InsuranceMan

Dear ADI Forum Readers, I wanted to take a moment first and foremost and thank all of you whom I have had the absolute pleasure of working with over the last year. The support of this community has been amazing and it really made my 2014 an outstanding year. I have met so many great people; most of whom have become my clients, or are working on becoming my clients and it really has been a great joy! To those of you who I have not yet met or talked to please do feel free to reach out to me at any time with any questions about my revolutionary insurance products as well as anything TTB bond related. I have issued out an incredible amount of bonds in the last year and I am an expert in doing so and I make it a very simple process for you. Usually it takes no more than 24 hours to have the executed (and correct) bond in your hands. *** To my point and the reason I am writing this post; I wanted to share with each and every one of you that I am very excited to announce that I have been selected to be a presenter at this year’s ADI conference in Kentucky. My presentation entitled “Insurance: What you know, don’t know, need to know” was selected out of a tremendous number of submissions this year and I am quite honored to be among those presenting. As well, I along with the experts group that I have put together over the last year are coming in with a Platinum Sponsorship for the convention and we will have a booth in the vendor’s area. So, if you are planning to attend the conference this year I would encourage you to come to my presentation as well as find me at our booth. I would love to meet each and every one of you, reconnect, or meet you for the first time in person, or even catch up if we met last year. I am looking forward to an amazing 2015 and I thank you in advance for allowing me to work with you, work for you, and be your trusted insurance professional and business partner. See you in Kentucky and please reply to this post if you are planning on attending so I know who I can hope to see. I’d love to put faces with forum names!

All, One reason that there is not much out there as of yet may be due to the fact that the board just finalized the speakers for this year. I just found out on Friday that I was awarded a speaking engagement so I would imagine that more news will be forthcoming in the next week or so. I will get in contact with the folks that I know over at ADI and see if I can obtain an update for all of us as to when they will be publicizing the full list. As soon as I hear back I will let you know here on this forum post.

Scrounge- I guess I will add you to my list of clients that smoked the timeframe. I will say that out of all of them so far you take the prize for fastest. I'm happy for you man. Very exciting!!!

Folks, Just wanted to throw out a quick update as well. As you know, I work with distilleries all over the country on their insurance and bonding and I keep a pretty close eye on how long the process takes. I have had several in the last week who have been issued their DSP approval in the 55 to 65 day range! Is it possible the TTB is getting faster????? It appears so! Congrats to all of my clients who received their DSP in the last week.

Don, Shoot me a PM and I will get you some info. I have quite a few clients who specialize in this and I will see if I can put you in direct contact with a few of them.

Do you “Have” insurance or do you “Acquire” insurance???? Let us begin by reviewing the definition of each of these words: have/hav,həv,(ə)v/ verb be obliged or find it necessary to do the specified thing. ac·quire/əˈkwī(ə)r/ verb obtain (an object or asset) for oneselfInteresting. The reason I bring this up and write this post is mainly due to the fact that there really are two varieties of distilleries found across this great country of ours (sorry if you are outside of the U.S., you are welcome to keep reading but I am focusing just on America at this point, sorry). There are those craft distillers who “have” insurance and those that “acquire” insurance. In my dealings with folks all across the country, from Alaska to Hawaii, from Maine to Florida and every known single point in-between, I have found that everyone I talk to falls into one of these two categories. Let us start with the “have” to people first. The people in this group seem to be the ones that are a bit put out due to the fact they feel victimized by the insurance process. Hearing things like, “Well!!!! I HAVE to have insurance because the stupid bank/landlord/government/name-some-other –random-entity is MAKING me, otherwise I would just go without!” This is very common with people in this group. The unfortunate reality is that these people either have not been properly educated in the insurance process and simply do not understand its beneficial function to them or …….. they are just crabby and they DO understand insurance but they still hate having to have it. Noted. “I pay all this money every year and never use it! What good is that, I could use that money for other things.” I have heard that so many times that if I had a nickel for each one I wouldn’t be here writing this; I’d be in Belize fishing right now. The first thing to realize is that insurance is NOT a waste of money, it is a way to protect you assets. In all reality insurance is a very safe and reasonably cost effective way to spread and mitigate your single risk against loss across a broader spectrum in exchange for a premium. In fact “insurance” is defined as: Insurance Definition A risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by event(s) beyond the control of the insured party. Under an insurance contract, a party (the insurer) indemnifies the other party (the insured) against a specified amount of loss, occurring from specified eventualities within a specified period, provided a fee called premium is paid. In general insurance, compensation is normally proportionate to the loss incurred. Some types of insurance (such as product liability insurance) are an essential component of risk management. Exactly. “…. an essential component of risk management.” I ask this question: would these same people notice a potential issue within their own distillery that could become a potential hazard or be a risk to their losing everything they have worked so hard to build, yet choose not to fix that issue unless someone was forcing them to? Of course not, most would be proactive and fix the issue and avoid or mitigate the risk. Well the same applies to insurance. Insurance simply cannot be looked at as something that is being forced. Instead, one should realize that insurance is actually there to be a benefit in the case of an unexpected event. Some of these same folks will choose to “self-insure” those aspects that are not being “forced” upon them. Often, they will need to comply with a landlord’s requirements, or get insurance to satisfy a bank loan, but that is where it ends. They will “self-insure” their property (stills, equipment, etc.) as well as their product. What they don’t understand is there is a lot more to insurance than meets the eye. Let us take for instance products coverage; product recall coverage; and liquor liability. What if these same folks are bottling their product and during the course of the process they nick the neck of the bottle, inadvertently sending glass shards into the product? They then send the product out without knowing and someone ingests some of the glass causing injury? Well, in this case, if they do not have products liability or some product recall coverage, they are going to have to foot the entire suit and recall costs out of their pocket. Payment of damages to the injured party; the cost of recalling the rest of the batch that could potentially be affected, etc., could be very costly. This could ruin many new or smaller distillers and potentially cost them their business. This whole situation however could have been mitigated via the proper insurance policy. If they would have had the proper coverage they would have not only coverage for potential lawsuits but they would also be afforded defense coverage for those suits. As well, their product recall coverage could be paid for (up to the limit purchased) and they could stay in business. The same goes for liquor liability. What are the chances someone may be potentially sued for causing someone to become “over served” on their product resulting in a lawsuit? I have seen this happen and even if the party was not found to be negligent the legal cost of proving themselves not guilty can be staggering (pun intended). The rule of thumb is, if you don’t have the coverage, you don’t have the defense. As well, if they choose to “self-insure” their equipment they are then beholden to having to buy it again should a loss occur. Insurance premiums on equipment, when written correctly, can be less than half a cent on the dollar! Well in my book that is a sound investment in the way of protection of your assets. That is simply not “throwing money away”. Given, there are a myriad of coverage’s and one needs to keep things in check as to not become “insurance poor” but again, this is where the education piece comes into play as well as knowledge on the part of the agent. If these folks “have” to have the coverage and choose to buy low and not know or care what is really covered, you have to wonder what other corners are being cut. This brings us to the “acquire” crowd. Oh how I enjoy these folks. These are the folks that get it, or at the very least they want to get it. They are the ones that ask the questions and will actually LISTEN to the answer because they want to know. These are the folks that will take an active role in the decision process and acquire the correct insurance product to fit their needs. The folks in this crowd understand that insurance is not a waste of resources but that it truly is an asset and protection that is there to assist them in their greatest time of need should it arise. The “acquire” group understands the value of what they are purchasing weighed against the cost of doing so. They are effective buyers that are still keeping an eye on their money but know how and why they are spending it and what they expect in return. They also understand that their insurance professional is a trusted confidant, a true business partner that they work in unison with in order to protect and grow their greatest asset. They are not foolhardy with what they will pay in the way of premiums but the dollars they do spend they know are in the best interest of their business. In a way, these folks have reached “Insurance Nirvana”. Often times they don’t necessarily start out that way, although some do. Some are born savvy insurance buyers but most “acquire” this skill over a period of time or through trial and error. I have two suggestions to anyone reading this post. The first would be this; if you are one of the “have” folks but would like to move closer to the “acquire” group without needing to experience the trial and error process, give me a call. I am careful to never say I have seen it all and done it all but I have seen more and done more than most anyone else. I have been doing this for a very long time and can easily lead you to “Insurance Nirvana” via the scenic highway route as opposed to the bumpy and slow dirt road that many insurance folks are on. Second suggestion; if you are in the “acquire” group, kudos to you. You are well on your way to being a happier person, comfortable with who you are and where you are going in terms of insurance and you will have a greater experience in the long run. For you savvy individuals I would still suggest you give me a call. I have the only product available that gives you what you really need (read this post: http://adiforums.com...?showtopic=4883 ) in order to experience true “Insurance Nirvana”. I am here to assist you, guide you, and if you have a great insurance product at a great price then I am even here to tell you, “Good job savvy insurance buyer, you have truly acquired Insurance Nirvana.”

Phil, If you like, shoot me a PM in regards to the barrels. I have an very good acquaintance who I have delt with quite a bit in the past who has 300 new 53g barrels available now and another 1500 coming in the first quarter or so of next year (2015). Let me know if you are interested and I will get you the photos and info. These are VERY nice barrels and pretty well priced as well. Aaron

VA and Teton, It has honestly been my pleasure assisting both of you and the folks you brought to me (thanks James!). It is always nice to have good feedback and I do try to do my very best everytime for everyone. One of the big things that I believe in, and something you get when you deal with me is a clear understanding of who, what, where when and why. I am big on educating my clients and I truly feel you need to know what you are buying, why it is required, and how the processes work. The over all insurance package needed and the bonding is all I do day in and day out for craft distillers so after all these years you do get pretty savvy. Like I said, it is always nice to hear your possative feedback. Thanks again guys and I can't wait to talk with you again soon.

To all of the friends that I have made through ADI, and to all of those I have yet to meet, Happy Thanksgiving! You all have provided me with a lot to be thankful for this year but most of all I am thankful for your friendship. Everyone here has been incredibly warm and welcoming and I have meet so many genuinely nice folks because of this gathering place. I wish you and yours only the best. Take time today to pause and truly give thanks for the many awesome things in your lives. All the best from my family to yours!!!

Jake, That is fantasitc and I am happy for you. I have had the pleasure of sampling your product and I can imagine you will have nothing but the greatest success. Give me a holler when you land out there, I work with a ton of folks out that way.

All, If anyone is interested I have a couple of gentlemen that I have worked with that specialize in alcohol law and alcohol compliance throughout the country. Feel free to PM me or call my cell phone at 307-752-5961 if you would like more information. These fellows are at the top of their game and I highly recommend them.

I truly hope Mr. McCoy recovers quickly. If you are in need of a recommendation in the mean time I have worked with Charles Schmacher several times and have even brought him into the fold of my distillery experts group. If you are interested let me know and I can get you connected to him. He spent a very long time with the TTB and ATF and is VERY well versed in all things TTB related. Hope this helps and hope Jim is well soon.

***** INSURANCE UPDATE ***** ******* 10 / 10 / 14 ********** ** DISTILLERY ON THE MOON ** Picture this if you will, a craft distiller that is making a wonderful multi-year aged product that is as smooth and richly complex in flavor as anything you have ever had the pleasure of having cross your palate; A multimillion dollar facility with one of the most beautiful, multiple story tall, hand crafted stills that you have ever seen; A cache of their distilled products with a value in the multiple tens of millions of dollars. Sounds pretty great right? Maybe it sounds like a goal that you hope to one day achieve for your own business? Now take this real life scenario and place this facility on the moon. Did I lose you there? Did I really say that this facility with all of this value and all of this product was on the moon? Yes I did. However, I am speaking metaphorically. This situation really, truly does exist in regards to a client of mine. They have the facility. They have the beautiful still. They have a large cache of their product built up for current and future demand, but for all intents and purposes their distillery is located on the moon. Well, at least that is what 99% of the insurance companies think. Recently I had the opportunity to work with a long term and very good client of mine in order to arrange for new insurance coverage for their ever growing and expanding craft distillery. There were many issues that needed to be overcome such as the value of their buildings (it is quite a lot), the value of their products on hand (but I am the only person in the country that has that figured out as well, see my post and read the whitepaper here: http://adiforums.com/index.php?showtopic=4883), but the biggest issue was their location. I marketed this account to every single insurance carrier I could find that purports to have a “special craft distillery/beverage” program. I was met almost immediately with declinations or comments of, “You have to be kidding, right?” One underwriter with a company who has a “special program” even told me, “This thing may as well be on the moon! There is no way we would touch this risk.” And on it went. EVERY carrier that I spoke to had a reason to not write this account. From the values being too high on the location (that carrier has a very low limit that they can accommodate “per location”, but they have a cool name that sounds like they want to write distilleries); To carriers saying that they just simply cannot accommodate something of this size; To the location of this clients operation (basically on the moon); To the fact that even though “they” have a special program, they are just under-gunned to actually write this kind of risk; Or that they could not get this past their ReInsurance company; To the fact that they only handle very small to moderate risk size (this has been a problem with a lot of distilleries, their carriers drop them when they actually get too big). The odd thing is, many, many clients fall into this category of size. So what are these clients to do when they either outgrow their carrier or are told that a number of carriers only write “rural risks but there has to be adequate fire protection” (two things that do not go hand in hand)? They are to turn to me! Of course I contacted the carrier that I have my exclusive program through, spelled out the details of the account, the fact that we needed my increasing and progressive valuation for their aging stock on hand, and you know what???? They did not even blink. No snarky comments about the “moon-like” location, no problems with the value, no issues with the lack of fire suppression and even better, they could do it in house without worrying about a reinsurance company riding them over the placing of the account! Within a week’s time we had a bindable proposal that we were able to execute in a timely fashion without missing a beat. The reason I wanted to tell this story is simply due to the fact that, as I have said before, just because an agent or carrier may be able to place a risk does not mean they should. Do your checking prior to buying your coverage. Is the carrier someone that is going to drop you in the second or third year due to your increasing size? Does the agent even really know your business and how to handle it properly? What happens in the case of a loss to your stock on hand? Just because a carrier has a “shiny” name with “craft” or “specialty beverage” or “distillery” in it does not mean they are a perfect fit for what your needs may be. Currently 99% of the carriers in the country use almost the exact same forms and endorsements to write craft distillers but those forms and endorsements in many cases do not provide adequate coverage for your true risk and at that point it just boils down to premium dollars (see this post: http://adiforums.com/index.php?showtopic=5245&hl= ) . In the end though, those premium dollars mean nothing if they are being spent on lackluster coverage. From the very smallest of start ups, to those who have been in the industry for many year that are located on the “moon”, urban or rural, and everyone that is growing and in between, I can assist you. This is not a shameless self plug (well, not entirely) but a true plea from an experienced professional: Do your research, know what you are getting and make sure you have someone with experience in this industry that can go to bat for you should something happen. That is what you are spending your premium dollars for, make them count. From one room “mom and pop’s” to multimillion dollar facilities on the moon, make sure you are protected by someone and by a carrier that fully understands your exposure and by someone who is in this not to make a quick buck, but by someone who is doing all they can to better the industry as a whole ( see this post: http://adiforums.com/index.php?showtopic=5465) . After all, “It is one small step for craft distilleries, one giant leap for distillery-kind”.

Esteemed Forum Members, I am pleased to announce that I, along with several others, have formed a core group of industry experts in order to better assist those in the craft beverage industry. This team is comprised of a body of experts that have a tried and true historical record assisting those in the craft beverage industry that has proven these members to be the best of the best. We have formed this group in order to positively promote the industry as a whole through best practices, best services, advanced education and unparalleled expertise. Given the incredible rate of growth that the craft distillery industry has experienced and continues to experience, there are a lot of people “jumping in” and trying to take advantage of the rapid expansion in order to make a fast buck. My opinion is that many of these people are diluting the industry as a whole via their lack of knowledge, lack of true understanding, and lack of experience and expertise. Becoming involved only to try and take advantage of a situation and capitalize on it only for personal gain is short sighted and I feel it is also intrinsically wrong. Many seem to be in it only for themselves and in the end only prove to be roadblocks that are a drag on the industry. They are not here to promote the craft distillery industry for the greater good; they are involved only for their own personal wellbeing. Our group of industry experts brings years of dedicated service, specialized products, and a true commitment to the craft beverage industry directly to you. One of the many benefits of this group is that we save you one of your most precious and valuable resources, time! Instead of having to spend countless hours of research trying to figure out who is reputable and who you should chose to work with, you now have a “one-stop-shop” of resources and we offer our services on a national level. While we all remain independent from one another, we work closely together as a group to best assist our clients and service their needs. You as the client though are free however to pick and chose which services you are in need of and can select to use any of us that you like. We are an expert resource group with a working knowledge of one another’s expertise and have an excellent rapport with one another. What this means to you is that if you have questions, we have answers. Our expert group is currently comprised of the following industries: Commercial Insurance / TTB Bonding / State Bonding: Aaron Linden – CIC, www.hublinden.com Product Design / Branding / Marketing: Leif Miltenberger, Hired Guns Creative www.hiredgunscreative.com CPA / Planning: Nick Shepherd & Kevin O’Brien, Irvine & Company, LLC www.irvinecpas.com Legal / Alcohol Compliance: Chris Hermann & Bernard Kipp, Stoel Rives, LLP www.stoel.com TTB Consultant / TTB Compliance: Charles Schumacher Architecture / Design / IFC: Mark Ward, Urbanadd www.urbanadd.com Distillery Operations / Product Development / Consultant: Daniel Feldman, Dodo Distilleries In closing, we are all very excited for this opportunity and the ability to bring our years of expertise and dedicated service to the craft beverage industry to all of you. I would encourage anyone reading this, from the start-ups to those of you who are well established, to reach out to any of us with any questions or comments you may have. The beautiful thing about learning is that no matter if you are new to the industry or if you have been in it for a while, things are always changing and there is always something new to learn. Let us be your resource for learning and let’s positively grow this industry together for a sustainable and successful future.

Jim, Congrats! Obvioulsy the hard work and dedication has served you well. I actual have had the Loganberry from a friend of mine that was out that way not to long ago. I like to taste products from all crafters and yours was amazing. Keep up the great work!

Dave, I know we spoke about this topic yesterday but I thought I would take to the forum as well to answer as the question does come up quite a bit as to where I write for clients. Currently my exclusive program is available to all 50 states as well as Puerto Rico. Canada is a bit of a different story due to the regulations not only in regards to international but as well in regards to provincial regulations. At this time my program with the agreed valuation and progressive valuation on aging products is not available in Canada, but I am working on making it available. I do have resources in Canada that can assist our friends to the north, but at this time it is on a case by case basis and the coverage is the coverage; no cool forms like I have. As things progress and steps are made to make this available I will keep you posted here on the forums. ********** P.S. Do keep in mind that my program is not ONLY for aging products, I handle ALL products on an agreed valuation basis with no coinsurance penalties. I am the only one able to do this currently and I am the ONLY ONE that has a way to value the time element of products in the maturation process. I just wanted to clear that up. I write for all types of distilleries.

All, It has recently come to my attention that there are quite a few of you who have not had the chance yet to read my white paper on craft distilleries (see the attachment in the original post above). I know there are a lot of new folks to the forum but for those of you who have also been around a while, this is something everyone can use to their benefit. If you have read other posts that I have started or contributed to you will know that I often say that insurance is often overlooked or is often at the bottom of peoples minds. We need to change that mindset. Insurance is there to protect your hard earned investment, time and passion. Give this a read not as a “sales tactic” from me, it is more than that. It is meant to make you think and hopefully spark a conversation with your insurance professional as to what you are actually covered for and what you may expect should you be faced with the unexpected. Ask them the hard hitting questions, this is your investment after all!! Just because someone can issue a policy for your distillery does not mean they may truly understand your unique exposures and risks. Just because someone has written micro-breweries for years (my pet peeve) does not mean they can convert that knowledge into writing coverage on distilleries. Just because a carrier has a catchy shiny “program” name does not mean that it is covering you in the way that you truly need to be covered. Have the tough conversation with your insurance professional and make sure they know what they are doing and that they are doing the best job for you. I appreciate doing business locally, but if you are the only distillery that someone provides insurance coverage for, the question needs to be asked, what do they really know about covering you correctly. You are not a normal “main street” business. You are unique, the industry is unique and the coverage provided to you needs to be unique. Make the call and make sure you are being treated and covered for your uniqueness!

bdkolstad, Thank you. I think these types of issues, as well as any insurance issues for the most part, are easily overlooked. Many distilleries move at a quick pace in order to keep up with the daily rigmarole and insurance issues are often at the bottom of the list. As I always say, insurance seems to be the least concerning issue for many people until something bad happens. I would like to change that mindset. If you are uncertain about doing something new or different in your business you may consult the TTB or an attorney, or possibly a CPA. Add your insurance person to the list as well. There are a lot of aspects that either directly or indirectly impact your insurance which in turn impacts your business. If you are ever not sure, pick up the phone and make a call. Then, if you get an answer you are not sure of, call me and I will give you real answer!

Josh, Thank you for the +1 buddy. It truly is just as easy as "Scrounge" laid out. The process is very simplistic, it has to be when you deal with the volume of bonds that we do on a daily basis. I know I have said it before, but I am going to say it again, my bonding rate is just unbeatable. I have compared our rates against those of the top 20 surety carriers in the country and we continue to have the best bonding rate possible. As far as me being a hell of a nice guy ..... Thanks. I have been called many things I'm sure but it is always nice to hear the good ones too!!!! HA.

Jedd has a good point but as well, do check with you insruance provider to make certain that your policy provisions allow for you to rent out your room for special events, especially ones that are not hosted by you. If you have any further questions about this do please let me know.

Tyson, The pleasure is all mine. Working with great folks such as yourself is what makes my "work" feel more like fun. I cannot wait to continue watching you grow and be there with you every step of the way.

All great points so far folks, but this also brings up the issue of workers compensation insurance and general liability insurance as touched on by One Eight. In my dealings with a lot of craft distillers in all parts of this great country I have some suggestions to offer on how this potential issue can be handled: Check with your state department of labor ( You can check your specific state here:http://www.dol.gov/whd/contacts/state_of.htm ) to find out what exactly needs to be done (if anything) in order to use volunteer labor. In many states there is nothing that needs to happen out of the ordinary but it is always best to check. Luck favors the prepared!In many states volunteers would be considered a "guest" or permissive user of yours or of your business. If something unforeseen were to happen to a volunteer and it resulted in a claim it most certain could be covered by your overall Commercial General Liability (CGL) policy either under the "Occurrence" limit or under the "Medical Payments" portion. In several states there is the ability to add volunteer workers to your current "workers compensation" policy. Via endorsement (usually titled something along the lines of "Volunteer Workers Endorsement") you would elect to cover workers that are engaged in volunteer labor. Usually this approach has language associated with "assumed wages" stating that the assumed wage must be reported that is equal to the remuneration normally received by a regular, paid employee that would be doing the same or similar work. Usually this endorsement is continuous and in effect until a written request is issued to rescind the coverage. Usually the rate on this should be well worth the premium paid to ensure coverage is in place. Again, the best way to handle the issue of volunteers is to do your research, check with your state and check with your insurance provider. I know a lot of folks rely on the help of family and friends in order to get their product to market and it is a key component for a lot of you. I don’t think it is an issue of "you can’t use volunteers", it is a case of making sure you are protecting them as well as yourself.

bdkolstad, I'm glad you found the information useful, my goal is to make folks aware of potential insurance issues. Everyone here works very hard to create their products and it would be a shame to lose everything to a tragic event. The devastation, clean up and rebuilding is difficult enough after a loss. Dealing with the financial side of it, if not insured properly, is something I like to assist people in avoiding. If anyone has any other questions about insurance or would like to see a post on a specific topic do please let me know.

What can we all learn from the recent tragic and damaging earthquake in the Napa Valley region a few weeks back that effected many wineries (and distilleries) in regards to insurance? Well, for one, earthquake itself is not a covered peril under any standard commercial property insurance policy. In the specific language of a Special Form Coverage Part (an aside here, you should make sure that you are covered on a Special Forms Coverage on your current policy) all causes of loss are covered except those that are excluded. Exclusion ( b ) on the Special Form Cause of Losses (Commercial Property Form CP 10 30 04 02) specifically excludes Earthquake. Earthquake however is not limited to simply just "Earthquake". "Earthquake" is defined as earthquakes, landslides, mine subsidence, earth sinking (but sinkholes themselves are covered) and volcanoes. Obviously, if you are located in an area that is prone to earthquake activity it would certainly be time well spent to check into an earthquake policy if you do not have one. The broadest coverage available is called a Difference In Condition policy or a DIC. A DIC is designed to broaden coverage for specific perils that standard markets do not provide adequate, if any, coverage limits for. Usually these are used to insure against perils such as flood and earthquake but do also have other applicable uses. In regards to a DIC that covers the earthquake peril the standard deductible can range anywhere from a standard 5%-10% but can be a high as 25% of the Total Insurable Value (TIV) per unit or location. This deductible can seem high especially in regards to a multimillion dollar loss like those seen on some of the regions larger wine producers (where the deductible could be anywhere from $100,000 to $500,000 depending), but it is certainly better than getting no insurance assistance as was the case with many of the folks in that region. Another issue that has reared its ugly head due to this incident is one that I have pointed out for years, the valuation of your product or stock on hand. Under the Commercial Property Endorsement form CP 99 05 06 95 (another aside here, make sure you at least have this form on your policy. Selfless plug here, I have an exclusive coverage form that I offer that is far superior to this, but at a minimum you should at least make sure you have this form, but you need to talk to me to get the very best available coverage) which is titled "Distilled Spirits and Wines Market Value" and in short it says that the insurance company will determine the value of your product at the time and the place of the loss based on potential "Market Value". I don’t know about you, but I personally do not want the insurance company telling me what my product is worth after it is already gone, that sounds like a losing proposition doesn’t it? Scarier yet is the fact that this endorsement never clearly spells out the actual value or settlement procedure that one could expect should there be a loss. The from that I offer is the only form of its kind that allows us to schedule the actual value of the product/stock on hand on a progressive valuation scale throughout the maturation process or for the product that you have on hand (I have the ability to value aging as well as non-aged stock). Also, my form waives all co-insurance penalties that would be associated with the product/stock coverage in the case of a loss. Now in regards to the earthquake, it really is a moot point in the fact that earthquake would not have been a covered cause of loss anyway. However it does raise the question about how would this impact you during a covered peril. Under the standard form that every other company uses (CP 99 05 06 95) my assessment is, not very well. In regards to the vague "Market Value" language seen in that form, this can be a large issue for a lot of startup distilleries or for that matter, ones that have been running for years but that are adding new products. In the case of a new product or new maturing products often times there is no established "Market Value". Take for instance a start up distillery that is making a 4 year aged bourbon (it has happened, I have worked with several). If they were to sustain a loss to their inventory in the 3rd year of the 4 year maturation process, what is the "Market Value"? That is the big question. Technically under the CP 99 05 06 95 form there is no established "Market Value" since the product has never been to market in order to establish said value. That form then stipulates that the value could be "The market price per proof gallon of equivalent bottled distilled spirits as of the time and place of the loss or damage". If you are a true craft distillery, there really is no "equivalent", is there? At least you would hope there isn’t. Do you want to run the risk of only gaining reimbursement based on the price of what one of the big distributors gets for their lowest bulk sourced product? I would imagine the answer would be no. With my exclusive form, based on the product, the time maturation element (or stock on hand) and the product/stock reports that are kept it is easy to determine the exact value and the loss and what would be recuperated should the unforeseen take place. That is why I developed this product, so that everyone can sleep at night knowing everything is covered the way it should be. The valuation of your product/stock on hand is one of the most misunderstood and under insured coverage’s for many distillers and it is the one that should be the most focused on. Knowing what you are covered for and how it is valued should be at the forefront of your concerns. In closing I would suggest that if you are in an area prone to natural disasters that are excluded under standard commercial property policies such as earthquakes, flooding, hurricanes, etc. you need to speak with an insurance expert about how to best protect yourself against these situations. As well, it would be time well spent on your part to protect you investment of time, passion and capital and review your current insurance policy to see what is really covered in the case of a loss. Do you have the "Special" coverage form; Are there any other forms or endorsements that protect your product/stock on hand; What are the deductibles or co-insurance clauses associated with a loss; What gaps may there be in your policy; and what has changed over the years in regards to value of your assets whether it be addition of equipment or amassing more aging stock. The sad reality is many insurance "professionals" are able to provide policies for a myriad of risks but that by no means suggests that they should. Find a true insurance expert that fully understands your risk and make certain that the premium you are paying is actually worth the price you are paying for your protection.

Tyson, Looking good so far! I for one cannot wait to try your products!!!! I may be over in your area the beginning of October. If I am I would love to swing by and see your place.