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Old 06-01-2011, 10:02 PM   #1
Jumbo82
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Default Do I need insurance for my nanobrewery?

As some of you already know, I have a one barrel brewery in Holderness, NH called Squam Brewing LLC. Up until now, I have operated without any insurance on my business. But I may need to bite the bullet and get some. I'm hoping someone out there can help me make an informed decision.

There are two main reason I'm looking into getting insurance. The first is that most brewing festivals that I've been invited to require proof of a certain amount of coverage. For example, one coming up in July needs this -

Insurance Requirements:
1. Public Liability: Minimum of Two Million ($2,000,000) combined single limit for bodily injury.
2. General Liability: Minimum of Three Hundred Thousand ($300,000) property damage per incident.
3. Liquor Liability: Minimum One Million Dollars ($1,000,000) combined single limit for bodily injury, deathand/or property damage.

It varies from festival to festival slightly, but that one seems pretty typical. The other reason for possibly getting insured is obvious; avoid getting screwed over if something bad happens. This is where I need help making an informed decision.

By forming an LLC, I thought I was protecting my personal assets in the event of a lawsuit or something similar. Thats why I chose not to set up a sole proprietorship. But after doing some googling, it appears I'm not personally protected by having an LLC.

On the one hand, its easy to say "just get the insurance and be done with it." But paying something like $500 every quarter is something I'd like to avoid if its not necessary. I'm in my late 20s and don't exactly have a fortune sitting in my bank account (the brewery itself isn't worth much at all), so if I do get taken to court there really isn't a whole lot someone is going to get. Unless they garnish my wages, which would really suck.

So to summerize, I would like to know how screwed I could be if I opt not to get insurance. I can handle not going to brew fests, but I can't handle paying off a million dollar lawsuit over the course of my lifetime. I don't plan on doing anything negligent and if a true accident happens, can't I just declare bankruptcy and be done with the brewery? Thanks in advance for any insight or advice people have.

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Old 06-01-2011, 10:14 PM   #2
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Paying 500 every quarter may seem like a sh1t deal but with today's litigious society I would be inclined to take every precaution necessary. Just my 2 cents.

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Old 06-01-2011, 10:39 PM   #3
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LLC = Limited Liability Company. It's limited, you still have liability, and it's not a corporation.

As you're finding out, if you want to run a legit business, you're going to need business insurance.

In case you think being incorporated gives you a safeguard against liability lawsuits, google "Piercing the corporate veil".

Find a local business group & get some well-grounded advice. Try the SCORE chapter in your local area if you want free advice from Retired Executives who've "been there, done that."

Good luck with it.

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Old 06-01-2011, 10:50 PM   #4
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have you taken a look at http://www.whaleninsurance.com/brewery/index.htm

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Old 06-01-2011, 11:50 PM   #5
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As with what XX said, having an LLC will help protect your personal assets in the case of your business being sued....but really only if you are treating your business LIKE A BUSINESS (and not your personal piggy bank or whatnot, you have to follow formalities but luckily there are not many for LLCs). One big deal about "piercing the veil" for LLCs or Corporations is being undercapitalized or not having any insurance. I'd highly recommend getting some (but have no idea how much). What happens if a single bottle you sell somehow gets somebody sick or they swallow glass or it explodes or your brewery burns down or floods or... on and on.
More practically, there is information about particularized "Brewing Insurance" "in the "Guide to Starting Your Own Brewery" book. Whalens appears to be down with it, but I'm sure you could talk to your normal insurance agent and get some more information. Good luck!

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Old 06-02-2011, 02:05 AM   #6
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Thanks everyone! I'll contact Whalen tomorrow. I've met a couple of SCORE people at functions in the past, might be time I give one of them a call. Better late than never!

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Old 06-02-2011, 02:09 AM   #7
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2 G's a year might sound like a lot until that jackhole that "chokes on a piece of glass" or something from one of the bottles of your stuff decides to drop three times that in legal fees to go after your assets.

I'm surprised that you didn't make this decision earlier. Take it for what it's worth, but at the end of the day if you're protecting your investment, you're doing the right thing.

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