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INSURANCE

Directors and Officers Liability

Depending on the legal structure of your business, you may be required to have a board of directors. The responsibilities of the board can vary depending on your articles of incorporation, but the most important attribute of the board is that they have a responsibility to protect the money and assets of the organization.


The likelihood that one of the members causes physical harm to someone is very slight. If that happens, general liability policies are in place to cover those occurrences. But what if a board member makes a decision that financially damages a vendor? Or an employee? What if your brewery declares bankruptcy and vendors are blaming the failure on the Board’s leadership? No physical harm or property damage occurred, which are the factors needed in order to trigger a general liability claim.


This is where Directors and Officers Liability (D&O) insurance comes into play. It protects the Ds and Os, making it so they can confidently make decisions about the direction of the company without having to worry about personal financial loss. The policy will pay out to cover settlements or defense costs. Depending on how the claim is filed, these claim payments will be made directly to the Officer or to the organization itself.


I have a client that was the victim of embezzlement over the course of multiple years by a trusted employee. By the time the theft was discovered, well over $250,000 was missing.
One investor claimed poor financial oversight from the company’s officers was the reason the loss happened and sued to get their investments back. The D&O policy provided money to cover the defense and ultimate settlement of the lawsuit. Without the D&O coverage, the board would have been on the hook personally for those dollars.


These policies can be purchased stand-alone or as part of a package typically referred to as a management liability policy. Management liability policies typically contain coverages for D&O, Employment Practices Liability, enhanced Crime and Cyber Liability policies, and Fiduciary Liability policies. These are not policies that most breweries purchase when they open, mainly because no one ever brings it up or start-up companies are looking to pinch as many pennies as possible.

But as your business grows, the likelihood that your exposure to different kinds of claims grows as well. Whether you choose to buy an insurance policy (particularly one that isn’t mandated by law or contract) is a philosophical decision that every company has to make. But being aware of these exposures and taking steps to mitigate losses outside of traditional, mandated insurance coverage is a huge part of risk management. It’s an exercise that could one day save your business.

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Contributing Author

Matt Hughes                                                                                                 Risk & Insurance Consultant, NFP Insurance

 

Matt has been a commercial insurance and risk consultant for 15 years. In addition, he has been a brewer for Wynkoop Brewing Company and founder/ former head brewer for Goldspot Brewing Company.

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Empty Board Room

Directors and Officers Liability

Matt Hughes, NFP Insurance

Depending on the legal structure of your business, you may be required to have a board of directors. The responsibilities of the board can vary depending on your articles of incorporation, but the most important attribute of the board is that they have a responsibility to protect the money and assets of the organization.

The likelihood that one of the members causes physical harm to someone is very slight. If that happens, general liability policies are in place to cover those occurrences. But what if a board member makes a decision that financially damages a vendor? Or an employee?

Contract Checklist Review

Insurance Contract Reviews

Matt Hughes, NFP Insurance

The day to day life of a brewery owner is filled with a lot of things that aren’t related to beer: dealing with payroll, fixing pumps, training new employees, tending to social media, or about a thousand other things.


So when someone asks you to sign a contract, whether that’s to bring on a mobile canner or to participate in a beer festival, many will either simply sign the document or hand it off to their attorney.

Paperwork

Employment Practices: Liability Insurance

Matt Hughes, NFP Insurance

Your brewery is booming. You’ve just celebrated your 7th anniversary party. In addition to the party, you’ve announced that you’re opening a second location and you’re going to start packaging your beer for wholesale. Life is good.

 

Along with this second location comes a lot of new overhead: more equipment, more permits and licenses, and definitely more employees.

PLAN

  • Contact a Broker

  • Understand Basic Lines of Coverage

  • Build It Into Your Business Plan

  • Think about Risk Management

ACT

  • Contract Reviews

  • Get Quotes

  • Insuring the Buildout

  • Bind Insurance

    • Property​

    • General Liability

    • Auto

oPEN

  • More Risk Management

  • Did You Forget Anything?

    • Workers Compensation​

    • Liquor Liability

    • Crime

Grow Graph

GrOW

  • What Is Your Exit Plan?

  • New Exposures Mean New Insurance

    • Management Liability Lines​

  • Addressing Claims and Loses