Critical risk factors for wineries

Critical risk factors for wineries

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Critical risk factors for wineries

Developing a broad range of solutions designed to provide protection throughout the lifecycle of a winery requires careful attention.  Whether it be protecting your grapes and vines in the even of a loss due to hail, frost or fire through to insurance for your property, business interruption, marine transit, trade credit and liability risks, HDL has the experience and global market reach to deliver tailored solutions to you.

Our experience in the wine industry and in dealing with major multi-million dollar losses in wineries places us in a unique position of truely understanding specific winery issues including accidental loss due to spoilage, leakage and contamination of wine stocks and the correct methodology to apply when determining the valuation and basis of settlement for your wine stock.

Importantly, there are often critical risk factors for any wine business that are often overlooked by a less experienced insurance broker, including but not limited to:

  • Normally, stock reserves for any manufacturer depreciate over time, conversely, wine stock appreciates. Wineries need to ensure that the declared values that are used for insurance have the appropriate appreciation schedule factored into account.
  • Your wine may depend on the barrels that you have matured over the years that you have been operating, and should they be destroyed, any replacement barrels must be carefully sought out so as not to alter the wine. Basis of settlement needs to take into consideration and reflect how your wine suits barrels, whether new or old.
  • Liability for duty may be an issue as the wine industry has to pay tax as the wine is bottled, rather than sold, as such, as the bottles are destroyed, you should be able to recover or offset the cost of the duty.
  • Labelling may be an issue. During and following a fire, the fire department are not usually conscious of the location of how stock are stored and the stock may be moved and unable to be identified. Unlabelled stock that cannot be identified should be considered total loss, and the basis of settlement should be reflected as such.
  • Control of salvage is vital, you must have the right of refusal to salvage so potential inferior stock is not passed to the public, and diminishing the value of its vintage.
  • Wine Libraries held are often irreplaceable, and should be on an agreed value and specified separately in the insurance schedule.
  • Accidental Damage is an important sub-limit, it has happened previously that the vat valves have been knocked off accidentally causing the loss of thousands of litres.
  • Increased cost of working is often undervalued as if the wine stocks or vineyards are destroyed at the time of harvest or post harvest, it is increased cost of working which will be used to buy replacement blends, and to have any surviving wine tested to ensure quality of product with no contamination.

Winery risk rating hazard

The following provides a generalised risk rating hazard index for wineries in Australia.

Contact HDL to discuss how we can assist you

Contact HDL for further information.

The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact HDL

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