It is difficult to operate a small brewery. Every day is busy. You need loads of batches to brew, orders to fill, and customers to keep happy. Every brewery has several individuals who carry the day: the head brewer with an uncommon taste, the operations director who manages the production process, or a co-founder who constructed the brand image and reputation on his own. With one of them suddenly out of the picture, the situation can be quickly unraveled.
This is where the key person insurance comes in; imagine that it is the lifeblood of your business. The policy is owned by the brewery, which pays the premiums. In case of an event to that key person, the payout will help maintain business operation, lost income, recruiting a qualified replacement, or debts and loan obligations until the situation is regained.
Who Counts as a Key Person?
Not everyone. Just individuals that do count. Usually:
- Founders or Co-owners: These are the decision makers.
- Head Brewers: They are recipes and quality.
- Sales or Marketing Leads: They ensure that distributors are satisfied.
- Operations Managers: They maintain the smooth running of production.
They can be eligible in case their loss will cause you a lot of damage in your business. A long-term delivery driver may even count, provided that he or she keeps everything in check. You have to think about the people whom everyone is relying on every day.
How Much Insurance Do You Need?
This doesn’t have to be complicated. A few ways to figure it out:
- Multiply Salary: Take their yearly pay and multiply by 5–7.
- Replacement Costs: The cost of hiring and training a new employee.
- Contribution to Profits: How much money they bring in, and how long it would take to replace that.
Example: Say your brewmaster earns $100,000 a year and is responsible for about a quarter of your brewery’s $1 million in profits. That’s a big role to protect. In that case, coverage in the range of $600,000 to $750,000 usually makes sense. Mix different valuation methods, income, contribution to sales, and replacement cost, to land on a realistic number. It’s smart to round up slightly. A little extra protection can make all the difference when keeping your brewery stable through unexpected changes.
Get It Before Expanding or Taking Debt
Thinking about a loan? Or growing the brewery? Get insurance first.
Lenders often ask for it. It is a good idea even though they may not. The absence of someone significant will not kill your business. It will make you less worried, and you will concentrate on the development of the brewery. It is also beneficial, since it becomes easier to plan. In the case you intend on bringing in partners or selling out the business later on, then when the time comes, having an insurance policy in place makes the process easier.
Life Insurance Basics
Not sure about life insurance? Here’s the short version.
For brewery owners seeking guidance, Everly Life offers helpful information. They explain coverage and policy types in plain language. It’s a good place to start.
- Term Life: Covers a set period. Cheaper. Simple.
- Whole Life: Lasts forever. Builds cash value.
- Universal Life: Flexible. Cash value grows.
Even a basic term policy can protect your craft beer brewery. You don’t need something fancy. Just enough to ensure the brewery’s survival in the event of a key person’s absence.
Protect Your Brewery
Consider it. Your brewery is more than simply a company; it’s your passion, your narrative, and your dream come true. It ought never to be a last-minute effort to protect those who enable that. Depending on what life throws at you, key person protection can be the silent protection the fact that keeps your garage doors running and your brewery tanks filled. It’s peace of mind, allowing you to concentrate on what you do best, brewing great beer and creating something that lasts, rather than bureaucracy or additional costs.
