LATEST COVID-19 BUSINESS UPDATE
As everyone is aware, Governor Newsom is requiring all brewery tasting rooms to be closed to on-site consumption and brewpubs to operate at 50% capacity due to the COVID-19 virus.
The CCBA has subsequently sent out a press release:
Today the Governor addressed the people of California, requiring certain businesses to close and others to increase social distancing protocols. The Governor is requiring breweries to close their tasting rooms, but he did not direct breweries to stop production or cease off-site sales. Breweries are still allowed to continue to manufacture beer, self-distribute beer, conduct off-site sales (to-go orders from the brewery) and deliver beer direct-to-consumers.
While the Governor used the term “brewpub” to broadly describe breweries with on-site sales, he was likely referring to breweries with only a tasting room. “Brewpubs” are breweries with restaurants. While we are still seeking clarity, based on the recommendations of the Governor regarding restaurant operations, CCBA’s understanding is that brewpubs will be allowed to stay open with the directive to maintain “deep social distance” between patrons and reduce capacity by 50 percent to accommodate this.
With this new development, we wanted to discuss what is currently covered by insurance and what options to generate revenue differently are covered by insurance.
Business Interruption Coverage
Business Interruption is a coverage that must be triggered by a covered cause of loss. Covered causes of loss include fire, theft, water damage, vandalism, etc. Unfortunately, a virus or pandemic is not a covered cause of loss.
There is Business Interruption coverage for Civil Authority, however, once again, the Civil Authority must close the business because of a covered cause of loss outside of your premise. For instance, when the fires were raging in Ventura County, CA, the City of Ventura’s downtown area was closed by government authority. Since the cause of loss was a fire, our downtown Ventura brewery client had his business interruption covered by the Civil Authority coverage. Once again, this is unfortunately not the case.
I understand this is not positive news and the fact that we are devastated to hear the stories and pain in our client’s voices is of little solace. However, we will not sugarcoat the situation as moving on towards positive actions is paramount.
Please note, the above coverage explanation is based on how the policies are written and will respond to the current situation. Court or government actions to alleviate the economic damage caused by the Governor’s action will either be outside of insurance or force coverage upon the insurance carriers. That takes either the legislature or the court system, therefore, a solution from those avenues is not coming quickly.
Options to Generate Income
Our brewery clients are looking for ways to generate income by alternative means. Currently, it seems that pick-up orders are still allowed at production breweries. And, if the CCBA clarifies Newsom’s comments, brewpubs that are able to operate at 50% capacity will also be able to sell take-out and delivery orders.
Production breweries have also inquired about the option to deliver beer. I cannot speak to the legality or permissibility by the ABC or TTB, however, understanding if you are covered by your insurance to deliver beer is critical as well.
If you currently have a commercial auto insurance policy or Hired and Non-Owned Auto coverage on your General Liability policy, you are likely covered to deliver beer to customers in the following circumstances.
- You are using company-owned vehicles scheduled on the policy.
- Using employee-owned vehicles and they have their own personal auto insurance as well.
- You rent a vehicle for deliveries.
If you plan on delivering beer or food, please call us first to verify that your exact policy provides coverage. However, from our discussions with underwriters, delivery is a contemplated coverage and should be covered in most instances.
We are here for you and we know that the community you have built around your brewery is there to support you as well. We know you will need to get creative to make it through uncertain times like these. Be sure to communicate any additional revenue-generating opportunities past us to be sure that you have coverage.
For up to date and additional on how you can protect your employees and your business please visit the CDC directly.
Brewery Insurance Program