Risky Business

In the two short years since Curt Cameron bought Thomas Hooker Brewery, he’s made real headway in polishing the reputation of the beer named after Hartford’s founder.

Sales have doubled, the company’s four ales and four lagers have cracked several Top 50 lists posted by RateBeer.com, and operations have moved from Hartford to a facility in Bloomfield four times as large.

Protecting that record of success hasn’t been easy.

Like most people in the industry, Cameron has struggled to find an insurance company that provides all the coverage he needs to shield his business. While it may not seem like a big deal, protecting the assets he’s worked so hard to build is important.

“For breweries, it’s a little bit convoluted because there are a lot of questions over which agencies will write a certain coverage,” said the 43-year-old Cameron. “Traditionally breweries have been forced to package their insurance needs from different companies because there aren’t many one-stop shops out there.”

Insurers have been hesitant to offer an all-encompassing coverage because of the unique exposures microbreweries and brewpubs present, specifically their need for liquor liability and equipment breakdown coverage, industry experts said.

In response, The Hartford Financial Services Group has partnered with the Whalen Insurance Agency of Northampton, Mass., to offer microbreweries and brewpubs access to a full set of insurance products.

“We want to be craft brewers’ top choice for their insurance protection,” said Deborah Bibbins, vice president for Captive & Specialty Programs at The Hartford. The insurer figures that so-called craft, or niche, brewers make up 4 percent of the U.S. market.

Cameron said the market potential couldn’t be better for the financial services giant. He estimated that 1,500 to 1,600 microbreweries across the country currently piece together their insurance coverage from multiple companies. “If they [The Hartford] produce a single turnkey solution, it would help tremendously,” Cameron said.

Whalen Insurance is an industry leader in providing microbrewery coverage. In 1987, it became one of the first insurance companies to offer brewers a special package including property, general and liquor liability, workers’ compensation and equipment breakdown.

The company currently insures 70 microbreweries and brewpubs across the country. It hopes to expand that client base to 250 with the help of sales representatives at The Hartford.

Owner Peter Whalen said insuring microbreweries and brewpubs has proven to be profitable even though the risks scare some insurers away.

Choosing Carefully

Whalen said he has had success because he’s been selective in choosing the clients he underwrites. He prefers to target family-style brewpubs, which usually have alcohol sales that are roughly equal to food sales.

“Typically, we don’t want to get involved with places where you are dealing with a pretty heavy consumption of alcohol,” Whalen said. “We aren’t looking for brewpubs that offer happy hours, live entertainment or attract a college crowd because those atmospheres have much greater risk.”

Microbreweries tend to be owned and run by experienced business people, Whalen said. “That limits the chances they will take shortcuts, which could put the company at risk,” he said.

Cameron fits that profile. He has a background in computer science and business. After working in California’s Silicon Valley for 11 years, he decided to settle in Connecticut. He bought and sold two liquor stores before purchasing Hooker Brewery in 2006, nine years after it was founded.

For microbreweries and brewpubs, liquor liability can be the most difficult coverage to find at an affordable rate. As a result, many brewers forgo the insurance, especially since most don’t serve alcohol on their property.

Whalen said that can be a costly mistake.

“Beer manufacturers that do not serve beer should know that they are not necessarily insulated from liquor liability claims,” Whalen said.

For example, a microbrewery can be named in a lawsuit if someone becomes intoxicated by consuming their product obtained at a bar or liquor store.

Microbreweries also have difficulties finding proper equipment breakdown coverage, even though it’s not entirely unique, Whalen said. That’s because standard insurance coverage usually stops paying out after damaged equipment is repaired. Breweries need longer coverage because it can take several weeks before new beer is actually produced.

The coverage offered by The Hartford and Whalen Insurance covers the expenses incurred by that lost time.

Product recall is another important coverage for microbrewers. It covers everything from spoiled beer to bad bottles. “There are many things that could go wrong for a microbrewery and brewpub,” Whalen said.

For example, Boston Beer Co., the brewer of Samuel Adams craft beers, recalled some of its product in April because of defective bottles that may have contained glass.

Bibbins said The Hartford’s array of products is designed to protect brewers against the unexpected “so they can focus on what they do best — brewing specialty beers.”