aware that there is a commercial policy in place, may be fine knowing that if there is an exposure due to the business they will not be the ones having to deal with it. Again though, there is room for grey area here. Quick example ... Distillery "X" sets up his/her shop in a pole building on their home's physical property. The distillery is down a branch of driveway separated from the home. A tourist happens to come by and wants to see the distillery and purchase a bottle (assuming that is legal where this is), so they drive up the driveway to the distillery. Finding no one at the distillery, they hop back in the car and head to the house to find the proprietor. Upon getting out of their car to approach the house, they are knocked over by a goat and suffer an injury. I know this sounds like a long shot, but I have seen this happen! So I ask, which policy should be on the hook in this circumstance? The commercial policy since the person was there to see the distillery after-all ... or the personal homeowners since this person was now at the residence and the goat is covered by the homeowners? The answer is, who knows!!!!! It will be for the insurance companies to fight over and figure out. In this scenario however, I fought that it should be the commercial policy since the proximate cause of the injury was in deed the goat, but the reasoning for the injured party to even be in that situation was due to the business exposure. The long and the short of all of this is that if you set up shop on the same tract of land that your home is on, expect to have some insurance issues, at least of a personal lines nature. I would contact your homeowners carrier ahead of time and see what there stance on this is. Better to find out in advance than risk being cancelled down the road, or find out you are in violation of the contractual language of the policy. Again though, I am here to help and can usually facilitate solutions and agreements between all parties. @bdsammy94, how in the heck are you doing, sir!?!?!?!? We need to catch up, and soon. In regards to what you are saying, I understand and have no doubt that you have been able to move forward into mixed use areas. However, that is somewhat due to enjoying the fruits of already having coverage with that certain carrier and being somewhat "grandfathered in" ... thanks to me 😎. Back in the day when your insurance was written, the carrier did not have the same stance on "residences" like they do now. As stated, they took a step back in June and started reassessing things. Most anyone that was already with them can move forward under the old guidelines, for the most part. It is the new folks coming in and wanting to go into mixed use buildings that are having the issue. I have several distilleries in areas that have condos and apartments above them, but trying to place new clients wanting to do the same is becoming more difficult with each passing day. I hope this helps to explain some of the potential issues that can arise in choosing a location, but again, if you have any questions or want to pick my brain, the advice and experience are free for the taking. Best, Aaron Linden - CIC 307-752-5961
  13. InsuranceMan 2.0

    FET Tax Cut Article

    All, I just wanted to share an article that I was honored to be featured in recently that discusses the new lower FET rates, and what needs to happen at a grass roots level in order to make sure that the rates are extended beyond the 2019 date. I have done a lot of work with different groups in regards to the impact that this new rate has had throughout the industry but I would implore you, the owners of distilleries, do everyone a huge favor ... Document, document, document! Of all the groups I have worked with, and all the discussions I have had, the most important factor in the very near future is going to be documentation. If you are enjoying the new lower FET's, and you have been able to purchase new equipment, finally do that marketing campaign you have been dreaming of, or hire some new employees to increase your output, DOCUMENT IT!!!!! Put real numbers to work for you. If you have saved "X" amount of dollars due to the lower FET rate, and have reinvested that in the economy via purchases, employment, whatever, make sure you are documenting it and sharing it with your state guild, national associations, etc. I am here to warn you, if this information is not produced and shared in concrete numbers, the government all-to-likely may not extend this wonderful incentive. If no one can provide solid evidence as to the economic impact that this has had on the industry as a whole, there will be no incentive for the fed's to cut their own large source of funding any further. I would also caution that these numbers have to be produced sooner than later due to the fact that these rates are due to expire at the end of 2019 unless action is taken. That means that numbers for 2018 need to be pulled together and presented as soon as 2019 kicks off. The government is a big ship and it turns slowly, meaning, these numbers cannot be produced in September of 2019 with the hopes of having anyone have time to look at them in time to have an impact. Keep in mind that these lower FET's are due to "sunset" on December 31st, 2019 if action is not taken. That is what I am asking of you all, to take action. Start pulling your "economic impact" numbers together now, so that come the end of 2018, you can go into 2019 armed with the information needed to ensure that these lower rates are here to stay! Here is a link to the article in case you would like to check it out: http://www.spiritedbiz.com/inside-spirits-making-the-tax-cut-permanent/ Best, Aaron Linden 307-752-5961
  14. I just wanted to take a moment to update everyone in regards to this topic and how it relates to possible insurance implications. As recently as June, many insurance carriers have taken a step back and started to assess their book of distillery clients in order to maintain a strong program and competitive rates. In doing so, many of the "admitted" carriers (of which there really are only about 4 that do it well) have determined that a mixed use building poses a "life-safety" hazard. What this means is that if there are "residences" in the same building as a distillery then it is not a desirable risk and will be declined. The carriers loosely define a "residence" as any unit that people occupy in the building, overnight, or as a permanent home. So any building containing apartment units, condos, hotel/motel units, etc. are now not a desirable class of business for most "admitted" carriers. I have defined what an "admitted carrier" and a "non-admitted" carrier are in the past under my articles that I posted as InsuranceMan, but here is a quick recap ... Admitted carriers are admitted to do business in the state in which they write insurance, pay into the state guarantee fund, and are regulated by the state Department of Insurance. Non-Admitted carriers (or "surplus lines" carriers) are not admitted in the state, they do not pay into the state guarantee fund, and they are overseen by the far less invasive state "surplus lines office". So, what does that mean? It means that admitted carriers have to file rates with the state, follow certain rules, make sure there is enough money set aside (guarantee fund) to pay claims in the state, and answer to the Department of Insurance. These regulations tighten up what the carriers are and are not willing to write (sometimes based on their filings and rates) which makes placing more difficult accounts much harder, but it keeps premiums lower and more competitive on the more "standard" business. Non-Admitted carriers however, can do pretty much whatever they like as they don't have to have specific rates filed (more of a range really), and can take on any risk they care to underwrite ... but it comes with a price. Ever hear of "Lloyd's of London"!?!?!? They will write dang near anything, but often times it comes at the price of a hefty premium. The long and the short of what I am saying is this, if you have a location that is just so amazingly stellar that you simply MUST HAVE IT for your distillery location, but there are "residences" in the building, expect to have a hard time obtaining insurance (unless you contact me of course, I have placed dozens of these), and expect to pay at least 2 to 3 times more than if you were in a standalone building, or a location that other businesses occupy (at least in regards to the General Liability aspect of your policy). The rule of thumb as I have come to say is, "Insurance Companies care if someone is sleeping there." As always, if you have questions, whether you are just thinking about fixin' to get ready to maybe start a distillery, or if you are years into your operation, I am here to help. I love to answer questions in regards to distillery insurance and I have seen nearly everything there is to see in regards to questions and issues. I have been doing this a long time and it is very rare that someone brings me a question or issue I have not had experience in dealing with. Maybe you can bring something to me that is new, I would love that and to help in whatever way possible. If you want to run something by me or have me look things over please just PM me or call my cell at 307-752-5961. Best, Aaron Linden - Insurance Superhero
  15. InsuranceMan 2.0

    PATH Act and Lower FET rates

    @kansftb, you would calculate your rate at the $2.70 for calendar years 2018 and 2019. After those year ranges, it is anyone's guess. I hope this is helpful for you and give me a shout here soon about the rest of your insurance needs! Here is a link to the TTB site where you can read about this for yourself if you like: https://www.ttb.gov/alcohol/craft-beverage-modernization-and-tax-reform.shtml Best, Aaron
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