PAGE 3 against fire and other perils, but agricultural commodities themselves, as well as equipment to process and transport those commodities, will still be excluded from coverage.5 Agricultural Hazards Technically speaking, a winery includes facilities for fermenting grapes and other fruits into wine with some alcoholic content. A winery doesn’t necessarily need to have its own vineyard or orchard, although many do. Vineyards and orchards represent costly components of an investment in a winery, as they require sizeable amounts of land in prime locations for growing. Vineyards and orchards also account for a large share of the risks to a winery, particularly natural hazards. Like other agricultural commodities, grapes are subject to damage by extreme weather events, such as droughts, inundations, and unexpected freezes, as well as plant diseases and infestations of damaging insects and other pests. Any one of these occurrences can ruin a crop for purposes of producing wine, especially if the terrain and grapes are selected and prepared for a particular vintage. Federal crop insurance is available and essential for addressing certain perils to growing crops, but it will not address losses in value due to subtle changes to growing conditions. Controlling these natural conditions and their effects accounts for one of the biggest liability exposures of wineries: Chemical drift liability, the responsibility of an agricultural operation for bodily injury or property damage caused when pesticides, herbicides, and other chemicals sprayed on one’s fields drift onto another’s property. Poor growing conditions can be one cause among many for a batch of wine to be tainted, potentially leading to products liability exposure for any disease arising from drinking tainted wine. Buildings and Equipment Once grapes are harvested or brought in from elsewhere, they must be put through the process of fermentation to create the wine. With this process, a winery adds the risks of light industrial operations to its agricultural operation. Through the fermentation and production process, a winery runs the risk of its equipment breaking down, ruining a batch of wine in the process, or suspending the wine-making operation during a critical time for both the life of the grapes and the demand from markets. In addition, wineries often lose valuable stock due to leaks in their equipment and associated spoilage, plus malicious tampering by disgruntled employees or zealous competitors. For these reasons and more, equipment breakdown coverage, including business income and extra expense coverage to address losses when operations must be suspended due to breakdowns, is an important component to a winery insurance program. Once produced and bottled, wine must be transported to market, creating a transit exposure with sensitive concerns for timing, temperature control, and handling. A Time of Testing for Wineries Continued Insights for Your Industry PROTECTING YOUR PROPERTY E04-1027 800.426.0677 | aipnw.com Sheila E. Salvatore, Editor | Editor@AdjustersInternational.com Copyright © 2022 Adjusters International, Ltd. All Rights Reserved. Insights for Your Industry® is published as a public service by Adjusters International, Ltd. It is provided for general information and is not intended to replace professional insurance, legal and/or financial advice for specific cases.
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