Archive for Drug & Alcohol Risks
Alcoholic Beverage Manufacturers & Distributors
Because of the tremendous exposure to burglary losses of stock and the need to maintain an adequate inventory of whiskeys, wines, and liquor, liquor dealers and stores are target risks for burglars and other criminals. Some insurers offer needed coverages piecemeal, on a stand-alone basis. Others combine all the necessary coverages, including liquor liability, in a package policy. These package policies include high liability limits for both commercial general liability and liquor liability. Careful consideration must be given to the firm’s ownership, peak concentration of values at certain times of the year, the firm’s business reputation, and adequate lighting and police surveillance when the store is not open for business.
Bars
Property and liability insurance coverage on bars is difficult to place because ofhazards, loss history, and clientele. Bars may be located in urban high crime areas or in isolated rural areas that makes them theft targets because of the appeal of their liquor inventory and the day’s receipts. Many bars still permit smoking which can create an explosive situation when combined with alcohol. Liability hazards are the traditional premises slips and falls on premises and in parking lots that are aggravated by liquor-impaired judgment. Many bars offer activities such as dancing, live-entertainment, games, and contests that can significantly increase their exposure to loss. All bars have vicarious liquor liability exposures but the degree of the exposure depends on laws in the particular state.
Breweries
Restaurants and taverns that brew their own beer and microbreweries that make and sell small batches of beer are increasing in popularity. These small breweries are able to compete with larger commercial breweries because of their smaller size, reduced costs, and limited distribution area. Programs are available to insure the equipment and supplies they use to brew the beer as well as their commercial general and liquor liability exposures.
Cannabis
Cideries
Liquor Dealers and Stores
Because of the tremendous exposure to burglary losses of stock and the need to maintain an adequate inventory of whiskeys, wines, and liquor, liquor dealers and stores are target risks for burglars and other criminals. Some insurers offer needed coverages piecemeal, on a stand-alone basis. Others combine all the necessary coverages, including liquor liability, in a package policy. These package policies include high liability limits for both commercial general liability and liquor liability. Careful consideration must be given to the firm’s ownership, peak concentration of values at certain times of the year, the firm’s business reputation, and adequate lighting and police surveillance when the store is not open for business.
Liquor Liability (Host Coverage)
A few markets write host liquor liability insurance to protect the possible exposure of individuals or business firms against liability for their use of liquor for business and non-business entertainment. Commercial general liability policies do not exclude coverage for claims that arise out of the use of liquor by firms that do not manufacture, sell, distribute, or serve alcoholic beverages. However, this coverage can be very useful when the named insured and the insurance company disagree about whether coverage applies at events when an accident that involves alcohol occurs.
Liquor Liability and Dram Shop Act Liability
Bars, restaurants, hotels, motels, and other businesses that sell, distribute, or serve liquor need coverage for their vicarious liability for injury or damage that arises out of acts of patrons served alcoholic beverages in their establishments. Specialty insurers write liquor liability coverage. It covers common law and statutory liability exposures for the businesses and also owners, general lessees, or mortgagors of the property. Insurer interest in writing this coverage and the premium levels available vary from state to state, based on the liquor liability laws in each state.
Marijuana Cultivators
Cultivators are also known as producers or growers. They include nursery operations, planting, growing, harvesting, packaging, and transporting cannabis. Some growers specialize in cultivating specific cannabis strains. Once harvested, the plants are trimmed and cured (dried). Cultivation takes place indoors (in greenhouses) and outdoors.
In addition to property and general liability coverages, other coverage issues involve workplace accidents, pollution liability and cleanup, payment of damages for the insured’s negligent acts, errors, or omissions.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Marijuana Manufacturers/Infusion Centers
Manufacturers obtain raw cannabis product from cultivators and processors. They turn the plant or raw material into consumable products and often perform extractions converting plant material into concentrated form to be mixed with other consumable products. Extracts have many applications including topicals, tinctures, smokables and edibles.
Property and business income exposures are challenging because of fluctuations in supply chain. The workers compensation exposure can be very high and require extensive and ongoing loss prevention effort. Employee dishonesty and theft are concerns as well.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Marijuana Processors
Processors are businesses that prepare marijuana after it has been harvested. Processing may occur either for, or at, a cultivation site. Processing includes activities associated with compounding, drying, curing, grading, trimming, rolling, storing, packaging, and labeling of cannabis or non-manufactured cannabis products. They face similar general liability and other risks found in other agricultural and manufacturing businesses face such as damage to property, fire, workplace accidents, product contamination.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Marijuana Retail Dispensaries
Dispensaries are retail outlets that sell medical and/or recreational cannabis direct to consumers. Dispensary technically means a facility that prepares and makes medicines available. With more States authorizing adult recreational use and new medicinal use opportunities developing in multiple States, cannabis sales are projected to grow substantially in the next few years. Therefore, there’s a concern with the rapid addition of start-ups. Similar to Medical marijuana dispensaries, the product exposure is problematic due to a lack of Food and Drug Administration guidelines. Employee dishonesty and fire concerns are high. Theft exposures is a particular with prevalence of cash sales. Other product and professional exposures are significant as customers rely on employee guidance on product use. Recall exposure is also a concern.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Marijuana Wholesale Distributors/Transporters/Secure Transportation
Wholesale Distributors and Transporters are businesses that purchase or contract quantities of cannabis from other licensed facilities and sell and transport products to licensed retailers, processors, and/or to other wholesalers. Product is stored in secure warehouses between transportation points or while pending sale. Wholesale distributors can also solely operate as secure warehousing and secure transporters.
The workers compensation exposure can be high and require extensive and ongoing loss prevention effort. Employee dishonesty and theft are concerns as well as higher auto and cargo exposures. Liability for loss or damage to (or destruction of) property of others is a significant exposure. Values can be significant.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Medical Marijuana Crop Insurance
A medical marijuana dispensary must have a marijuana crop to sell. This unique crop is subject to the same hazards as any other crop in the specific area where it grows. This crop’s potential value adds a significant theft exposure. The crops’ value varies because some growers provide a generic crop while others use research and development techniques to produce disease- or symptom-specific crops.
Medical Marijuana Dispensaries
A number of states have approved the use of physician prescribed medical marijuana. These dispensaries attempt to fill those prescriptions. They have exposures similar to pharmacies or liquor stores because the commodity they sell is both very attractive and controlled by a government authority. The product exposure is more difficult because there are no Food and Drug Administration (FDA) guidelines that address the drug. Employee dishonesty and theft exposures are significant because all sales must be conducted with cash. Products, particularly from edibles, and/or professional exposures are also concerns.
Nightclubs
Nightclubs are entertainment venues with live bands or DJs and dancing. Some nightclubs are for under 21’s and alcohol free but most have significant liquor exposures. There is usually an entrance fee or cover charge and bouncers are often employed to maintain security both at the door as well as within the establishment. Commercial property, general liability, liquor liability, and workers compensation coverages are all needed but may be difficult to place.
Wineries
Wineries are considered agribusiness and need coverage specifically designed for their unique exposures. Property insurance includes coverage on buildings; outdoor steel tanks or underground wine storage tanks; coverage for specified perils for grapes that are on trellises and vines; electronic data processing equipment; “all risks” type coverage for wine stock; and coverage for wine leakage from tanks and containers if tanks burst, collapse, or otherwise discharge wine. The wine itself needs special valuation clauses. Liability coverage applies to the premises, retail wine shops, tours, and products liability. Separate liability coverage may be needed for special events and liquor liability. Environmental coverage may be needed for liability due to spraying operations performed in vineyards.