InsuranceMan

Happy Tuesday To All, In today's installment of the "Tidbit" we are going to try something I gave a shot a while back but it was not as well received as I had hoped it would be, but first ... In the spirit of always growing my superpowers (and due somewhat to regulations and complilance), InsuranceMan 2.0!!! has been a bit preoccupied with CE. Ah yes, as any of you that came from or are still dwelling in the professional world (outside of distilling), there are requirements for Continuing Education (CE) in order to keep your licensure up to date and make all of the regulators happy, happy, happy. Well, 'tis the season, and I am neck deep in it, but that does not mean I am not here to serve and protect you! I should have it all wrapped up in the next day or so, but I have been a bit busy with it all. That then brings us to the meat of the TMIT for today. As stated, I tried to do a little Question and Answer (Q&A) post a while back and I have either done such an amazing job at educating all of you that no one has any insurance questions, or people just did not want to ask questions. I hope it was the former but methinkst thou ADI-ers mayst not want to appearest naive. Whatever the case, I would like to open up this post to questions. Any questions that you may have. There are no silly questions, people, so let's have at it. Do you have questions about your General Liability, perhaps your property coverage, maybe how your stock should be calculated?!?!?!?! Do you want to know how to make a killer Pad Thai or ask what I am doing this weekend? Nothing is off limits, so let's get this party started?!!??! Who will be first???? What will they ask?!?!?! So many questions ... but all from me so far. Now it is your turn. Be the first to post a question and let's have some fun with this. Until someone does ... Stay Vigilant!!!!! Best, Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

The very best of Tuesday mornings to you!!!!!!! Yes, Tuesday is upon us once again! I know we all look forward to what that means! It is time for today’s installment of the TMIT. Today I am going to shed some light on something that I have mentioned many times in the past but never really took the deep dive on. That “something” is co-insurance. Ah, co-insurance. This “something” is something that most insurance agents cannot even wrap their minds around. Don’t believe me, just ask them. I have actually had conversations with underwriters who have said that they really don’t quite understand it. Well, ok. I guess their job is underwriting and not claims adjusting, BUT STILL!!!!!!!!!! As you sit down with your insurance policy to give it a loving perusal (really, who does this?!?!?!!) you will inevitably come across your property section of the policy. In that section you will see the amounts of coverage you have in regard to your building (if you own it, or maybe your tenant improvements and betterments), your equipment (at least I hope you have coverage for that), your contents or business personal property (BPP), and maybe even your stock on hand (if your agent knows what they are doing that is) to name a few. If your policy is of a more standard ilk, you will see the description of what is being covered, the limit of value of that coverage, your deductible, and more likely than not, your co-insurance limit. OOooooooo …… Yep, there it is!!!!!! It is the insurance equivalent of spotting a unicorn in an open field. It is mythical, it is magical, and really, when you see it, you may rub your eyes and wonder silently, “What the heck am I looking at?!?!?!?!?!” Co-insurance comes in a myriad of different flavors depending on the carrier providing your coverage, but typically you will see an 80%, 90%, or in some cases 100%. I will say that one of the only times you see a 100% co-insurance clause should be if it is an “agreed value” or something of the like. Fear not dear reader, I will explain this so that you understand it, no matter what percentage you have listed. Then, armed with this all-knowing insurance geek knowledge, you can sit around your next dinner party or tasting and astound people with your incredibly in-depth repertoire of insurance knowledge, which to be honest, probably won’t get you anywhere. REGARDLESS, let’s get to it. For this example we will use your building value (fear not, if you do not own your building you can simply apply this to whatever aspect of property coverage you like, it all functions the same way). Let us hypothesis that you have your building listed with a nice round value of $1,000,000 (places pinky to corner of mouth with one eyebrow lifted)!!!!!!! Excellent. Maybe your agent went to the painstaking lengths to run a Marshall & Swift cost estimator or some equivalent based on contractor costs and types of materials used in your location to accurately decipher what your actual building costs would be if you needed to rebuild from the ground up. Wait, what?!?!?!! Who did what now?!?!?! Well, this is an interesting point of fact. Where did your insurance amount come from? Did you give it to the agent and they just said ok and used it? Is it what the property would sell for if you wanted to sell it???? Either way, dollars to donuts, it is wrong. First of all, your agent should always be providing you with a replacement cost estimation of what it would run if you had to rebuild the entire building, end of story. If they have not done that, run, screaming!!!! Not that you don’t know your building and what intrinsic value it may have to you, but in this case, the cost of construction is ever changing and the only accurate way to know what that cost would be is to do an “Insured To Value” (ITV) or “Total Insured Value” (TIV) cost estimation based on the most recent and up to date figures available in your area. As to “what would it sell for”, again, WRONG! The sale value takes into account things such as location, overall land and land size, etc. The sale price is not what it would take to rebuild the building. In fact, sometimes the sale price could be much more, and in some cases it could be much less that what the building alone would cost to replace. Interesting, isn’t it?!?!?!?!?! In fact, I am going to use a real-life example for you so you can see how dangerous this can be. I have a client in a middle of the country city, a city that was hit hard with having too much warehouse real estate and not enough buyers for the market. He was able to score an incredible deal on his building. He procured a 10,000 square foot warehouse for around $150,000!!!!!! That comes out to $15 a square foot (not including the land), which is UNHEARD OF! He calls me all excited and wants to get insurance coverage for his distillery in this location. I said great, and congratulations. He tells me that he wants to insure everything like it was before, but now he owns his own building (proud moment for him to be sure) so he wants to include that on the policy for $150,000. WHOA!!!!! Pump the breaks … What? He tells me of the amazing deal he got, and he only wants to insure the building for what he has into it. Can anyone say, “co-insurance clause”?!?!?!!? OK, here we go. A co-insurance clause is put into insurance policies (almost always reflected as a percentage) and used by insurance companies to ensure that policyholders insure their property (again, any kind of property) to an appropriate value. Why do they do this? Well, it is a way for the carriers to make sure that they are receiving a fair and accurate premium for their risk involved in insuring the property. Ah yes, it all boils down to money! A prime example is the one that I just gave (as by design). This insured wanted to insure his building for $150,000 when the true replacement cost of the building would be much higher. The premium to insure a $150,000 building may be around $1,125 (if it is a $0.75 rate) as opposed to a premium of nearly $7,500 in order to insure a $1,000,000 building value. Now you can see why the carrier is interested in making sure that things line up correctly. This is one of the reasons why they have the co-insurance clause. Co-insurance works like this: It is the amount of insurance you DID have at the time of the loss divided by the amount of insurance your SHOULD have had (and just where does that value come from you are wondering????? You guessed it, mainly from an ITV/TIV that the claims adjustor runs, usually from Marshall & Swift. Oh, all the pieces are fitting together like I had this planned out or something!!!! The voice of experience is loud and clear coming from me!). Take that percentage, multiply it by the loss amount, subtract your deductible and that is what you get reimbursed from the carrier. Lost yet? Most people are, even those who have been in insurance for years. It is easy to understand when we go back to our example. We will get there in a minute, I promise. If this insured’s building has a true replacement cost of $1,000,000 and he has an 80% co-insurance clause, this means that to be in compliance with this provision he MUST insure his building to at least $800,000 (0.80 x $1,000,000 = 800,000) If he insures his building to that amount, he can avoid any kind of co-insurance penalty and he would receive the full amount of insurance (minus the deductible) in the case of a loss. Keep in mind that he will only be able to recoup the amount of value shown on the policy coverage form ($800,000 in this case), which would leave him having to out-of-pocket $200,000 in order to build this same $1,000,000 building, but that is better than what happens if you do incur a co-insurance penalty. OK, now that you understand that aspect, I will illustrate what happens if you are out of compliance. In our example it would look like this: $150,000 (DID have) / $800,000 (SHOULD have had since the value is $1,000,000 @ 80% = $800,000) = 0.1875 or 18.75% Yep, if an insurance agent didn’t know any better (which I of course do!!!!!!!) this client would have only had his building insured to 18.75% of its actual replacement value. VERY BAD!!!!! Here is the equation: Amount of insurance the insured DID have (if they had not known better): $150,000 --------------------------------------------------------------------------------------------------------------------------------------- = 18.75% Amount of insurance the insured SHOULD have had: $800,000 Obviously the insured is WAY out of compliance here. What happens next may make you cringe or toss your cookies, so hold on tight or prepare to look away! You have been warned. If the building were partially damaged, let’s say to the tune of $50,000 here is how this would play out: $150,000 (DID) --------------------------- = 18.75% multiplied by the loss amount of $50,000 – Deductible $800,000 (SHOULD) So you would have a co-insurance equation that looks like this: 18.75% x $50,000 = $9,375 - $1,000 deductible = $8,375 insurance claim payment. GASP!!!! As you can see, due to the insured being out of compliance and the co-insurance penalty being implemented, this insured is only going to received $8,375 on a $50,000 claim. This leaves this poor bugger having to out-of-pocket $41,625 in order to repair the building to bring it back up to where it was prior to the loss. Horrifying, right?!?!?!?!?! I don’t want to leave you with that vision today though, so I am going to show you what happens if everything is a hunky-dory! Same situation, but we have the building insured at $800,000. $800,000 (DID) -------------------------- = 1 or 100% x $50,000 loss - $1,000 deductible = $49,000 $800,000 (SHOULD) AND THE CROWD GOES WILD!!!!!!!!!! Here is the real deal folks and what you really need to know about co-insurance. Just don’t even play the game. My advice is to never try to get into a situation where you are trying to hit right on the value you need to meet your co-insurance limit. The price of concrete fluctuates, drywall, plywood, etc. Even if you think you are right on the money, it could all be different tomorrow and it could cost you big time! Think of this, what is it going to cost you to insure your building to its full value instead of 80% of its value? Well, in the case I gave above, it may cost you $1,500 more a year to insure your building (maybe!!!!) at $1,000,000 as opposed to playing the co-insurance game of Roulette and having it at $800,000 only to find out that is not enough. Do not scrimp on your coverage here, please, I implore you. Unless you are a “let it all ride on red” kinda gambler, this is something you need to stay away from. There are ways to shave some of the costs off your building replacement cost, there are. I have tricks and tips as to how to get some of the value down, but I am not going to share that here. Too many non-superhero agents read my posts to try and garner some of my super insurance knowledge, but there are ways to reduce the overall ITV/TIV. If you are interested in that further or need a comprehensive review of all things insurance-y, get a hold of me, InsuranceMan 2.0!!! and I would be glad to lend you a helping superhero hand. Until next time dear reader … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insruanceman2.0@yahoo.com

It is Tuesday here on the ADI forums, and we all know what that means … In today’s installment of the Tuesday Morning Insurance Tidbit we are going back to the basics. I have had many conversations with folks who were not entirely certain what the different coverages of an insurance policy are, how they are broken up, or really what they mean. So, in today’s installment of the TMIT we are going to dissect a basic insurance policy and provide a 30,000 foot perspective. First and foremost, again, this is a very rudimentary explanation of an insurance policy. Many of you will have needs far beyond this, but for several of you it may be your first time thinking about these issues. Wherever you fall on the spectrum, I hope this is helpful. Where shall we begin? Well, let us start with what is potentially the most important piece of information on the insurance policy, YOUR NAME! You would not believe how many times I see this messed up, and you really would not believe the impact this can have on your coverage. Your name is going to be your name, the name of the distillery, entity of the distillery, etc. Simple, right? Well, for some, not really. Let’s say “Joe Smith” owns “Main Street Distillery” to keep things simple. What should the NAMED INSURED section of the policy read then? Well, who are we protecting with the policy? Joe Smith owns the distillery and as the owner/partner/member/officer he is provided coverage by the policy if done under the entity name. That would then mean that we should use Main Street Distillery then, right? Well, maybe and maybe not. Is Joe Smith a sole proprietor? If so then we have to name Joe Smith as the named insured doing business as (DBA) Main Street Distillery. Confused yet? Right! It all depends on the structure of the individual or entity that owns the business. If Joe is a sole proprietor, then in order for Mr. Smith to be provided coverage he has to specifically be named on the policy as the named insured dba the business name. If Joe set things up as a C-Corp, S-Corp, LLC, etc., then he would be afforded protection automatically by the policy under the entity. So, if it is Main Street Distillery, LLC then Joe would be included for coverage under the operations of the business. It should be simple, but it can be confusing, and it can impact your coverage in a monumental way. Case in point, let us say that Joe is a sole proprietor who is doing business as Main Street Distillery but the policy only names Main Street Distillery. In this scenario there is a loss and not only is Main Street Distillery sued, but Joe is sued individually for his negligence. Well, if Joe is not name as an insured on the policy then “Joe ain’t got no ….” coverage!!!!!!! That’s right, the only thing contemplated for coverage is what appears on the policy declarations sheet. WATCH OUT FOLKS! If the scenario is changed and the entity is an LLC, let’s say, then if the entity is sued and Joe is named individually, he would be afforded coverage via the policy since he is the owner/managing member of the LLC. See how this can be confusing and have a huge impact on who is and who is not covered? OK, so what if Joe operates the distillery as Main Street Distillery, LLC but owns the building under “Old Joe S Enterprises”? Well, how is the ownership structured here? Is it a subsidiary of Main Street Distillery, LLC dba Old Joe S Enterprises? If so, then I would hedge on the safe side and list it as such, but many miss this factor. Is it a separate LLC? If it is Old Joe S Enterprises, LLC then it could either be listed as an “Additional Named Insured”, a straight up “Named Insured”, it could be included to have coverage on the overall policy, or it could have its own policy. Ah, down the rabbit hole we go, HOLD ON!!!!!! Long-story-short, if you have never had the discussion with your insurance agent about what the ownership looks like, what the name of all of the entities are, and how they should be covered or separated out you could be in big trouble. Or … you could work with someone who has a tight grasp on all of this. Someone like me, InsuranceMan 2.0!!!, and you would know where you stand on this subject. Next we have the actual coverage, the meat and potatoes side of the policy. What you are actually being covered for and what that is based on. Again, a rabbit hole of impressive proportions in its own right. Simply put there are a few key coverage factors you will need to know about. They are as follows: General Liability Liquor Liability Property Coverage Commercial Auto Umbrella (maybe, depends on how big you are, lease contracts, distribution contracts, etc.) (and potentially) Workers Compensation. I say “potentially” Workers Compensation due to the fact that many distilleries that are starting out may not have that need as they may not have pay rolled employees, or if they do they may not be subject to work comp. It depends where you are located. See my post about Workers Comp here: For the General Liability it is broken out into roughly 6 different sections. Those sections are “Each Occurrence Limit”, “Personal and Advertising Injury Limit”, “General Aggregate Limit (Other Than Products – Completed Operations), Products/Completed Operations Aggregate Limit”, “Rented to You Limit”, and “Medical Expenses Limit (Any One Person)”. HOLY INSURANCE OVERLOAD, InsuranceMan 2.0!!!, “What does that all mean?!?!?!?!?”, you may be screaming at your screen. Well, in brief, your Each Occurrence Limit is the amount of coverage you would have for any one liability loss. Your Personal and Advertising Injury Limit would be the amount of coverage you have for any injury (physical) to a person or persons where as the Advertising portion would be if you were sued over saying something in your advertisements about someone else’s product tasting like caca and yours being superior. Then the Aggregate limit is the total amount of coverage that you would be afforded in any one policy period. So, if your per occurrence limit is $1,000,000 and your aggregate is $2,000,000 that means that the insurance company would pay out up to $1,000,000 for any claim, but never more than $2,000,000 in any given policy period. Clear as mud? No? OK, think of it this way. You have one claim wherein someone is injured and that claim is $900,000. Ooooo ….. yikes, that was dang near that Million limit, but you are ok, it was under. 6 months later you sustain a liability claim of $500,000. Boy Howdy, it is not your year! Well, due to the fact that you already used $900,000 of the million limit you may be concerned that only $100,000 will be covered. Not so! Because of the aggregate limit, the full $500,000 is covered in this claim. However, you now have had two instances that add up to $1,400,000 so you really only have $600,000 more in liability coverage to get you to the end of the year, and the way you are going, that may not be enough. The Products and Completed Operations Aggregate Limit works much the same way but this coverage only contemplated your products. So if someone were to be injured by your product, that would fall under this portion of the policy coverage. Somewhat easier, and there is more to say, but I will leave it there for the time being. Keep in mind that your General Liability premium and Products premiums are all based rated on your sales. Again, a rabbit hole that we don’t have time to go down but this is a huge pet peeve of mine. A L L sales need to be broken out and classified correctly, enough said. This is something that I find to be incorrect on about 80% of the policies I see that are not mine. I can fix this for you to make sure things are accurate, just give me a call to discuss this in detail. That bring us to the Rented to You Limit. This is for properties that you rent. WATCH OUT HERE!!!!!!! Most policies will give you $100,000 on the surface, and many of you are in lease situation where the building value you are in far exceeds $100,000. Many of the policies that I provide include an endorsement (you’re welcome) that replaces this $100,000 limit with a $1,000,000 limit. Ah, that’s better. But watch out for this, if there is no increased limit on this line item you could be in trouble. You can buy this limit up, but it will cost you some additional $$$$$$$. Last in the Liability section is Medical Expenses Limit (Any One Person) of $5,000. “Does that mean if someone gets hurt at my place, I only have $5,000 to cover their injury?” Great question my astute reader, but the answer is no. Medical Expense is kind of a sub-limit of the overall General Liability. This is for “nuisance” claims. If someone comes to your facility and slips on some spilled water (hypothetical) and twists their ankle and has to have it looked at and wrapped at the hospital, and the expense is $2,500 then the carrier would pay them that amount in exchange for them waiving their rights to seek further damages. If though, that same person who happens to be a concert pianist, slipped and fell braking their hand and now is claiming that they are going to be out of work for months on end, then it becomes a General Liability claim and would fall under that $1,000,000 limit. Now we are on to the Liquor Liability coverage. I know, I know … I hear it all the time, “But I only serve four (4) quarter ounce tastes, there is no way I can be sued for over serving under my Liquor Liability!” Well, read this: As for the Property coverage, this is where you are going to cover your assets. Your equipment, your building (if you own it), your contents, stock on hand, and miscellaneous items such as computers/boxes/labels/bottles/caps/corks/closures/etc. You are going to want to make sure that this figure is accurate for a few reasons. One, if something were to happen you want to make sure that you are reimbursed the correct amount so that you can replace your “stuff” and keep going. Second is that if this figure is not accurate you could face a co-insurance issue. Third is that you need to make sure that your product is covered correctly and adequately, especially if you are aging anything. The is so much more to this aspect but this is only a quick look at the overall coverage. If you want to know more about limits, co-insurance, deductibles, various coverage forms and what types of losses are covered, get in touch with me. How about Commercial Auto? If you own a vehicle in the name of the business, then you are going to want to place a commercial auto policy on that vehicle or vehicles. One, it protects you for a higher limit than you can obtain on a personal policy; Two, most personal policies exclude business use; Three, it protects the entity from lawsuits. You may be thinking that commercial auto does not apply to you because you don’t own any vehicles in the name of the business. I get that, but do you ever drive a personal vehicle, or ask others to do so for work related needs? If so, you have a commercial auto need. It is called Hired and Non-Owned (HNOA) Auto coverage. If you want more details go here: This brings us to the Umbrella coverage. What is this? Well, it truly is like an umbrella because it provides an extra layer of protection above the rest of the policies. Usually the limit is $1,000,000 and that is on top of your General Liability, Liquor Liability, Products, Auto, etc. So that $1,000,000 limit that you had, with an umbrella, is now $2,000,000. WHAT!?!??!!? SWEET!!!!!!! Yes, sweet indeed! However, it is truly only $1,000,000 as most umbrellas only provide an aggregate limit of $1,000,000 meaning that the limit really is just $1,000,000. Some reasons that you may consider an umbrella policy is that they are cheap, and they afford you a lot more protection. Maybe your operation is such that you are seeing many people in your facility, you do a lot of events, or your distribution area is so large that if there were tainted product and you could not recall it quick enough there would be the potential for a lot of claims. Who knows, but we can discuss that further if need be. Another reason would be that it is a requirement. Maybe the landlord requires you to carry $2,000,000 for any one occurrence. If that is the case, really, one of the only ways to achieve that is via an umbrella. Sometimes “big box stores” or distributors will require this in order for you to sell your products through them. Whatever the case may be, it is something to think about and have knowledge of. Last but not least is Workers Compensation. If you didn’t click the link above that references this, scroll back up after reading this and click on it to get a feel for what we are talking about. In that article it discusses what Workers Compensation is, who needs it, and why. I don’t want to regurgitate all of that here, so, if you think you have a need for this coverage, do yourself a favor and give it a look. OK, dearest loyal reader, there you have it. A brief (-ish) synopsis of an overall insurance policy, what to look for, what you need at a basic level of understanding, and some interspersed humor (hopefully, so that it is not as painful or dry). With that, I will leave you until next time. If you have questions, would like to learn more, or just want someone to bounce things off of (I am a superhero after all so things just bounce right off of me), give me a call, shoot me an email, or flip on the InsuranceMan 2.0!!! beacon and I will swoop to your assistance. Until next time dear reader … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

What a Glorious Tuesday Morning in ADI-ville!!!!!! A glorious day just in time to coincide with a glorious installment of the Tuesday Morning Insurance Tidbit. Yes, I know … YOU’RE WELCOME! As you see from the title, we will be delving into quite a few TLA's today. What is a "TLA" you may ask? Why, it is the Three Letter Acronym for a Three Letter Acronym (TLA)! In today’s installment of the TMIT we are going to be discussing something that is becoming more and more prevalent in today’s insurance marketplace. As you know from my posts like “The Times They Are a-Changin’” and “Standard vs. E&S”, there has been a tightening of underwriting guidelines as well as several carriers that simply are leaving the distillery insurance space which in turn is forcing several distillers to head into and Excess & Surplus (E&S) lines market. With that comes some positive aspects, but also a few negative, which brings us to today’s topic. When you deal with and E&S carrier a few things happen. First is you get a hold of an insurance agent (but not just any insurance Shmoe, no … do yourself a huge favor and get a hold of an expert, someone like, oh, I don’t know ….. Hummmmm ……… let’s see here now ….. ME!!!! Yes, InsuranceMan 2.0!!!). Second, that agent assists you in finding out what kind of carrier is going to be interested in insuring your distillery. Third, if it is either decided that you do not fit a standard carrier (maybe because the standard carriers have rejected to offer a proposal, or simply due to the insurance agent knowing that you will not fit due to location, exposures, etc.) the agent will employ an insurance broker to go out to the E&S markets in order to obtain a proposal for you. Fourth, the agent provides you with the proposals and you make a decision based on coverage and premium. Fifth, you sign all the paperwork and bind the coverage. Last … And this is where our topic for the day comes in, the last step is the insurance premium payment … Dun – Dun – DAAAAAHHHHHHHHH!!!!!!!!!!!!!!!! If you have been used to working with Standard carriers in the past, it is like running through a summery meadow full of flowers, fawns prancing about, the sound of a stream trickling in the distance. Standard carriers don’t want any money down or up front, they will send you a direct bill invoice, maybe in 30 to 45 days from the issuance of the policy, and then you have several weeks after that to make sure you get your first payment in, and then, just when you thought it couldn’t get any better, IT DOES!!!! They will break up the rest of the payments over the course of up to 9 installments and they may not even charge you a fee to do it!!!!!!!!!!!!! W H A T ?!??!?!?!! Is this insurance Heaven?!?!?!?! Who does this?!??!?!? Well, they do. However, as that one pretty smart dude stated a couple of years back in his Third Law of Motion, for ever action there is an equal and opposite reaction. I am pretty sure he was talking about insurance and this topic. E&S carriers are the complete opposite of Standard carriers. Not only do they want 100% of the money up front (a.k.a. Fully Earned Premium or FEP / all the premium / cash on the barrel head / the whole enchilada), they also will hit you with things like “broker fees”, “inspection fees”, and “taxes”. These items are also “fully earned”. Just when you though it couldn’t get any tougher, they also subject you to a 25% Minimum Earned Premium (or MEP). That means that even if you were to cancel the policy a few months in, they are going to retain 25% of the total amount of the premium plus all of the taxes and fees, no matter what! WOWZA! You ain’t in that Heavenly insurance field or in Kansas anymore, Dorothy! So, you have to come up with a huge wad of cash upon binding the policy and if you cancel you will lose 25% of the premium and all of the taxes and fees?!?!?!? Yup, sorry Charlie. The horror!!!!! So, what can be done?!???!?!?! Well, have no fear, InsuranceMan 2.0!!! is here!!!!! I always am keeping a vigilant and weathered eye out for your best interest, dear reader, and I have your back … and your solutions. There is a wonderful tool called a “Premium Finance Agreement” (PFA) and with that agreement it will allow you to make a down payment (although it still has to be the 25% of the premium plus all the taxes, fees, etc., ‘cause they are going to keep that no matter what) but then it allows you to break up the rest of the premium, potentially into 9 other installments. Well, THAT’S BETTER than having to pay it all in full. Although it is true that the premium finance companies are not just going to do this out of the goodness of their hearts, in fact, they are going to charge you an Annual Percentage Rate (APR) in order to provide you with this option. But again, I have your back. Because I work with so many distilleries and have such a good relationship with my premium finance company, I can often times get them to an APR of 7%-11% depending on the overall size of the account. Sometimes even less! Most agents and premium finance companies will hit you with a standard 12%-15% to start and I have even seen them as high as 24%. Heck, you may as well pay your insurance on a credit card at that point! A few other things to be wary of in your insurance dealings with E&S carriers would be the cancellation provisos. Some will offer a “Pro-Rata” cancellation term. This means that once your 25% (plus taxes and fees) money is used up, if you cancel (for example 9 months in), they will refund you any unused portion of your premium payment back in full. That is what you want! The one to watch out for is the “Short-Rate Cancellation”. In this method the carrier would retain a percentage of the unused premium that has been paid if you request a cancellation, and only refund a portion of your money back to you. No Bueno! As it is with most things, there are a lot of moving parts when it comes to your distillery insurance as a whole, but if you get into a situation where you are dealing with an E&S carrier, those moving parts increase exponentially. This is not something that you want the aforementioned Shmoe dealing with for you, is it?!?!??! NO! So get in contact with me, InsuranceMan 2.0!!! and let me put my expertise to work for you! Until next time, dear reader … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

Happiest of Tuesday Mornings to You, My Dear ADI-ers!!!!!!!!! Well, today’s TMIT is going to be fairly short and to the point (fairly). I am not putting up this post to Insurance-shame anyone, I am just addressing a particular issue that has been somewhat prevalent as of late. Let’s start with a scenario, shall we? You make booze. No, you actually are handcrafting a unique and individual spirit unlike those produced by anyone else. You have taken painstaking amounts of time to hone your mash bill, tweak your recipes and keep insanely detailed notes as to the overall distillation process. You put your heart and soul into what you do to make it uniquely yours, different and better than anything else available. YOU ARE A TRUE CRAFTSMAN! So, what if someone comes in to your distillery, tours around, sits down for a tasting flight and winds up saying something to the effect, “Yeah, the Vodka is OK, but not as great as Ti-o‘s though! Your bourbon doesn’t taste anything like Pen----n or J- -k.” (Yes, I know that neither of those are bourbons, that is the point here folks!) Your eyes may widen, you jaw may hang agape, and you may gaze deeply into the persons soul and think, “What the … ?!?!???!” Same can be said about what I do. I too am a craftsman. I too have taken painstaking lengths to hone my skills, to tweak my insurance recipes and keep insanely detailed notes to the overall insurance process to provide something completely different and better than anything else available, to make something that is uniquely yours! Crafting an insurance policy that no one else has, that takes into account all of the details of your unique and individual operation. So, when I hear things like, “Well, insurance is insurance, I don’t really know that you can offer me anything better than what I have.” I tend to have the same look that you might. “What the … ?!!!?” Has your current agent discussed your stock values and provided you with a spreadsheet that will calculate the correct values of your products regardless of the stage of maturation that they are in? Has your current agent taken an active interest in how your equipment is being valued and where it should be placed to get you the best insurance premium for your buck? I would say that for the most part the answer would be no. How many distilleries does your current insurance agent work with? Have they worked with 400+ distilleries across all 50 states and done import/export ocean-marine cargo policies for products being shipped overseas? If the answer is no, I think you can tell where I am going with this. God forbid, but if you or a loved one were ill and needed specialized care I dare to imagine that you would not run down to the GP doctor in town and say, “Well, I need brain surgery so let’s get this skullcap off!” NO, OF COURSE NOT! I have said it before and I will continue to say, you would seek out the best doctor in the specialized field and you would have them treat you. If you did choose to utilize the GP to treat you, well … you will probably get the results that you could expect, not so good. Same thing applies here. If you want to utilize a general practitioner of insurance, someone who writes shoe stores, a contractor or two, and a lot of homes and autos, you are going to get the results that could be expected. They are not going to understand the valuation of maturation (they may not even know what “maturation” is), they are not going to understand the difference between your tasting room and a bar, they are not going to take the time to dissect your overall business operation and make certain that each and ever aspect of off-site tastings, special events, gift shop sales, wholesale and retail sales are accounted for and how that may impact your overall premium. You very well may end up with a policy that is cobbled together with a carrier that may not be a good fit or the best use of your money, and in the case of a claim, well, if it was not done correctly you may be in a world of hurt. I always say that even if you don’t have the right insurance, you may have insurance anyway because you may have to get into a long and miserable battle of having to put in a claim against the agents E&O policy. In the meantime, and over the years that could take to settle, you may not operational and all your efforts may have been for naught. Is that a risk you are willing to take with your business, your passion, your life? If the answer is no, then I suggest at least letting an expert take a look at your policy. Let an expert dissect the coverage and ask the deep questions to see if you really have the coverage that you need for what you are doing. Each distillery is as unique as fingerprints, no two are the same. There is no catchall policy for every distillery. If you are uncertain as to what you are covered for, if the coverage has never been explained to you, or if you just bought a policy ‘cause you needed to have it, then it is time to bring in an expert. Unless you are the “put it all on the line” gambling type, I highly recommend that you get a hold of someone who has taken the time to go grain to glass at several different distilleries. To find someone that has spent nearly 20 years in the insurance industry who specializes in distillery insurance for nearly a decade. Someone that has been endorsed as the recommended insurance agent by ADI! Here, I am going to make that search easy for you, it is me, InsuanceMan 2.0!!! Heck, even if you just have questions about your current policy situation, I am more than happy to take a look at it, offer my insight and expertise, and if you choose to stay where you are at, OK. Dollars to doughnuts though, we will end up working together and have a great relationship. You may have tried the rest, now work with the best (I know, that sounds cocky and I really don’t want it to come off that way, but I have spent a very long time working diligently to understand all aspects of what you are doing as well as deep-dive into the insurance industry as a whole, so it is not cocky, I just really am passionate about what I do because I LOVE IT!) OK, end of rant for today. Was it a rant?!?!? Maybe. Was it informative? I think so. Does it clearly spell out that what you do is unique and truly different from everyone else? Yes, just like what I do for my clients is unique and truly different, something you likely won’t find anywhere else. Here is the best piece of advice that I can offer anyone that is either just starting out, has been distilling for a few years, or is a massive scale international producer, call 307-752-5961 and have a conversation. A no-obligation conversation. I guarantee, you will not be sorry. Until next time my friends …. Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

Happy Tuesday Morning, ADI-Land!!!!!!!!!!!!!!! I know, I know, you are probably currently undergoing some-sort-of anxiety as well as other physical symptoms of withdrawal associated with not having you weekly dose of the Tuesday Morning Insurance Tidbit for the last couple of weeks. Well dear reader, sit back, take in a deep breath, sip your coffee or what-have-you, and relax. I am back and you can rest easy knowing that the TMIT is back in all of its outstanding glory for your reading pleasure ….. You’re Welcome!!!!!! Yes, it has been a few weeks since the last installment of the TMIT and for that I apologize. As it turns out, InsuranceMan 2.0!!! was otherwise occupied administering superhero justice in a different capacity. Suffice to say, although it was not insurance justice, it was justice nonetheless and it was doled out in healthy, hefty amounts to the evildoers. With that said, let us get on to todays “Tidbit”. As you all are aware (unless you have either been under a rock or doing an insane amount of runs and bottling to get ready for the 4th of July sales) there have been a lot of sizeable disasters in the distilling world as of late. As you know, the Barton bourbon warehouse #30 that initially collapsed back on June 22nd ruined nearly 18,000 barrels of Bourbon. Despite attempts to shore up the warehouse and save what bourbon was left, those attempts proved to be unsuccessful as the rest of the warehouse came tumbling down on the 4th of July destroying the remaining barrels. Ugh, the horror!!!! Then on July 2nd we had the Jim Beam fire in Woodford County, Kentucky that destroyed 45,000 barrels. Again, THE HORROR!!!!!!!!!! This is just insane, people! Now, to make matters worse, an alcohol plume 23 miles long has spread down the Kentucky River from the runoff killing innumerable amounts of fish. Although Beam Suntory has brought in a team of environmental cleanup contractors and consultants the damage is far reaching and unfortunately far from over. As if all of this was not enough, back on March 5th of this year Sazerac had a 120,000-gallon mash spill in which not only was there a massive cleanup involved, but people were also injured. To this I truly say, OH THE HORROR!!!!!!!! Loss of property, damaged stock, and massive cleanup efforts are one thing, but injury to human life is undoubtably something that gives us all pause and is certainly “worst case scenario”. Things can be replaced, people cannot. My heart goes out! So, why am I bringing you all this doom and gloom in todays “Tidbit” you may be wondering? “I’m just a micro-distillery and I don’t have anything close to 45,000 barrels or 120,000 gallons of mash! What does this have to do with me?!?!?!”, you may wonder. Well, honestly, it has everything to do with you and here is why. Yes, although it is true that many of these larger disasters took place at the “big boy” distilleries and many of those are either self-insured or coverage is placed with a large reinsurance company, it still has an impact on all of us. Although the losses in these aforementioned cases may not have a direct impact on many of the insurance carriers that I work with, the overarching scenarios certainly do. Underwriters are a fastidious bunch and they pay a lot of attention to the news, especially when it has to do with an industry that they are providing insurance coverage for. Although the claims of these horrible losses may never hit my carriers P&L sheets, that does not mean that they are not paying close attention to the types of losses, the severity of the losses, and the frequency at which they are occurring. That is an interesting point. “Frequency” and “Severity” are two terms that are often batted around in the insurance world. Some may argue that it is better to have one event of “severity” over the course of many years than it is to have less damage but more “frequency”. Why is that? Well, in the world of insurance, it is not “if” you will sustain a loss, but “when” according to many actuaries (and you know how I feel about them if you have read my other posts). Generally, actuaries will say that everyone will have a loss at some point in time. And if you have never had a loss, then you are due to have one sooner than later. I don’t like that saying, but it is somewhat true. “Severity” is sometimes better in that if you have one large loss over the course of a decade it could be said that everyone is due to have a loss and that may not be as impactful to your premium as having multiple smaller losses every year or so. The reasoning behind this is, that if you are having losses more often, than there is potentially something inherently wrong with your process, safety protocols, or overall operation. Underwriters and actuaries do not like “frequency” in the slightest. These types of losses often have a greater impact on your overall premiums and can even lead to loss of coverage completely. Circling back around, these news stories and losses have an impact on the industry as a whole since they demonstrate that there is a potential for losses within the distillery business. Fire is of course one of the utmost concerns that carriers have when insuring alcohol. Alcohol is flammable and fire can spread quickly. In the case of the Jim Beam fire, they are hypothesizing that the initial fire was started by a lightning strike. Obviously, if lightning were the cause than this was not an operational or safety issue on the part of Beam Suntory, but it still resulted in an incredible loss. A loss that now is not just a loss of product, building, and value but now it is also an environmental loss, or a loss due to “pollution”. The point to all of this being that no matter your size of operation, things can and do happen. Things that more often than not are out of your control. Tanks leak, structures give way, fires break out, and people can be injured. If it can happen on a large scale at facilities who have been honing their skills for hundreds of years than it can certainly happen (albeit on a smaller scale) at any size operation no matter the precautions taken. Afterall, that is why they are called “accidents” and not “on-purpose-es”. Take for instance the matter of the Jim Beam fire. According to sources, the building was equipped with a fully functioning sprinkler system, yet the results were a complete loss. (ASIDE HERE … I have made this argument time and time again to underwriters, fire marshals, etc., that sprinkler systems do not stop these types of fires, if anything they only possibly mitigate the damage slightly, but I digress!) Could they have had lightning rods in place? Maybe. Would they have helped? Possibly. At the end of the day though, although this loss may have been due to an “act of God” (again, I don’t like that term. I would like to think that God, no matter your manner of religion, would never destroy so much delicious alcohol) and not due to their policies or procedures. A true “accident”. Accidents though are what drive insurance premiums and cause underwriters and companies to tighten up their already stringent underwriting guidelines. That is the impact on all of us. That is the issue at hand. This is why these losses are devastating not only to those who have sustained these atrocities, but to all of us in the industry as a whole. As I have written about previously (see: ), carriers have been undergoing an underwriting guideline tightening over the last 6 months or so and these stories certainly are not helpful. So, take heed and be warned, the difficult underwriting requirements that we have all been facing could potentially become more challenging in the months to come. So far, we have not seen an increased impact from these issues, but they are relatively new on the scene, but be prepared in the months to come. In the meantime, if you are struggling with your insurance coverage, need coverage to get up and going, or want to have a more in depth conversation about pollution coverage as it relates to the alcohol industry (especially if you are close to a natural body of water or waterway), just call on me, InsuranceMan 2.0!!! and I will zing to your rescue. Until next time dear reader …. Stay Vigilant!!!!!!! Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

***** UPDATE ALL ***** Please find all of my new posts under InsuranceMan 2.0 here on the forums. I may have moved to a new agency, but I am still here to assist you with all of your insurance needs. Call me at 307-752-5961 or shoot me an email at aaron@roaringforkins.com . THANK YOU !

Good Tuesday Morning fellow ADI-ers, In today’s installment of the “Tidbit”, I am going to address a topic that I have been running into more and more lately and it is of utmost concern. Specifically the issue of "Policy Identity Confusion". I kid you not, out of the last dozen or so policies that I have looked at from other agents, (and keep in mind, they are not insurance superheroes like me, InsuranceMan 2.0!!!, they are just plain-old insurance drones) I have seen this issue no less than 5 times! 5 TIMES, PEOPLE!!!!! That is almost half!!!!!! Goodnight, that is A TON, and it is scary!!!!! It sends shivers down my super-spine to know that this is happening. What am I talking about? Non-other than the scary and fearsome “Material Change of Risk” clause contained within the deep dark recesses of your insurance policies. Oh, this area of the policy is in the darkest, spookiest, musty smelling, nastiest, dankest, most cobweb-riddled area that only the most stoic of insurance superheroes dare tread!!!!!! Alas, I, InsuranceMan 2.0!!! not only will tread into this fray, but I will shine my bright beacon of insurance knowledge on it for you in order to make it wither and wilt in front of your very eyes so that you do not fall victim to it!!!! So, what exactly is this, what is a “Material Change of Risk”? A material change of risk, by most policy standards is defined as ”An act or omission by the insured or his representative (that means “your agent”) that constitutes material misrepresentation or nondisclosure of a material fact in obtaining the policy, continuing the policy, or presenting a claim under the policy; Increased hazard or material change in the risk assumed that could not have been reasonably contemplated by the parties at the time of assumption of the risk; Substantial breach of contractual duties, conditions, or warranties that materially affects the insurability of the risk; A fraudulent act against the company by the insured or his representative that materially affects the insurability of the risk”. OK, so now we know what the definition of this is, but what affect can it have on a policy? Who cares?!?! Well, you may care greatly if you fall prey to this proviso. If it is deemed that there is or has been a “Material Change of Risk” to your policy, the carrier could do any number of things. They could choose to increase your premiums pro-rata for the duration of the rest of the policy term (by a lot, in some cases); They could decline the payment of a claim due to this increased or prohibited change; Or they could outright cancel your coverage with the proper (albeit, short) notification. “Why are we even discussing this?!?!?! I would never intentionally do something like this!!” I know you wouldn’t, dear reader, I know you wouldn’t. Likely as well, your agent would not knowingly pull the wool over anyone’s eyes either, but sometimes these things can happen unknowingly, and sometimes, unfortunately, with knowledge. But, back to the original issue at hand, as well as those highlighted in RED above. What I have seen recently are distillery policies that have been placed with insurance carriers that improperly classify the type of business within the General Liability Class-code Section of the policy (this would be a “condition” that could “materially affect the insurability of the risk”). This is the section of the policy that shows what classifications of business you are covered for, how much premium is to be charged based on your sales figures, and the overall “meat” of your policy and coverage determinations. Ah, now this is all starting to come together, right!?!?!? I have seen many recent DISTILLERY POLICIES that have been classified under one of the following class codes: 51350 Beer, Ale or Malt Liquor Mfg. – In Bottles 51351 Beer, Ale or Malt Liquor Mfg. – In Cans 51352 Beer, Ale or Malt Liquor Mfg. – Not Bottled or Canned Yes, it is so much clearer now and you are tracking where this is all going, aren’t you? If you are a “DISTILLERY” but you are classified as a “BREWERY”, and that is what is shown in your General Liability hazard class schedule, and this is the determination of the premium you are paying for, do you think that could potentially result in a “Material Change of Risk”? OF COURSE IT CAN!!!!! As we all know, in simplistic terms, beer could be used to dowse a fire if need be. What happens though if that same fire comes in contact with Vodka for instance? Yuppers, big ol’ fire and things that go boom. As well, breweries typically are not prone to the ill effects of fire, whereas distilleries have a much higher risk and concern of fire. I dare say that if you have been erroneously classified as a brewery and suffer a loss as a distillery, that very well could constitute a “Material Change of Risk” and the carrier may deny the claim on the basis of this provision, leaving you in quite the lurch. Many times, this classification identity issue is not done intentionally, rather it is simply due to the fact that the agent handling the policy may not be familiar with working with distillery clients. They very well may figure, “Booze is booze, what’s the difference?” Maybe they really have no clue that there even is a difference and they really think they have classed this correctly. Either way, the policy is written for what it is written for, and there is no, “Hey, if this was a mistake, don’t worry about it” clause! The policy is the policy and the coverage is the coverage. I will say, I have also seen the seedy underbelly of the insurance beast as well, where an agent knowingly improperly classified an account to either beat the prior premium, or to make it fit a carriers underwriting guidelines in order to “make a sale”. FOR SHAME!!!!! Tsk on those evil-doers!!!!!! Regardless of how or why it was done, at the end of the day it is you and your business that could suffer the wrath of this policy condition and we don’t want that! Keep in mind that there are many insurance providers in the country that will write coverage for breweries all the live long day. Those same carriers that love breweries however have no tolerance to knowingly write coverage for a distillery. So, if you were placed with a carrier such as this, and you were improperly classified, chances are that they could cite this “Material Change of Risk” provision that is placed in the policy for just this type of circumstance. That could mean that you have to pay through the nose once it is figured out, or you could be cancelled or denied coverage. All rather bad situations! How are you classified? What classifications are on your policy? Do you know? Have you looked? What would happen in the case of a claim? As I always say, the worst time to find out what you are and are not covered for is after a loss has already occurred. You need to know, NOW! You need to be confident that the insurance company will be there for you should you ever need them. If you don’t know, if you are not certain, maybe it is time to call in an expert. Perhaps someone that knows these policies and carriers inside and out. Someone who has “Insurancevision X-Ray Powers”, that can see deep into the inner workings of your policy’s soul. Someone like … InsuranceMan 2.0!!! Until Next Time My Friends … Stay Vigilant! Aaron Linden a.k.a. InsuranceMan 2.0!!! (307) 752-5961 insuranceman2.0@yahoo.com

Good Tuesday Morning, Fellow ADI-ites, Ah … it seems as though Spring has finally Sprung here in Sheridanopolis, and fingers crossed, there will be no more of that flaky white stuff falling from the sky for many months to come!!! It is just a glorious time of year and the sunny skies are quite welcomed after such a long, cold winter. I hope that wherever you are, you are experiencing wonderful weather, and that you get a chance to get out and enjoy it. In today's installment of the “Tidbit”, I want to address a question that I have received quite a lot lately. The question of, “When is late too late?” What I mean by that is actually multifaceted, due to the fact that I have been asked the following questions: “When is it too late to obtain insurance?”; “When is it too late to get out of the insurance I already have?”; “When is it too late to make changes to my policy? Let me take these one-by-one in the order that they are presented. When is it too late to obtain insurance? The answer is “Never”. It is never too late to obtain insurance. Heck, I have even worked with folks that have been in operation for years that have never had insurance. Then, due to distribution requirements, or a change in business, etc., they need to obtain coverage. Truly, it is never too late to cover your ass ---- ets! I will say this, if you have been operational for a several years, a year, or even a few months, and you have not had prior coverage, it can complicate things a bit. Underwriters often times will ask, “Where has their coverage been prior to us?” When I tell them that there has not been coverage they often ask why. Then, through explanation usually we can get over that hurdle but there are a few things that need to happen in order to do so. Some carriers may want a “No Known Loss Letter” (or NKLL in cool insurance-ese language), or, some may choose to not offer coverage due to the fact that someone has been in operation without coverage and will ask that we come back to them after having a year of coverage under our belts. This can be an issue since it may throw that person into an E&S market for a year (or two), where they are going to end up paying a higher rate in order to prove coverage to a standard carrier later. If you have questions as to the difference between an “Admitted” or standard carrier and a “Non-Admitted” or E&S carrier, check out this posting that I put up a while back that explains it in all of its glory: Back to the question though, it is never too late to obtain coverage. Whether we have to go E&S, or if we can get it through a standard market, technically, you always need insurance coverage, really from day 1! Think about it. You have assets to protect, you have several potential liability issues that can arise, products liability issues, and you certainly have a liquor liability aspect that needs to be contemplated. Yes, I know folks that have run for 7 years without coverage and they have been just fine. It can happen. I also know some folks who have been up and running for a few months and have sustained a loss. In one case it was a pretty sizable loss to their equipment. It was the kind of loss that would have wiped them out had it not been for the insurance coverage that they had in place. Some may say that it is too late in the case of not having coverage and then sustaining a loss. I can understand that thought process, that it is too late if you have a loss and no coverage to pay for it. I personally would argue though, that it actually may be an opportune time to procure coverage so that you can make sure if a similar situation arises, you will be covered. Silver lining and all! That brings us to the next question, “When is it too late to get out of the insurance I already have?” Great question, dear reader! The short answer again is “Never”. It is never to late to get out of a policy that is either incorrect, does not provide adequate or accurate coverage, or one that is costing WAY too much premium. However …… it all depends on if it is a “standard” or “non-standard” policy. UGH! Here we go again with all this nonsense. Here is the quick “skinny” as to the difference and why it matters. Standard carriers will allow you to cancel a policy at any point and refund you any unused portion of your premium. What this means is that if you paid the policy in full but decide to cancel your policy 5 months into the coverage period, they will refund you the 7 months of unused premium that you paid in. Cool, right?!??! That is nice of them. E&S carriers operate a bit differently though. Most, if not all E&S carriers, have some built in costs and clauses that ensure they retain some of your premium for their efforts of writing your coverage. E&S carriers have things such as “Minimum Earned Premiums”, or MEP’s (again, cool Insurance-ese language for you to impress your friends with! Yet another reason to ready these riveting articles provided by InsuranceMan 2.0!!!) MEP’s state that you owe 25% of the total premium to the carrier regardless of when you cancel your policy. How about an example? OK! Let’s say that you purchase a policy from someone that does not really understand distillery insurance (this happens ALL THE TIME!). You get the policy and as you look through it you find that there are several things missing, or you have been classified incorrectly. In a rage, you slam the policy dramatically to the table, grab your phone, and feverishly dial up InsuranceMan2.0!!! to get my expert take on your policy. Through conversation we find that this policy that you have paid a ton of money for is not worth the paper it is written on. FRUSTRATING!!!!!! To further add to your ire, we discover that you have a 25% MEP which means that the carrier is going to keep 25% of the total premium of the overall policy even if you cancel. UGH! To further cause your blood to boil, we also discover that you have been charged taxes and fees (very common for E&S carriers) that also are non-refundable! Grab the antacid!!!!! So, what does this mean? It means that if your policy was $12,000 a year (ease of math sake, again. I just don’t like math all that much), the carrier is going to keep $3,000 of your premium dollars even if you cancel in the first few days, or months. As well, any taxes and fees (this amount could be $1,000 when totaled) are not refundable since they are due at inception of the policy. The long-and-short of this means that you are obligated to pay about $4,000 in premium no matter what. If you break that down into “months”, this basically means that you are obligated to stay with this carrier for about 3 1/3 months. Does this mean it is too late to get out of the policy you don’t want that does not provide the correct coverage? Not necessarily. I have worked with clients where we have been able to provide the correct coverage for them, all while saving them enough money to make it a wash, or close enough to it for the first year, that it was advantageous for them to make a switch early on. As well, as the coverage period continues, the amount of premium you might negate dwindles. Thereby, if we wait a month or so to get the policy rewritten, the blow becomes lessened due to the fact that you would have owed that premium anyway. Depending on your unique situation, it may be advantageous to make a change earlier than later. Or, you may have to wait until all of those initial premium dollars are used up, with the taxes and fees, and then make your move. It is still never too late to get a jump on it though, so we are poised to make the switch when it becomes financially advantageous to do so. Last but certainly not at all least is, “When is it too late to make to make changes to my policy?” Three guesses as to what the answer is! You really don’t have to be “Jeopardy James” to get this one correct! Come on, what is your answer?!?!?!?!? “What is, ‘NEVER’?” “Ding, Ding, Ding!!!! Right again!!!! Tell ‘em what they’ve won!!!!!!!!!!!!” “You have won an exclusive trip to ‘Insuranceopolis’ where you get to meet InsuranceMan2.0!!! and get a fully comprehensive analysis of your insurance needs!!!!!!!!!! This incredible prize package is worth … well, it is priceless actually!!!!!!” Truly, it is never too late to make any changes that you deem fit to make to your policy. Insurance policies are dynamic, living documents, really. You can add coverage or remove coverage for your policy at any given time. Your needs change throughout the course of a policy period, and you should be able to make adjustments at any time that you like. If you add coverage to your policy however, it may result in additional premium that you will owe (sometimes in full, sometimes over the course of the rest of the policy payments for the year.). If you take coverage away or reduce it, it will result in a premium refund that will either be paid out to you in full (if you paid in full or are close to the end of your policy period), or be applied to any future premium that is due. In closing, it is never too late to get insurance, it is never too late to get out of your insurance if it does not fit you correctly, and it is never too late to make changes that you need to your insurance. As well, plot twist, it is never too early to start working on your insurance needs either. Whether you are coming up on a policy renewal, just getting ready to start a distillery, move into a facility, or are ready to drop your first ounce of distillate, you need insurance. The sooner you start thinking about it, the better. Life is easier when you can check insurance off your list, and I, InsuranceMan 2.0!!! am just the person to get it done! Until Next Time My Friends, Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

Good Morning A D I !!!!!! Ah, here we are again, Tuesday! Where does the time go?!?!!? It seems like we just had last week’s installment of the “Tidbit”, but here we are again. I truly do hope that you enjoyed your long weekend and took the time yesterday to remember all of those who have severed our great nation. Freedom most certainly is not free, and so many have given so much, and we all need to remember that daily, not just on Memorial Day. To those that have served, no matter the capacity, THANK YOU! You allow us to do what we do and enjoy being able to do it in the greatest country on earth! With that, let us get on to today’s installment of the Tuesday Insurance Tidbit. Today I have something very special on tap for you … a delicious serving of Workers Compensation! Mmmm … Doesn’t that sound tasty? From the aroma, to the way the light glistens off of it, to the full-bodied texture of the policy … who doesn’t enjoy a good taste of Workers Compensation now and again?!?!?!?! Workers Compensation, Work Comp, or WC, as it is known, is often viewed as a “necessary evil”. Why is it a necessary evil, you may wonder? The reason for this is because for many distillers, brewers, vintners, etc., it is a “must have”, and for many it can be one of the most expensive policies that you are required to purchase by state law. So, what exactly is WC? I am glad you asked! At a very high-level view, Work Comp is a type of insurance that assists in providing a type of wage replacement, as well as medical benefits to your employees if they are injured in the course of their job/duties while working for you or your business. You provide (and in most cases are required to provide, as we will see) the employee with workers compensation benefits in exchange for the employee’s relinquishment of their rights to sue you or your business for injuries sustained while on the job for any tort negligence. Although various states have different requirements, WC policies generally provide for compensation for lost wages due to injuries, as well as reimbursements for medical bills due to work related injuries, and in some cases, pay benefits to dependents of a worker if they are killed in the course of their job duties. WC is typically “compulsory” in most states. For those of you recovering from a long weekend, that means it is required by law. There are exceptions to this, however, but Work Comp is always a good idea, and it is one more protection for your most valuable assets, your employees. Workers Compensation rates are created based off of several different areas specifically with your individual business in mind, and are based on your specific business. This is known as your “experience rating”. The experience rating compares your business to other business’ in the same industry grouping through an averaging of these rates. Each individual business is compared to the industry grouping as a whole, which is known as an “experience modifier”, “Ex. Mod.”, or in super-cool insurance-speak, “X-Mod”. (Not to be confused with “X-Men” which is a Marvel trademarked bunch of other superheroes that are not associated with me, your all-knowing and loving InsuranceMan 2.0!!!) If your business has a better loss ratio than the grouping as a whole, then your X-Mod. would reflect that on your rating sheet. However, if your losses are greater than the average, then your X-Mod. would be higher than the average and that will also be reflected and drive your premiums to be higher than others in the same grouping. The reasoning behind this is due to the fact that it provides an incentive to control work related injuries and keep them to a minimum. The less injuries/claims, the lower your premiums. Also, it encourages employers to return workers back to their duties as quickly as is permissible. Obviously, this is calculated by our favorite folks, the actuaries (read my past posts to get a feel for these people) to make sure that enough premium is being charged in order to offset any potential losses. OK, now you may be thinking, “So what does all that really mean to me?” Again, so inquisitive, dear reader. Well let me tell you what it means. The premium calculations are determined by multiplying your rate times each $100 worth of payroll. “In simple math, please!” Right! Sorry. This means that if you have $250,000 in payroll, you would divide $250,000 by 100, equaling 2,500. Pretty easy, right?!?!? Well, not so fast. That is only known as the “manual premium” in WC terms. Cool, huh? Who knew you would learn so much? InsuranceMan 2.0!!! knew it, that is why I write these for you! The manual premium is only an indication at this point and has not yet taken into account your X-Mod. discussed above. So now what happens?!?! Well, X-Mods. are typically based on a 3-year loss cycle, also known as an “experience period”, but they are generally calculated each policy year. X-Mods. have an average rating of “1”, meaning that a rating of 1 is right in the middle of the pack. Not good, not bad, but average, just as you would assume. If you have been in business for 8 years with no losses, your X-Mod. could be below a 1. If you have been in business for 3 years with several small losses, or one big loss (An aside here, it is better to have one large loss then several small losses. It is a “frequency vs. severity” issue. I may discuss this at a later date), you may have an X-Mod. much greater than 1. See, again, it is all based on your individual and specific business and your history. A simplistic example of this would be that you have been in business for 3 years and you have typical losses and your X-Mod. is a 1. Given the above payroll of $250,000 then, you would divide $250,000 by 100 giving you $2,500. You would then multiply the X-Mod. of 1 against the 2,500 and end up with 2,500 x 1 = $2,500 in premium. (Do keep in mind here that carriers will often charge some other associated premiums or fees to offset the state guarantee fund or for other reasons, but we are just trying to keep this simple, Mmm-kay?) Another, more advanced example would be you have been in business for many years, but due to some workplace incidences, your X-Mod is a 1.75. You would then take the above payroll of $250,000 and divide it by 100 giving you the same 2,500. Now though, you would multiply the 2,500 by 1.75 and end up with $4,375 in WC premium. Ah!!!!! Now you can see the incentive to keep your accidents/injuries lower. By keeping your accidents/injuries lower via training, safety procedures, etc., you could have saved yourself $1,875 annually in work comp premium! Again however, these are fairly simplistic examples and real Work Comp policies contemplate several aspects of payroll. For instance, if your $250,000 in payroll is comprised of $50,000 for bookkeeping, $150,000 of distillery operations, and $50,000 of bar/tasting room payroll, then each of those would be broken out into their own classification and rated independently based on each of their own X-Mods. MAN, THIS IS SO COOL!!!!!!!! Sorry, my “insurance-nerd” is showing! *****WARNING: COSTLY INSURANCE PITFALL ALERT AHEAD ***** The above-mentioned is one of the biggest areas in which inaccuracies can arise and result in a costly mistake. Potentially a several thousand-dollar mistake! Be careful here! Some classification codes through the National Council on Compensation Insurance, or NCCI, can be split out by the amount of payroll that a multi-functional employee severs, and some cannot! Let’s say that you have an employee that spends some of their time in the distillation operations, and some time working the tasting room. “Well, I will just split their payroll out by how much I am paying them for each function, right?!?!?!” Well, maybe right, maybe wrong. In the case where you have an employee (or several) that perform multiple functions (and we all know that this happens, jack of all trades around the distillery), their payroll may be able to be split between each function, maybe not. The NCCI may have exclusionary terms in their definitions that state if an employee is doing other associated tasks, then those are either needing to be contemplated in the highest hazard code, or they may have to be split out. Super confusing, right?!?!? An example is as follows: 2130 SPIRITUOUS LIQUOR DISTILLERY – Includes grain alcohol manufacturing. Warehousing, blending, rectifying or bottling to be separately rated as 2131 – Spirituous Liquor Bottling. CROSS REF. Alcohol Manufacturing – Grain – All Operations. As you can see, if your employee is engaged in distilling only, we would classify all of their payroll into the 2130 category. However, as you can see in RED, if they are warehousing, blending, rectifying or bottling, those would need to be separately classed under the 2131 classification. Well, what if they are working the tasting-room as well?!?!? Then we have to allot the correct amount of their payroll to that role as well! Again, sometimes you will get into a situation where their entire payroll has to be classed into the highest rated job hazard that the employee performs, sometimes it can be split out, but you better make sure you (or your agent) know which-is-which so you can avoid spending too much, or not enough! Cue the music as the dreaded “Audit” is about to take place!!!!! I know this is getting long, but I am here to inform, and that does not always just happen in a few paragraphs, so stick with me, we are almost done. Now, with all of that amazing information given above, you must also keep in mind that each state has its own set of governing requirements and regulations. Some states require EVERYONE be covered; some states don’t care. It may depend on if the employee is full-time or part-time. Other states only have WC policies that can be purchased directly from a state governmental entity. Most states fall somewhere in between. Here are some quick examples of varying regulations to illustrate the point: ALABAMA: Only employers with 5 or more employees (including an officers) are required to carry WC; ALASKA: Any business with 1 or more employee must carry WC; California: All employers must provide workers compensation, only Sole Proprietorship with no employees may opt out; Illinois: Workers Compensation is required on all employees, even if it is only (1) part-time employee; Indiana: All employees must be covered, but Sole Proprietors, Partners, and Managing Members may opt out of coverage; Kansas: WC is mandatory for any employee making over $20,000 annually; Massachusetts: All employees, including owners must be covered; Minnesota: I throw this one in because it shows how weird and specific this all can get! Check this out: 2018 Minnesota Statutes 176.041 EXCLUDED EMPLOYMENTS; APPLICATION, EXCEPTIONS, ELECTION OF COVERAGE. Subdivision 1.Employments excluded. This chapter does not apply to any of the following: (15) persons employed by a closely held corporation who are related by blood or marriage, within the third degree of kindred according to the rules of civil law, to an officer of the corporation, who is referred to in clause (7), if the corporation files a written election with the commissioner to exclude such individuals. A written election is not required for a person who is otherwise excluded from this chapter by this section; WHAT IS UP, MINNESOTA?!?!?!?! ”… within the third degree of kindred according to the rules of civil law …”?!?!?!!?!? Wow, they are super-duper specific here! It actually has a lot to do with farming/agriculture if you must know, but again, you can see how varied the states are. Texas: OPTIONAL! Ah, good ol’ Texas!!! They ain’t gonna’ have nobody tellin’ them what to do! In Texas, the only WC that is required is if you are in the construction business and you are having your employees on a governmental work site. Let us not forget North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the US Virgin Islands. Those states/territories are considered “Monopolistic” states whereby the only workers compensation insurance policies must be provided by the state plan. This brings up other issues such as “Stop-Gap” and a few other items, but I am not going to get into that here. If you are in one of these places and you have questions, you know that you can call me. Last but not least is the question of “volunteers”. UGH!!!!!!! “InsuranceMan 2.0!!! MY BRAIN HURTS … STOP!!!!!!!” I know, I know, dear reader. I often use my powers of droning on about insurance to vanquish my arch-nemesi, but I don’t want you to suffer, my dearest friends, so I will be quick. In regard to volunteers, first, check with your state department of labor if you have questions. Their contact information can be found here: http://www.dol.gov/whd/contacts/state_of.htm ). In many states, volunteers would be considered guests or permissive users, and nothing really has to be done. If they get hurt, it would more than likely fall under your overall general liability, but be careful! In other states, volunteers may need to be added to your WC policy via a “Volunteer Worker Endorsement” but this can cost you. Often times this is the best way to make sure your “bottling party” folks would be covered if they are injured, but there is often “assumed wage” language whereby you would be charged a premium as if these folks were making the “assumed wage” of what an employee doing this task would normally be making. Basically, in the end, given the role that each employee serves, to if their payroll can be split or not, to who is required to be covered, to where you can even purchase coverage from, to ensuring volunteers can come in and assist you, there are a lot of things to consider. Do you want to try and figure this out on your own or do you want someone with Insurance-Superpowers to come to your assistance?!?!? We all know the option you are thinking in your minds. That is why I, InsuranceMan 2.0!!!, am here to save the day!!!!!! I think you should be getting in contact with me, don’t you? Until next time, dear reader … Stay Vigilant! Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

Happy Tuesday ADI-Land!!!!!!!!! Holy Moly! Between the wicked and wild weather that is currently plaguing the central US, to the downright cold and wintry weather here in Sheridanopolis, to great white sharks in NYC, it makes one wonder to one’s self, “Self …” I think to myself, “ … what in the world is happening!?!?!?!” Then my thoughts snap back to insurance, because it all boils down to insurance at a grass roots level. Am I right?!?!?! “How is the great and all-knowing InsuranceMan 2.0!!! going to make any of that relate to this installment of the ‘Tidbit’?”, you wonder. Well I am glad you asked. In this installment of the tidbit, I am going to magically weave all of these aforementioned items into an insurance lesson tapestry, for your reading pleasure. First and foremost, the wicked weather in the central part of the US. Many of us view insurance coverage as coming into play if we have maybe done something (or not done something), and it results in a injury to a person or property. Maybe a fire, or slip/trip-and-fall at our business. Oddly though, many insurance claims come at the hands of Mother Nature herself. According to The Travelers Companies Inc., more than half of all claims from 2009 to 2015 were weather related. Interestingly, 25% was due to wind; 15% was due to hail, and the other 19% (I will do the math for you, that is 59% 😉 ) was ice dams/roof leakage/water damage, etc. Dang! Although fire damage is the most costly of all damage, as you can see, weather related insurance claims make up nearly 3/5ths of all claims activity. With the amount of rain, tornadic activity, hail, and strong winds that is currently happening it makes one realize that insurance coverage is incredibly important during times like these. “Acts of God” as they are called are the leading cause of all claims, yet many do not think of insurance in this way. A more common worry may be an auto accident, or the previously mentioned slip/trip-and-fall. In reality, most claims situations come from things that are far beyond our control. Are you insured correctly for these instances? Does your policy cover you for flooding? Is there a wind/hail exclusion on your policy? If this has made you set down you lowball and go scrambling for your insurance policy that is good … and bad. It is good because it has you thinking and wondering what is in your policy. Opposite that though, it is bad because you didn’t know! I’m not “policy-shaming” you here, but if you don’t know, why don’t you know? That could be the fault of your agent not explaining it to you or taking the time to let you know. What if there is a wind/hail exclusion and your distillery is the victim of a tornado and all your precious bourbon is now broken open on the floor and riddled with hail???? Well, grab a straw and get to slurping, because that is the only thing that is going to console you at the end of the day because if that is the case, you don’t have the coverage in place that you should have. Now, with that little bit of unpleasantness behind us, let us turn our attention to the cold that is gripping us here in the western part of the US. Did you know that according to the Insurance Information Institute, 18% of all water damage is due to water damage from frozen and burst pipes? Yeppers, you heard it here first. The cold can wreak havoc on your business, especially at this time of year where it should be warm (PLEASE BE WARM SOON). I have had insureds that have turned their heat off because it is springtime, only to succumb to a claim because of a freak cold snap with freezing temperatures that cause their pipes to freeze and burst. No bueno! Again, this is a situation that we may not have much control over. It is usually nice and warm at this time of year and therefore commonsense would tell you that it is ok to turn off the heat since it almost June for cripes sake. Well, although we have some control and we could have left that thermostat turned up, we were not planning on this horrible, miserable, cruddy cold weather. Next thing you know, BAM!!!!!!! Water claim. This brings us to our last item for this article, sharks in NYC. “Oh, yeah! How is InsuranceMan 2.0!!! going to tie this in?!?!?! I cannot wait to see this one!!!!!”, you say to yourself aloud. Ha! Never doubt my powers of relating all things to insurance, dear reader. My insurance-superpowers know no bounds. For this scenario let’s assume that you have a distillery in the northeast. Let us also keep in mind that Memorial Day is just 6 days away. Let us also say that your head distiller decides that they are going to go to the beach for the long weekend. Pack a picnic, grab a sample bottle or two from the tasting room and hit the road. They get to the beach, settle in, have a little swig from the bottle, and soak up some sun. Ahhhhh … This is the life!!!! After some sun-soaking, your head distiller gets a bit hot and decides that they are going for a quick dip in the ocean. UH-OH, you can see where this is going!!!!!! Yeap, que the music, because your head distiller is about to become a tasty little shark-snack in the blink of an eye … or in this case, the snap of some seriously powerful jaws. Did you have “Key-Person” insurance on them? What is Key-Person insurance anyway? Again, I am glad you asked. Key-Person insurance, at its most simplistic level, is a life insurance policy for a key employee, business partner, or even spouse that you, the owner of the company, can take out on key individuals, you pay for the premiums, and become the beneficiary in case something like this shark-snack scenario takes place. Why would you have such a policy? Wow, you are inquisitive today, aren’t you?!!!? Well, as the beneficiary of the policy, if the unforeseen happens, you receive the proceeds of the policy and can then use them to find a replacement person (but really, who can really ever replace INSERT NAME HERE), pay off debts, maybe settle with other investment parties, or in the worst case, assist in the liquidation and closing of the distillery. Often time, key employees are your most valuable asset, yet most do not choose to, or know they can, insure their most valuable of all assets. It is certainly something to consider and it should be something that you work into your insurance portfolio if you are in this type of a situation where your business really revolves around one or two main employees/investors/business partners. With all of those depressing scenarios, that brings us to the end of this installment of the “Tidbit”. I did not write this to bring you down, or wring your hands worrying about all the crazy horrible things that could happen. Rather, I wrote this to get you thinking that there are so many situations that are out of our control, so many things that no matter how careful you are and how much you plan, losses can happen. “Yeah, but I have always had good luck and nothing like this has ever happened to me!”, you may be thinking. Well, I will tell you what an actuary would say (BTW, actuaries are like a mix of funeral directors and CPA’s, but without a personality) … “If you have not had a loss in many years, or ever, then you are due!” If this has set you in to thinking about what is or isn’t covered, or if you don’t know if your policy is protecting you for the unforeseeable, or if your agent never speaks to you and only sends you invoices, then maybe it is time you drop me a line. InsuranceMan 2.0!!! is always here to help!!!!! Until next time my friends, Stay Vigilant, Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

G O O D M O R N I N G A D I ! ! ! ! ! ! ! ! ! In today’s instalment of the “Tidbit”, we are going to cover the differences between “Named Insureds” and “Additional Insureds”. Sounds amazingly wonderful, doesn’t it?!?!??!? Ok, no, it does not really sound that interesting, but it is something that people have a hard time understanding, and I do get a lot of questions about it, thus making it the “topic du jour”. Let us begin with Named Insureds. What is a Named Insured? Well, in a quick synopsis, a Named Insured is the individual or company listed within the Declarations of the policy. Named Insureds are the people or the entity that the policy is written for. In fact, in the policy language it will define the Named Insured to mean you and your, meaning that the coverage is specified to cover the entity or those encompassed under the entity. Officers of the entity are covered without being named individually or specifically, as are employees acting on behalf of the entity, but only while engaged in conducting business on behalf of the entity. Heck, even volunteers can be covered while acting on behalf of the entity! Being a named insured offers the broadest level of coverage provided by an insurance policy. Sounds nice, right?!?!?! Being a Named Insured gives you the broadest coverage, which is a great thing to have … but there is more. It also comes with some duties and responsibilities. Hey, if you are the Named Insured and you are getting the broadest coverage, you are going to have some obligations as well, right?!?!?! Ain’t nothin’ free! So, what are some of your responsibilities as King Of The Insurance Policy? Well, for starters, the policy is going to specify that it is your duty to report any claims, or potential claims to the carrier. Usually this is done via your insurance agent, but in many cases, you can provide the claim directly to the insurance company, if you so choose. I would encourage you to at least loop in your agent though, so that they are not blindsided by a claim, especially if it is something fairly significant. As well, your agent can assist you in getting the claim handled in the best way possible, stay on top of updates, and be your advocate to the carrier. Another duty of the Named Insured is to keep all of the pertinent records and other necessary information that the carrier may need in order to properly rate premiums, handle audits, and in most cases and most importantly, pay the bills. Oh, it also allows you the ability to change the policy at any time or cancel it, no one else has that ability. OH THE POWER!!!!!!!! “Can there be more than one Named Insured?”, you may be asking. I was just pondering the same thing! Weird, its like we are insurance best-ies. Like, we totally finish each other’s insurance thoughts. So cool!!! As it turns out, yes, there can be. There are actually several instances where you may have common ownership in several different entities and due to the nature of the ownership, they can all be listed on one policy. Let’s say you have your distillery under one entity name, but you own the building in the name of another entity (with common ownership) but lease it back to the first entity, and you have a distribution entity as well. All of these entities can be insured under one policy as Named Insureds! Man, this is so great, right? All of this insurance knowledge in one place, who knew?!!?!?! Well, just hold on one hot second here before you get to excited and call all of your friends to bestow upon them all of this great information. As with most things in life and for sure most things “insurance”, there is a catch. Although you CAN list multiple Named Insureds on your policy, the big question becomes SHOULD you? Why would you not want to list every entity on one policy, wouldn’t it make it easier for everyone? One premium to pay, one policy that has all the information on it, one “go-to” for all your needs? Yes, that sounds like a great idea, dear reader. However, one of the biggest reasons why you may not want all of the entities listed as Named Insureds is due to the fact that the policy limits do not increase exponentially based on the number of Named Insureds. What I mean is, just because you have three Named Insureds, that does not mean that each one of them is afforded their own $1,000,000 worth of coverage in the case of a claim. By naming all three entities in the example above, it does not make your $1,000,000 occurrence policy into a $3,000,000 policy. Quite the opposite in fact. What ultimately ends up happening in a claims situation that can legitimately name each entity, is a sharing of that $1,000,000 limit. If there were a situation that arose that named the distillery entity, the building entity, and the distribution entity, then effectively each would only have about $333,333.33 worth of coverage available to them under this policy. (Please keep in mind, this is a very simplistic illustrative example. Depending on the claim, amounts, percentage of damages, etc., more coverage could be available to one entity over another, but the fact remains that there is only one amount of available limit across all Named Insureds). That alone is a pretty big reason as to why you may not want to have multiple Named Insureds on a policy. Then there is the hotly contested “First Named Insured” debate. Does the First Named Insured have first right of coverage over any other Named Insureds, and if so, which entity should be named first and how then do you determine the order of the rest of the Named Insureds. Furthermore, you don’t even want to get me started on the possible tax implications, severability issues, cross-suits, etc. What this really means is, at the end of the day, it may be best to have each entity procure its own policy that is solely responsible to only one Named Insured. This then provides the entirety of the specified limit to only the one Named Insured listed and keeps you from having to worry about a suit that can name each individual entity, since they each would be covered on their own. Of course, if you are still desiring one policy naming all of your entities, the issue of splitting limits can possibly be overcome by the addition of an excess or umbrella policy. A simplistic example of this would be, if you were to place an excess policy of $2,000,000 on top of your $1,000,000 policy (and name all the same Named Insureds in the correct order, make sure that it was follow-form, among many other very specific parameters), and all the stars align, then you essentially would have a $3,000,000 policy giving each entity their own $1,000,000 in coverage. Again, there are a lot of things that need to happen, and boxes checked in order to make this happen correctly. That paired with the fact that excess policies usually cost around $1,000 per $1,000,000 of coverage, you may not be any money ahead by doing this. Being that there really may be no cost benefit (or very little) in the excess / umbrella scenario, I would reiterate that it is probably best to have separate policies for each Named Insured. OK, so what is an Additional Insured then? I am glad you asked. An Additional Insured is someone, something, another individual or entity, that is added to the policy due to your business relationship with them. This is usually done for a specific job or task, or for a limited time, location, or limited business function. Most Additional Insureds are added to the policy via an endorsement due to the nature of their relationship with the Named Insured. An example that I have dealt with on many occasions is in regards to distributors or suppliers. Let’s say that you have the opportunity to sell your product in a “big box store” that means a lot more revenue for you (yes, I know, selling to big box stores means having to do so for less than you would sell to other places, but just humor me here). That big box store is going to tell you that in order for you to sell your product through them, they are going to want to see proof of liability coverage, maybe an excess policy, oh, and by the way, they also want to be listed as Additional Insured on your policy. Or maybe it is a much smaller scale. A local farmers market is going to host a total of 6 – once a month markets and for you to show up and sell your spirits, they want to be named as an Additional Insured. In either situation what this means is that if your actions or your product somehow cause damage to person or property, and you are sued along with the box store/farmers market, that your policy will provide coverage on behalf of the Additional Insured. So, let us hypothesize that you are at the farmers market and leave a box of bottles out in the middle of where everyone is walking (silly you 😊 ), and someone trips over it and gets hurt. They in turn decide to sue you, and name the farmers market organizers as well. Being that you named the farmers market on your policy as Additional Insured, your policy is going to respond to the claim brought not only against you, but for the farmers market as well. That was nice of you, to give them insurance coverage for your boneheaded move! Again, in this situation we see a split of coverage. Just because we have a Named Insured and an Additional Insured does not mean our overall limit increases. It is actually used for both suits, thereby essentially reducing your overall limit. Scary! Again, this is why there are excess / umbrella policies available. Additional Insured status is very commonplace in today's world. Whether it is the request of a landlord, an event holder, a distributor, etc., everyone asks for this and usually gets it. It is how business is done, and really, it is just a layer of protection for them in case you do something that causes an issue. After all, why should they be on the hook for some goofy thing someone else does?!?!?! With that said though, do you require Additional Insured status from your glass provider? How about from your grains distributor? Hummmm???? Interesting. Have you ever thought of that? Have you ever considered being an Additional Insured … why would you do that?!?!?!? For many reasons, that’s why!!!! What if the glass provider sends you glass that is impure or has a defect causing it to break easily and harm someone???? Your product did not cause the glass to break and cut someone’s finger off, but your name sure as heck is on the label, and you can rest assured that old four-finger Joe (as he is now known) is going to pick up the phone and dial up (very carefully, as now he is healing from his lost digit) his lawyer and say he wants to sue whatever name is on the bottle. Well, if you had your glass provider name you as Additional Insured, you could turn this claim over to them to have them handle it since your product and you did nothing wrong. You can kick back and raise a glass knowing that you are being taken care of and the claim will never hit your loss report. SWEET VICTORY! (except for four-finger Joe, it wasn't so great for him) I know there are many moving parts to all of this, and so many items of confusion as to who is what, and what applies to who, and what limit is whose, and which what is where. Keep in mind, we didn’t even discuss primary and non-contributory, or waivers of subrogation. When it is all said and done, you are not in the business of knowing or having to know all of this crazy boring insurance stuff. You are in the business of making delicious distilled spirits, and bless you for doing so!!!!!!!!! You don’t want to have to know all of this, or worry about any of it, that is why you need to allow me, InsuranceMan2.0!!! to handle all of your insurance needs. And with that, dear reader, your head is probably swimming and I dare say, you probably need a nap (if you didn’t get one half way through reading this). I will leave you for this week with this thought … Has your insurance agent ever gone into this kind of detail for you? Could they? The really big question is, would they???? Well, I do, I can, and I do it weekly. Imagine if you had that kind of insurance power in your back pocket. Well, that is what you get when you deal with me, InsuranceMan2.0!!! Until next time, dear citizen …. Stay Vigilant, Aaron Linden a.k.a. InsuranceMan2.0 307-752-5961 InsuranceMan2.0@yahoo.com

Happy Tuesday Dear ADI’ers, Well, April showers bring May snow storms ☹! UGH! Just when I thought winter could not get any longer! I sit here in the confines of my lair of solitude bundled in warm clothes peering out the window as the snow piles up here in Sheridanopolis and my mind wanders to warm sunny days without big white flakes falling to the ground. I hope wherever you are reading this from, it is actually Spring, and you are wearing shorts and flipflops, skipping through green meadows full of brightly colored flowers, and enjoying sunlight. Enough about me freezing to death (thank goodness for my superpowers and sold weather superhero outfit, otherwise I might freeze to death). Now, on to today’s “Tidbit”!!!!! Something that no one else, well ok, maybe like 0.000000000765% of other people in the insurance universe think about is the valuation of your product. They may ask you to come up with a number, and then that is what they will haphazardly slap down on the application forms which then, scarily, become your insurance policy! All the while, these subpar insurance folk have no idea where that number came from, nor do they care. SAD! Do YOU know where that number came from or how you arrived at it? Have you ever thought about it, like REALLY thought about it and how you should be valuing your product? Well … that is where I, InsuranceMan 2.0!!!, are vastly different and much more “supery” then the rest!!!!!!!!! When it comes to your spirits, should they be valued at Wholesale, Retail, or Somewhere In Between? What I mean by this is, what are you actually selling them for? What is the real value of your product, and what would you expect to get back in the case of a claim? Let’s boil this down, shall we. Insurance companies, as we have discussed in the past, are only going to give you “replacement cost” of what you had into your product (BOO HISS!!!!!!) if no one tells them different. This is no bueno!!!!!! What if you have a few pallets of finished product sitting around that is ready to go out the door and something happens? Well, ideally those items should be valued at a wholesale/distribution amount. Keep in mind, insurance carriers are never going to pay out a claim based on a retail sales price, they just aren’t … Unless … What if you are selling your own product at a retail price out of your distillery gift shop / tasting room?!?!!?! Well then, those items SHOULD be valued at retail price, so that in the case of the unfortunate, you are made whole on what those products should have been sold for. Confused yet?!?! Then we get into the “somewhere in between” portion. This value can be very difficult and tricky, unless you have an experienced, knowledgeable, downright fantabulous superinsurancehero at the helm! What are we talking about? Well, stuff in barrels, product stored in someplace getting some age on it, or put up somewhere to get some coloration and flavor. Whatever! The real question is, “What is the value of that stuff?!?!?!?” Ugh, don’t get me started!!!!!!!!! Actually, you can, but that will have to take place during a real person-to-superinsurancehero conversation as I will not divulge my secrets here on the forum. Suffice it to say, products in a state of maturation/aging/gaining coloration/flavor have a whole different value than anything else and it is all based on a “time element” that NO ONE ELSE contemplates, aside from me, InsuranceMan 2.0!!! This is simply due to the fact that no one else has my super insurance brain power, and I think it has to do with the fact that they simply don’t know or care, to be quite honest. Well, I do know, and I do care!!!!!! So, what have we learned today!??!?! We have learned that unless you are working with someone (that someone being me, InsuranceMan 2.0!!!) that knows what they are doing, you could be under-insured, over-insured, paying too much, or not having correct values for your product. We have also learned that if this post makes you think, “Geeee … I have never had this conversation with my agent before, I wonder how my product is being valued????”, then it is time to stop sitting there with that contemplative look, index finger up to the side of your head, glazed eyes, staring off into space thinking, and pick up the phone and call me!!!!!! With me, you will always know how your product is being valued, what the difference is in how it is valued, and we will review the value of any maturing spirits as often as is necessary because I do know, and I do care. Seriously, isn’t it time you stopped messing with the rest and started working with the best!?!?!?!?! Until Next Time My Friends … Stay Vigilant!!!!!! Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 InsuranceMan2.0@yahoo.com

Happy Tuesday Loyal Readers, In today’s installment of the “Tidbit”, I wanted to take a moment to simply set the record straight. I have had several calls over the last few weeks since the big ADI convention and announcement of me being the recommended endorsed insurance agent that have all posed the same query. Several folks have called me (and even a few asked, “Is this InsuranceMan 2.0?!?!?!?! The real InsuranceMan 2.0!?!?!?!?”, that made me chortle and perhaps even guffaw a bit) and asked me how much my initial consultation was, or what my fees were to assist them. WHAT!?!?!?!? People, people, people … I know that I have been specializing in distillery insurance for longer than anyone else, and I know that I have a very nice amount of clients who say wonderful things about me and recommend using me, and for all of these things I am incredibly grateful, but one thing I do not do, nor will I ever do, is charge for my knowledge, assistance, or opinions. I DO NOT charge an “initial consultation fee” or any such thing. To be crystal clear, InsuranceMan 2.0!!! is here to assist and serve, free of charge. My knowledge, opinion, answers to questions, and assistance is ALWAYS FREE OF CHARGE. The only thing that will ever cost you good ol’ fashioned “foldin’ money” is if, after speaking with me and having all of your questions answered, you decide to purchase an insurance policy through me. END OF STORY!!!!! My initial consultation and everything else are simply free for the taking. If you call me up (or email or text me or whatever), ask me a bunch of questions (which I will gladly answer), and you hang up and never speak to me again, ok. No cost to you, nada, zip, zilch, zero. If you call me up and decide that everyone who says good things about me is correct, and you want to do business with me (which you will, trust me 😉 ), then yes, there is a cost associated with that, but it is only the cost of the insurance policy(ies) premium, and that is all. No “consultation fees”, or any tacked-on fees by me. I am here to assist you, guide you through the process, and be of whatever help you need, FREE OF CHARGE!!!! Gratis, Pro Bono, Complimentary, Voluntary, and a lot of other synonyms that mean “free”. So, realistically, what are you waiting for? Speaking to me does not cost you a thing, and I do know a lot about distillery insurance, and it is all here for the taking. Whether you have been operational for years and years, or you are just looking at getting into the game, I can assist you. Some people that have been distilling for years call me up due to their operations expanding, or maybe they are needing to grow into another state with their distribution and they need a state bond, or they find out their current agent could only assist them up to a certain level of coverage, I can and do assist them. Others have no idea what insurance is or why they need it and they call me with questions pertaining to the basics, I love to assist them as well. Some folks are somewhere in the middle or need to add to their existing coverage but have no idea what they need, OK, not a problem. The long and the short of it is, there are no stupid question and there is nothing to big or small for me to discuss. If you have any questions or concerns what-so-ever in regards to your distillery insurance (GL, Liquor, Work Comp, Cargo, Business Auto, Property, Keyman, BI/EE, HNOA, or any other insurance acronym) please give me a call, shoot me an email, thumb me a text, hit me up on FaceSnapGram, whatever, I am here to help. InsuranceMan 2.0!!! is always on the job, and as always, is always free! Until Next Time Dear Reader … Stay Vigilant!!!!!!!!! Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 Insuranceman2.0@yahoo.com

OK, last, last update ... If you have not been following my "Tuesday Insurance Tidbit" under the "Speakeasy" section of the forums, jump in there and give them a read. You will find a lot of information in there as well as some interesting "tidbits" of knowledge that you won't find anywhere else. If you have questions or insurance needs, please do feel free to call my cell phone at any time at 307-752-5961. I always answer all of my one calls. Until Next Time My Friends, Stay Vigilant, Aaron Linden a.k.a InsuranceMan2.0

Happy Tuesday dear ADI’ers, I know that you are probably lamenting the fact that you didn’t get last week’s installment of the “tidbit”, and for that, I apologize. The good news for me and those I am working with is that business got in the way! It was an incredibly busy week and I simply ran out of time and could not post the weekly installment. Ever since the ADI convention and the release of the endorsement from ADI naming me as their recommended insurance agent, things have been WILD!!!!!!!!! Wild in a good way, but wild to be sure. OK, on to this week’s installment of the “tidbit”!!!! I know that over the course of the last few months I have been telling you about the changing insurance markets, the tighter underwriting guidelines that are being imposed, and the potential difficulty in fitting into a standardized market … but there is hope! Fret not dear reader, InsuranceMan 2.0!!! is here with some good news! I have recently been in contact with some carriers that are willing to be a bit more flexible, take the time to listen, and really assess each piece of business in order to understand it and make it fit into their desired class of business. With that said, there are a few things that need to be kept in mind. They are asking for at least a 45-day lead time on any piece of business that they are going to look at. What this means is that the carrier is going to want all of the applications submitted to them at least 45 days before your start date of coverage (if you are a new distillery), or in advance of your renewal date (if you are an established distillery with a current policy that you are looking to replace). What this means to you and I is that we really need to start the process at least 60 days in advance, allowing us a few weeks to gather the necessary information, applications, etc., so that we can have everything in to them prior to that 45 day deadline. If we can start the process even further in advance of those 45 days, GREAT! The more time the better in this case. The other consideration is that if you are an up-and-coming distillery, or doing a build out, or looking to relocate, it is a VERY DESIRABLE ATTRIBUTE (is it clear that I am trying to emphasize this point, or do I need to give a wink 😉 and a nod at this point?!?!??!) to have a separate room or location that is used to store finished product or product that is maturing. This separate room should have a 2-hour fire rating with a fire door, etc. If you do not have a separate room it will not preclude these carriers from considering your distillery insurance, but it will assist in keeping premiums lower as well as “tick the box” in the “more desirable column”. So, this is certainly something to keep in mind. With all of that said though, if you don’t meet these criteria, again, fret not! If you do not have a separate room, if you do not have 45 days advance of needing coverage, or if you have a setup that is a bit nontraditional, I CAN STILL ASSIST YOU! In fact, check this out … I recently just worked with an incredibly lovely couple that have a system that makes most insurance carriers run away screaming for their lives!!!!!!!!!! Let’s just say that it is not uncommon for insurance carriers to like insurance risks that come with very little risk. In their minds-eye, they want everyone to have a sprinkler system throughout the building (even in the ducts if possible), a separate location for ALL PRODUCT, 24-hour fire rated walls, a location in the city but away from all other buildings, a fire department on site or right next door, blah, blah, blah. All the stuff that we know simply does not exist, but the actuaries desire very little risk for their premium. Well, cue the music as this operation makes a dramatic entrance. This operation, although they do have a separate storage location, and most of the boxes checked that carriers like to see, they have something that causes carriers to turn their heads away in horror!!!!!! They have … are you ready for this???? Prepare yourselves!!!!!!!!!!!!!! AN OPEN FIRE STILL !!!!!!!!!!!!!!!!!!!!!!!! Yeppers! A true open fire still. Even with that, something that shocks and awes insurance carriers and causes them to run in the other direction in a hot panic, I, InsuranceMan 2.0!!! was able to place coverage for them when their current insurance carrier pulled the rug out from under them and told them that they would not renew their coverage. I was able to swoop in with my super-cape heroically flapping in the breeze, scoop them up, and fly them to insurance safety where they could continue to operate their distillery knowing that I was able to provide them with the coverage that they needed with the assurance of the carrier fully understanding their operation and method of heating the still. All in a days work for InsuranceMan 2.0!!! So no matter your situation, no matter your operation, know that I am the only insurance superhero in the country that will take time to listen, get to know you and your operation, and custom tailor an insurance policy to perfectly fit your needs, just like my supersuit perfectly fits me!!!!!!!!!!!! Until next time dear readers … Stay Vigilant, Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

Happy Tuesday fellow ADI-ers, Well, I am back! I have to tell you, in all honesty, I wish I weren’t. I have spent the last week or so in Thailand with a 10 hour tour stopover in South Korea, and it was absolutely amazing and I wish I could have spent more time. I have never felt more like James Bond and Indiana Jones all wrapped into one before!!!!!!!!!! I am appreciative of the time that I had away, but it just never seems long enough. With that said though, I am rejuvenated and ready to continue my insurance superhero work, so let’s get to it! In today’s installment of the “Tidbit”, we are going to discuss Business Income & Extra Expense (also seen as BI&EE or BI/EE). It is important to understand this coverage and what it does and does not cover. First, what the heck is it?!?!?! Well, it is actually two different coverage’s, but they oftentimes go hand-in-hand with one another, and that is why they are often referred to at the same time. First, Business Income is a type of property insurance that covers the loss of net income of a business when there is damage to the premises due to a covered cause of loss, that results in a slowdown or temporary cessation of business. Extra Expense, however, is the necessary expenses that you incur during the period of restoration that you normally would not have incurred if you had not had a loss. So, again, what the heck does all of that mean??!??!?!?! It is probably easiest to use examples to illustrate these coverages. Let’s say that you have had a fire in your building and you are shut down for 60 days while the clean-up and restoration is taking place. Business Income coverage would provide the net income amount and continuing normal operating expenses that you would continue to incur (including payroll, if you have employees) during the period of restoration. Basically, this coverage provides for the amount of net income that you would have normally earned during the period of restoration, as well as pay for your normal operating expenses such as rent, utilities, property taxes, etc. Nice, right?!?!?! You would still have money coming in during this downtime if you have this coverage. That makes a difficult situation much easier knowing that you can still pay your bills and keep staff paid even if you are not able to produce product and make money. Whew!!!! Thank goodness for insurance, right?!?!?!? In tandem with Business Income insurance paying for ongoing costs, Extra Expense coverage provides for the necessary costs/expenses that you may incur to get your business up and going as quickly as possible after a covered loss. Extra Expense coverage can be used to temporarily relocate your business to another location, outsource functions that you normally would be able to conduct if you had not had a loss, an in some cases even expedite shipping of necessary items/equipment or renovation costs. Things like getting a water mitigation company to come in as quickly as possible to keep damages to a minimum and the increased electricity costs to run all the drying fans are examples that I have seen covered by this insurance. Again, pretty nice to have in order to make a difficult situation more bearable. Although I always suggest having these coverages on your policy, there are some things that they do not contemplate. Business Income/Extra Expense coverage is also often referred to as Time Element coverage, but be careful!!!!!!!!! People often misconstrue Time Element coverage to mean that however long the restoration period takes, it will all be covered. Worse yet is that some insurance agents may even tell you that “time element” coverage will provide compensation on things such as the time value of maturation on your product. They believe that the value of the maturation would be covered under this policy provision. W R O N G ! ! ! ! ! ! ! See, that is why you need me, InsuranceMan 2.0 !!!! to assist you. Time element coverage typically will only cover you for a restoration period of 12 months and is based on a complex formula that considers your past Profit and Loss Statements (P&L’s), earnings data, etc. Usually the numbers are compiled from your normal course of business and earnings from the last three to five years. If you are a start up operation, this can be a bit more difficult to justify and predict, but it is possible and really should not be something to stress out over. With that said, one thing that it will not take into account is the maturation value of your stock. Please, please, please keep this in mind as this can be a HUGE point of contention in the case of a loss. There are ways to make sure that the maturation value is provided for, but I am one of the only people in the country that understands this aspect and created a valuation form to deal with this specific need. If you have questions about this, please reach out to me and allow me to assist you! As with all insurance, the question always arises as to, “How much is too much?”, or “How much is enough?” A very basic rule of thumb is that if you take your P&L statement for the course of a year and divide it by 12, it will give you a very rudimentary figure to start with. Let’s say that your net earnings in a year are $120,000. Why that figure, well, because it is easy to use as it breaks out to $10,000 a month in earnings and I don’t want to do too much math what with being jet-lagged and all. So, if you know that your net earnings are roughly $10,000 a month, you can then decide what level of coverage you want to have for your BI/EE. Often times the coverage is provided on a monthly level of indemnification. What the heck does that mean?!?!?!? It means that insurance carriers will provide coverage based on the total coverage amount on a 1/3rd, 1/4th, 1/6th basis, or on a 12 month actual loss sustained basis. Ugh, this is getting confusing, right???!?!??! Right! Again, more reason you need me to assist you. The tricky part is deciding as to how much coverage you need and for how long. Typically, most businesses go with a 1/6th basis and cover themselves for half a years’ worth of net income and expenses. Now, that may or may not fulfill your needs, but I am speaking in generalizations here. So, in this case it essentially means that the total limit of indemnification would be $60,000 for the year on a 1/6th basis. That then breaks out to $10,000 a month for up to 6 months. If the restoration period takes longer than that amount of time, and costs more than the $60,000 you are going to have to out-of-pocket the rest of the funding. As you can see, it is important to make an educated decision when choosing the limit as well as the period of restoration. Without wanting to confuse this issue further, I will briefly mention a few items. Just because you chose a 1/6th limit (in the case above), it does not mean you are only limited to 6 months of coverage. It does mean that the maximum amount of coverage that you can get in any one month is limited to the total amount divided by the period of indemnity, however. An example would be that you picked $60,000 on a 1/6th basis but you really come to find out you only are needing to use $6,000 a month. Well then, your overall limit of $60,000 would carry you for 10 months and that would be permissible even on a 1/6th coverage option. Converse to that, let’s say that you find that you need $12,000 a month to keep up with everything. Well, being that you chose the 1/6th basis, you could only recoup up to $10,000 in any given month leaving you $2,000 short each month and you would use up your total amount of indemnity within the 6 months timeframe. One last item to mention is that just like other insurance, the more you want the higher the cost. If you go with a lower period of indemnification with a lower monthly limit, the less expensive it will be. If you are really concerned over a loss and being shut down and you want to make certain that you have adequate coverage, you can choose a 12-month, actual loss sustained option but keep in mind this is usually the most expensive option. This option keeps you from having to go through the process of determining and setting a separate limit due to the fact that it provides coverage for your actual loss of business income for up to 12 months. I highly recommend this type of coverage, not because it costs more and I can make more, but because of the fact that it really is the best coverage available and leaves very little grey area in determining amounts, etc. With that, dear forum-goer, I will bid you ado for today. Thank you for taking time to read this and educate yourself on the wonderful world of BI/EE. As always, if you have any questions, needs, or concerns, please feel free to reach out to me, InsuranceMan 2.0!!! Until next time … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com

Good Morning ADI-Land!!!!!!!!! Well, I am here today to thank all of you that stopped by my booth at the expo in Denver!!! I had a wonderful time getting to know all of you better, and connect up with some old friends, as well as make many new ones. It was a fantastic turn out for sure! If you did not get the chance to go, do yourself a favor and make sure you hit up next year’s conference in New Orleans!!!!! I cannot wait. OK, so last week I told you I had big news, and this is the week to release it to anyone that was not at the convention. I, InsuranceMan 2.0!!!, have been named as the endorsed and recommended insurance agent by ADI for their membership by Eric Owens of ADI. I have attached a copy of his letter as well for your perusal. This is quite an exciting partnership as I have been working with ADI and their membership for several years, and this truly shows all of our commitment and pursuit to make the insurance marketplace better for everyone. The more distillers insured means better rates by being able to calculate historical data which means opening up new markets for everyone, and the hopes of being able to lower rates in the future and have more competitive options. These are certainly exciting times, and I know it will mean great things for all of us in the future! Thank you to everyone that has worked with me in the past and the present, and for all of you that have not had an opportunity to work with me, I greatly look forward to working with all of you as well. With that, I am off. I don’t just mean that is it for today, I mean I am really off. As I stated last week, even Insurance Man 2.0!!! needs some R&R sometimes, so I will be out of the country for a bit. Don’t worry though, I will be back April 2nd (with a bit of a jetlag hangover), but I will be back. Until then my friends … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0 307-752-5961 insuranceman2.0@yahoo.com Aaron Linden Endorsement.pdf

Happy Tuesday Dear Readers, Ah … Spring time in the Rockies! 50 degrees one day, Blizzard warning and cancelled everything and road closures the next. I will say though, that it beats Minnesota (right @Skaalvenn), where you enter winter and negative degrees, and it stays there for 5 months!!!! At least here, in Sheridanopolis, you do get those 50-degree days followed by blizzard warnings. BUT AT LEAST YOU GET THOSE 50 DEGREE DAY REPRIEVES. Enough about the weather, what am I, some 90 year old rancher, talking about the weather. “Looks like weather’s comin’!” Isn’t it always!??!?!?!?! In today's installment of the “Tidbit”, I am going to keep this short and sweet, and not like I do when I say that and then go on ad nauseum for pages on end. This one will be short … ish 😊. Today I am inviting all of you to please come and visit me at booth 434 in Denver next week. As well, I have to tell you, BIG THINGS ARE HAPPENING!!!!! And when I say big things, I mean BIG THINGS. Although I will be at the expo next week and may not have a chance to post here (although I might, but really, with all the fun and frivolity that occurs at the expo it is doubtful), it is my anticipation that upon my return I am going to have some seriously amazing news for all of you here on the forums. With that said, I will be on hiatus for a week or two as I will be out of the country for a period. Even superhero’s such as I, InsuranceMan 2.0, need the occasional break. Insurance-superhero-ing is a full-time gig, 24/7, and occasionally you just gotta get away, as the great Lenny Kravitz has sung. Please stay tuned, dear reader, as I will be forthcoming with some pretty exciting news that is certain to turn the distillery insurance world on it’s head, and be beneficial for everyone. Until then, dear reader …. Stay Vigilant, Aaron Linden a.k.a InsuranceMan 2.0 307-752-5961 Insuranceman2.0@yahoo.com

Good Morning Dear Readers, In today’s installment of the “Tidbit”, I wanted to touch upon bonding since it has been something that many folks have asked me about recently. I know, I know, bonding for the most part for many of you has been a non-factor in the recent years … OR HAS IT!??!?!! Dun-duh-daaaaah!!!!!!!!!! I wrote a little posting here a while back about bonding and the fact that the Fed’s never really, clearly defined the new Federal Excise Tax’s (FET’s for those of us in “the know”) reduction, and whether or not you should carry a bond. At the time that they passed the “Tax Reform” bill, Congress only spoke about the removal (or withdrawal) of tax paid spirits. They did not address the potential need for a bond to be held on the stock that is aging, in process, bottled, or bulk spirits (we will just refer to all of these as “stored spirits” from this point forward). There was a bit of debate between forum-goers as to if the “stored spirits” could ever have a need for taxes to be paid in the case of theft, destruction, etc. Addressed in the Code of Federal Regulations (CFR’s); Title 27; Subchapter A; Part 19 – Distilled Spirits Plants; §19.262 General requirements for filing claims - §19.268 the reasoning, ability, and what may happen is discussed in case you feel like reading it … or if you need a nap. Anyway, there is a possibility that “stored sprits” could have the taxes called for by the Fed’s, in which case a bond would or could come in very handy. I will leave that up to you to decide. Really though, the heart of the matter and a question I get asked a lot is, “What is a surety bond for FET’s, do I need it, how does it work, and what about state bonding???!!?!” Well, InsuranceMan 2.0 is here to tell you. What is a surety bond? Well, basically a bond is a legal agreement between entities (in this case the distillery and the governing body) that guarantees that in the case of taxes needing to be paid, that they will be paid, either by the distillery (Indemnitee), or in the case that they cannot make the payment, the surety company (Indemnitor) is obligated to make the payment on behalf of the distillery. In short, if you don’t have the money to pay the taxes, the surety company will make the payment for you to get the government off your back. Sounds like a sweet deal, right? Not so quick! In the case that the indemnitor was to make a payment for you, yes, it satisfies the government by making them whole, but your obligation does not stop there. If the indemnitor has laid out money on your behalf, they are going to want to make up that loss somehow, and that now once again becomes your problem. A guy named “Guido” may show up to your door demanding payment, and “take your knees” if you can’t come up with the money. Actually, that probably isn’t going to happen … Probably. More likely, the surety company would ask you nicely for the money at first, but after that things could get icky. They may sue you over the lost funds, slap an injunction on you and your business (because you do sign the agreement as an individual and on behalf of your entity, if you have one) and make you liquidate assets until the loss is paid in full. Sounds kind of scary, huh? In reality, not really. If you think about this, when are most taxes due? When the product is withdrawn from you bonded premise. Generally that would mean, if you are removing product, chances are the reason is because they were sold, in which case that means that you have the money to pay the taxes on said withdrawn spirits. So really, the surety bond is just a formal agreement, a placeholder, to make the governmental body feel all warm and fuzzy and sleep better at night knowing that they are going to be paid no matter what. I personally have never seen a bond called on anyone that I work with, but I have heard of it in the case of loss/destroyed product (at which there may be a reduced rate on taxes due), or in the case that a distillery has become insolvent (again, thank goodness I have not had anyone with that issue). In any case, even though there is debate as to if you should carry a bond or not, a bond could be very nice to have should the unforeseen ever happen. Just an FYI, a Federal TTB DSP bond is broken into two parts, and this is what was never really addressed. There is the “Operations” side of the bond, and the “Withdrawal”. The operations side contemplates spirits that are “bulk, bottled, or in process”, so again, the “stored spirits”. This is the section that the Fed’s never spoke about or addressed in the tax reform. Then there is the “withdrawal” side that contemplates the taxes needing to be paid when the spirits are removed from you premises. This is the ONLY part that they concerned themselves with. Again, you can see how with this being the case, there may still be need for a bond at this time and place. Based on this recent tax reform, however, as illustrated, the Fed’s really are only concerned with the withdrawal side of things, and they lowered the taxes due from the historic $13.50 rate per proof gallon (100 proof, or 50% ABV) down to $2.70 per the same. A little aside here, the REAL tax rate for many was actually $10.80 since most product for many going out the door was 80 proof (or 40% ABV), which then made the tax rate $10.80 per proof gallon. Just wanted to share that little nerdy bit of knowledge with you. So, what the heck does this all mean?!?!?!? Well, it is too soon to say what Congress will do in the future, but the current FET reduction is due to sunset on December 31st, 2019. In the tax reform document, it states the following: PART IX—OTHER PROVISIONS Subpart A—Craft Beverage Modernization and Tax Reform SEC. 13801. PRODUCTION PERIOD FOR BEER, WINE, AND DISTILLED SPIRITS. (a) IN GENERAL.—Section 263A(f) is amended— (4) EXEMPTION FOR AGING PROCESS OF BEER, WINE, AND DISTILLED SPIRITS.— ‘(B) TERMINATION.—This paragraph shall not apply to interest costs paid or accrued after December 31, 2019. H. R. 1—123 SEC. 13807. REDUCED RATE OF EXCISE TAX ON CERTAIN DISTILLED SPIRITS. ‘(1) IN GENERAL.—In the case of a distilled spirits operation, the otherwise applicable tax rate under subsection (a)(1) shall be— (A) $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and (B) $13.34 per proof gallon on the first 22,130,000 of proof gallons of distilled spirits to which subparagraph (A) does not apply, which have been distilled or processed by such operation and removed during the calendar year for consumption or sale, or which have been imported by the importer into the United States during the calendar year. So again, what does this all mean?!?!?!! It means that currently we are enjoying a bit of a reprieve in regards to the amount of taxes that are to be paid on withdrawn spirits, which is super nice! It leaves more money in your pockets and that is always a good thing. It also means that come the end of this year it could all go away. Maybe it will be voted to remain the same, that would be awesome! Or, it could potentially even go up to or above the historic levels that it was at. Truth be told, we have no idea what is going to happen. One thing is for sure though, many, if not all states, require some type of surety bonding at a state level. Whether it is a “sales and use tax” bond, an “alcoholic beverage manufacturer” bond, or something else, there is probably still a bonding need for your distillery. I, InsuranceMan 2.0 am here to assist you. I can and have provided hundreds of bonds for distilleries across this great land, and I actually have the lowest bonding premiums of anyone in the country. So, if you have a bond and feel as though you are paying too much, or if you have a question about if you should get a bond or not, or if you are a new distillery and found out you do have a state bonding need, I am here to assist you. Maybe you are nearing that 100,000 gallons of withdrawn product and getting nervous as to when the right time to get a bond may be. Again, I am here to help. Give me a call, shoot me an email, text me, hit me up on a PM here on the forums, come see me at booth 434 in Denver in a few weeks, or send a smoke signal. Whatever you need, I am here to answer all of your deepest, darkest insurance and bonding questions. Until next time my friends … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0 307-752-5961 Insuranceman2.0@yahoo.com

Good Morning ADI Citizens, I apologize for not getting the "Tidbit" out as of yesterday, but it turns out that InsuranceMan 2.0 does have some weaknesses. After a fun filled weekend of skijoring in the cold, despite my superpowers, I have ended up with Bronchitis and have been seeking respite in my lair of solitude the last several days. I hope to be back in full swing next week with another installment of the "Tidbit". Until then, I will continue to fight the forces of evil that plague the insurance industry from my lair whilst sipping hot toddies. Until next time my friends ... Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0 307-752-5961 insuranceman2.0@yahoo.com

Good Tuesday Morning Fine Citizens of ADI-ville, I was sitting in my lair of solitude the other evening whilst on the phone with a good distiller friend of mine. Unfortunately, due to schedules and just "life" we had not had a chance to speak in the last several months. He had asked me what I had been up to recently, outside of saving the planet from the woes of evil insurance agents, and villainous insurance companies? As we spoke, I had told him about what I had been up to and he commented, "Man, what the H**L?!?!?!!? You seriously should write a book someday." That got me to thinking ... Many of you out there in ADI-land know my superhero persona, but those of you that have not met me don't really know my "mild-mannered" normal self that I am when trying to be inconspicuous out in Sheridanopolis, or the vast far reaches of the world. My friend suggested I should do a post here on ADI to help familiarize myself to anyone reading my posts. I thought, "OK, I can do that." I know, I know, it could be a long story, I will keep it fairly short, but if you don’t want to read it, at least scroll to the end and watch the videos and listen to the mp3 😊 One caveat to all of this is, I do not want this to come off as braggadocios, anyone that knows me knows that is not who I am. It is just more so that you get to know the person that you are dealing with, and that I am not always InsuranceMan2.0!!!!!!!! Nope, sometimes I am "Aaron Linden", normal human person, well, kinda. Where to start though, that is a big questions. As they say, start at the beginning ... It was a hot August night in 1974, late on a Friday night when I was born ... JUST KIDDING! We are not going back that far. I was born late on a Friday night though, and I assume that is why I still like to stay up late and love the weekend! OK, for reals now ... I grew up in Minnesota, Stillwater to be exact. Great place to grow up, on the river, small community (at the time), safe, nice. I went to college in Minneapolis, MN and graduated with a double major and double minor in 4 years (Poli. Sci. was one of the majors, if you must know). I was able to do this mainly because many of the classes that I took had some overlap and I was able to get a lot done in a short time (but I did my fair share of partying as well, and enough for a few others probably). Then, it was going to be off to law school. I know, right?!?!!?! Me a lawyer?!!??! Well, life kind of jumped in the way and I did not end up going to law school. Maybe it was a bit of burnout from years of school, maybe it was divine intervention, but I was accepted and asked if I could enroll the next fall? They said yes, but I didn’t end up going then either. Fast forward many years, and I had always wanted to move to Wyoming after traveling out here to hunt, fish, and camp, but who can make a living in Wyoming? Well, as it turns out, there was an insurance agency that was looking to expand into Sheridanopolis, and they wanted to know if I would like the opportunity (there is plenty more to this story, but I don’t want to bore you), and of course I said yes. Now, fast forward many more years, and I have been doing insurance work for 17 years and specializing in distilleries for 8. I started out writing very niche insurance policies that no one else could or wanted to write and ended up developing many programs due to this on a national basis. Heck, I was even the endorsed insurance agent for AANR. Yeap, I sure was! What is AANR you wonder? Well, it is the American Association for Nude Recreationalists. Don’t believe me, Google it. Wait!!!!!!!! Maybe don’t, LOL!!!!! Insurance has allowed me to do a lot of cool things. Travel to amazing places, meet amazing people, and work with great folks like you here on ADI. I have worked with folks like Channing Tatum (go to Google images and type in: Aaron Linden distillery insurance, and about 5 images over you will find this): as well as Zac Brown, John Bon Jovi, and the list goes on. Like I said, it has allowed me to do some cool stuff for sure. But there is more to me than insurance, like I said. I also have sat on many boards, overseen many non-profit foundations, and recently have been inaugurated to the Sheridan City Council after the last election. My favorite thing though, that people don’t really know about me is that I can do voice impersonations of dozens of famous people, imitate dialects from all over the world, and I do quite a bit of acting, in my spare time of course. Plays, voice-over work, musicals, and even commercials. There are a few samples of each of those below. Anyway, I just wanted to do something a bit different on this installment of the “Tidbit”, open myself up to all of you so that you know there is more to me than simply being the all-knowing, all-powerful superhero that I am (I am kidding of course). One thing that you should know is that I love being InsuranceMan 2.0!!!!! and working with all of you outstanding folks. In whatever I do, I do it out of love, passion, for fun, and because I just really love and live life to the fullest. Here are a few samples of my craziness, hopefully for your enjoyment: ***** Special Announcement on this one ... The very Lovely Woman in this video with me just said "YES" to my engagement proposal on Valentine's Day!!!!!!!!! She has always hated Valentine's Day up to this point, now she loves it, and I love her ***** My most recent commercial (forgive the hair and beard, I was growing it for "Escanaba in Da Moon Light" in which I played "The Jimmer"): And, one of my favorites, Dr. Seuss' "One Fish Two Fish, Red Fish Blue Fish" in 42 different voices : Aaron Linden One Fish Two Fish.mp3 (Click the link then click the little doohicky in the lower left part of your screen. It will pop open a window so you can listen.) Until Next time, Stay Vigilant My Friends, Aaron Linden a.k.a. InsuranceMan 2.0 307-752-5961 insuranceman2.0@yahoo.com

Good Morning Fine Citizens of ADI-land!!!!!!!!!! It is a lovely, but a bit cold, day in Sheridanopolis. I hope wherever you are, you are toasty warm whilst reading this informative installment of “The Tidbit”. Today we are going to look at a coverage that is as important as any that you can purchase, LIQUOR LIABILITY. First of all, let me explain the definition of Liquor Liability. According to the “Insurance Information Institute (I.I.I.)”, Liquor Liability insurance is defined as coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder. Wait … WHAT?!?!?! Just by serving someone liquor, you can be sued?!?!?! ABSOLUTELY!!!!! Liquor Liability coverage is essential coverage to have if you are in the business of alcohol, any type of alcohol! If you produce it, sell it, give samples of it, you better have it! This is especially true in states that have adopted any kind of Dram Shop Act/Law. OK, what is a Dram Shop Act/Law???? I am so glad you asked! A Dram Shop Law/Act is a statute which makes a business that sells alcoholic drinks, or a host who serves liquor to a patron who is or appears to be intoxicated, or close to it, strictly liable to anyone injured by the patron, including the patron. Did you know that currently the only states in the US that have not adopted any kind of dram shop law are: Delaware, Kansas, Louisiana, Maryland, Nebraska, Nevada, South Dakota, and Virginia? Every other state has a Dram Shop Act/Law on the books. So, does that mean if you are in any of those states you don’t have to worry about Liquor Liability? NO! Often times, these states still allow for prosecution regardless of if this law was in place. As well, personal injury attorneys rarely care in the case of a lawsuit, and they will come after you. Even if the intoxicated person injures someone else, or themselves, crashes their car into someone or something, or even if they go home and beat up the neighbor or significant other, you could potentially be sued. “But InsuranceMan2.0, we only give away a total of four, quarter ounce samples!!!! That cannot get someone drunk!!!!!” Ah, excellent point dear reader, however … You may not have known the patron was at three other establishments before wandering in for a lovely sample of your wears. Or, perhaps they just slammed a fifth in the parking lot and then came in to have a taste, or get a cocktail (did a little pre-game warm up as it were), and it had not hit them prior to them coming in. Whatever the situation, if you have served them you could have potential problems. Case in point, I work with an establishment that is in the business of selling alcoholic drinks. They are in the business of selling A LOT of alcoholic drinks. In fact, they are the largest bar in a state that I shall not name. A patron came in at 11 a.m. for a Jager Bomb (I’m not judging), paid for the drink with their debit card, and went on their way. Fast forward to 3 p.m. when this gal went to her child’s daycare, retrieved her child, and proceeded to drive through the wall of the daycare. Yeap, true story. Sad but true story. As it turns out, the establishment that I represent was not the first stop of this gal’s morning, nor was it the last. At each place she stopped, she had at least one Jager Bomb, paid for it with her debit card, and moved on. In the lawsuit that ensued, her paper-trail of where she had been and the drinks she consumed was easy to establish since they all were transacted through her bank statement because of the debit card. Her lawyer then named each of the 8 establishments in the lawsuit citing that they each in someway contributed to her intoxication. Guess what, all 8 of them were successfully sued, and had to split the penalty 8 ways. I am not saying that this is ever going to be a situation that you may be involved in, but I will tell you that if you don’t have liquor liability coverage then you don’t have liquor liability coverage. Liquor liability coverage is almost always excluded under your general liability coverage if you are in the business of selling or profiting from alcohol, period. So, without purchasing a separate liquor liability coverage, you have no coverage. That means that any suit and resulting claim would come out of your own personal pocket, or that of your business. Either way, that is not good. Furthermore, an often-overlooked aspect both General Liability and Liquor Liability is the fact that they both provide for defense coverage. Yessir! If you are sued, no matter if it is a real case of negligence, or a frivolous lawsuit, your policy provides for the cost of defense. Yeah, Buddy! I have seen people sue over the craziest of things. Things that have no validity what-so-ever. I don’t know if you have hired an attorney lately, but the prices are not going down! Even in the case of a frivolous lawsuit, it could cost you tens of thousands of dollars to prove your innocence. Better that money and the crack staff of attorneys comes out of the insurance carriers’ pocket as opposed to yours. The long and the short of it is this … Liquor Liability is something you should have, you need to have, and something that you should want to have. Pair this with making sure that you and all the servers are TIPS trained, and you should have very little to worry about. Heck, most carriers only charge between $750 and $1,000 a year for a standard liquor liability policy. That would barely get you 2-3 hours of a lawyer’s time! Of course, that pricing can be impacted by various factors such as a full-blown cocktail room that is selling $1.2 million a year, but for a normal tasting room that is either giving out free samples, or making a decent profit from tasting charges, it should not cost you more than that. And for that $750 - $1,000 you have the piece of mind of knowing if you are sued due to a liquor situation, you have $1,000,000 worth of coverage to take care of any claim, defense costs, and crack staff of lawyers. Now, that is something that should make you sleep better at night. Until next time my friends, STAY VIGILANT, Aaron Linden a.k.a. InsuranceMan2.0 InsuranceMan2.0@yahoo.com 307-752-5961

Good Morning All, Today I am coming to you from the frozen land of Sheridanopolis!!!! -17 here this morning, and Insuranceman2.0 is wanting to pour coffee on his feet! I wanted to take this opportunity to inform all of you that I will be in attendance at the ADI Expo this year, and I hope to see all of my vigilant friends at booth 434!!!!! I am very excited to attend the convention and expo for the 5th time in a row and cannot wait to have the chance to meet many of you in person for the first time. If you are attending, please make sure to stop by, say "hi", and get all of your insurance needs taken care of! Here is an interactive map of the expo floor for your perusal: https://shows.map-dynamics.com/adi2019/ . Make sure to highlight and click on booth 434!!! Until next time my friends ... Stay Vigilant, Aaron Linden a.k.a. InsuranceMan2.0 insuranceman2.0@yahoo.com 307-752-5961

@Julius, Exactly! Reactive and knee-jerk based off of one possible bad apple. This is right on the money with what I am saying. Many, if not most of the standardized carriers are becoming more and more reactionary to distilleries and are now wanting to see them as a "high-risk" classification of business. I do not see this changing any time soon, so it is time to buckle up and hang on. Again, I am working on educating them more, and looking at several other carriers/programs at this point in time. Currently there are still options, but they are becoming tighter and imposing many more requirements that they had not required in the past. Stay Vigilant!!!!!!