Building insurance spikes

[Guardian's]

I recently have looked at three different buildings in which to locate a small distillery. In each case, as soon as building owner's insurance company is informed of my interest, the insurance companies have said the rate for insuring the building would need to be increased by between $1000 and $1200 a month if the owner allows a distillery to locate there. Is this spike typical and customary for the industry?

[John McKee]

In my experience and opinion this is a newer phenomena and is going to continue to get worse. Our insurance carrier dropped us, without chance of appeal and with no accidents, injuries, or lost time incidents....because of the number of fires, explosions, and incidents that others in this industry have allowed to occur over the last few years.

Expect annual rate increases, higher premiums, etc if our industry doesn't change its approach to running ethanol distillation refineries. Plan your OPEX and expansion budgets accordingly.

Cheers.

[porter]

Move the actual distilling process to a non-attached, cheap 'production' building out back and leave that as the insured production facility. Insure the other main structure as a warehouse. TTB may require an enclosed breezeway between for bonding but as long as you put fire rated doors on each end of the connector then each building is a seperate insurance item.

Give up on any downtown location and move everything relating to production outside of any city limits, that always helps with code enforcement too.

[stevea]

That's a pretty grim assessment John McKee., but I expect you are right.

Do you have any words of wisdom on fire prevention measures ?

I'm thinking that zero open flames and a steam driven plant (w/ boiler located outside a firewall) might go a long way..

Explosion proof pumps, fans, vent actuators and lighting anywhere that vapor is likely to accumulate.

Fire suppression equipment ? The foam systems are quite expensive if you have a product leak.

Move the actual distilling process to a non-attached, cheap 'production' building [...]

Are there TTB issues with the still room adjacent and not attached to premises ? Esp wrt to barrel storage ?

I expect the barrel storage area is just as bad wrt fire hazard as the still, maybe worse.

Then there is the mill room and the bottling room to deal with too.

[porter]

Barrels were discussed in a previous thread.

Not considered fire hazard if below 125p from what I remember.

Milling room... possibly but no more than a small bakery grinding their own flour

You're dead on though about the open flames. And no employees smoking inside the building at all. One otherproblem that appears to be common to several fires is that they ran unattended, even for a few moments, overnight, etc. And the flammable level alchohol wasn't in a sealed container at all times, once it left the still proper.

Where do keep your heads, in a glass at the side until you're done? Just common sense items an outsider should be asked to observe and find for you. Maybe change some bad habits.

[Guardian's]

Thanks for the input, but no contributor has yet touched on the meat of my question. Maybe I'm phrasing it wrong. So here is another attempt: I'm looking at spaces in the 2000 to 3000 square foot range. My town says those spaces go for about $0.50 per square foot. However, if its a distillery, the square foot price doubles or in some cases almost triples. Is this typical for distillers?

[Jedd Haas]

"Typical" varies widely by state; and even by location within a state. It would help if you stated (ahem) your location. Certain locations simply do not have a competitive market for insurance, and if you are so unfortunate, you will count yourself lucky to obtain coverage at all.

[stevea]

Barrels were discussed in a previous thread.

Not considered fire hazard if below 125p from what I remember.

I find this comment puzzling - since barrelled whiskey around 125p is common. Do you have a link to the thread please ?

Here is a big scale example of what 125p barrel storage can do @ Heaven Hill.

Or the Wild Turkey warehouse fire of 2000, started by lightening.

http://news.bbc.co.uk/olmedia/740000/images/_743083_fire1300.jpg

I do realize that my state code and IIRC the national fire code have exceptions for alcohol aging in

wooden barrels, but that *seems* to be a "carve out" for traditional use - rather than actual safe practice.

125p ethanol has a flash point around 72F at that concentration, and LEL ~3.3%, so I don't see how this

makes barrel storage safe.

Milling room... possibly but no more than a small bakery grinding their own flour

No more than this ?

[media=]

Of course at a smaller scale you'll probably just get a flash-over in the mill-room.

Maybe catch the grist on fire and hopefully just singe your hair.

Stones or metal bits or mechanical failure in a mill can be the source.

You're dead on though about the open flames. And no employees smoking inside the building at all. One other problem that appears to be common to several fires is that they ran unattended, even for a few moments, overnight, etc. And the flammable level alcohol wasn't in a sealed container at all times, once it left the still proper.

Open flames are a persistent source of potential ignition, but in one Canadian study static electric discharges were just as common a source of ignition in fires, and frictional sparks and electrical arcs & sparks were not inconsiderable. Smoking and open flames are obvious, but I expect few people consider the flash units in their smartphone cameras or the static buildup in an agitator bushing.

I don't think we can blame "lack of attendant". The fact is that humans regularly become distracted, have medical issues or need a break and any plan that assumes otherwise is a failed plan. We should expect humans to not (usually) make dumb mistakes, and can handle short procedures with considerable care, but multi-hour still run w/o a break is unrealistic. Further, things like pinhole vapor leaks in a still may be invisible even to an attentive operator.

Some area will be unattended at nearly ever point in time and problems can happen in off-hours w/ no human intervention. Barrels do fail catastrophically (I seem to recall a 0.2% rate somewhere) and of course leak, and a puddle of 125p ethanol is likely to get to the flash point except in winter, and will probably flow to the least desirable locations unless you have a floor drain or dam.

My *guesses* for safer operation are - firewalls between operating areas, containing dust, keeping air circulating. Alarms that will warn at a small fraction of LEL. Removing the main sources of ignition in the areas where high alcohol levels can be anticipated (still, barrel & bottling areas) w/ no open flames, ESD floor paints, explosion proof(resistant) pumps & lights in critical areas.

When I see pix of a typical microD with no sprinkler system, barrels stacked on one wall, a still nearby and spark-generating Mr.Coffee on the other it seems pretty awful to my amateur seat-of-the-pants evaluation.