New Workers’ Comp Class Code for Furloughed Brewery Employees

By: Matthew Post, C&S Insurance

According to an April 2020 survey, conducted by the Brewers Association, 99 percent of craft breweries—virtually all, in other words—experienced some economic strain due to the coronavirus pandemic. This staggering figure includes 90 percent who saw declines in their on-site sales, and 89 percent who were forced to cancel 2020 events. No doubt for many, curtailed cash flow and production led to another tough reality: furloughs.

Three months later—as restrictions ease and the industry begins to make peace with a new normal—any inroads toward recovery are worth pursuing. And luckily, thanks to the Massachusetts DOI’s recent approval of a newworkers’ comp class code for furloughed employees, we’re now seeing an opportunity for brewers to lower their annual premiums. The following Q&A outlines what this code means, who can leverage it, and when qualifying brewers need to take action. (As soon as possible is the answer, by the way.)

Q: What is this new workers’ comp class code, and why does it matter?

A: Code 0012 is a newly approved workers’ comp class code. For those who aren’t familiar with the term, a “class code” is a four-digit code used by insurance companies to estimate what your premium should be, based on the risks associated with the type(s) of work your employees perform. Normally, brewers and brewery drivers would be assigned a code of 2121—with a rate that currently stands at $1.24 per $100 of payroll. 

Because it is designed to address the folks on your payroll who were temporarily absent from work, this new code has a rate of zero ($0.00 per $100 of payroll). So even though you may have continued paying your furloughed employees, any of that payroll assigned to code 0012 would not be included in the premium calculations for your workers’ comp. That could potentially equal big savings.

Q: My brewery furloughed employees this year. Can we use this class code?

Yes, as long as you continued to pay those employees while they were furloughed, and provided you maintained “separate, accurate, and verifiable entries” within your payroll records. 

Q: What about employees working from home? Does that count as furloughed?

No. According to the WCRIBMA, if an employee has been designated to work from home, and his/her duties are now of a clerical nature, his payroll during the pandemic period can be allocated to Code 8810 – “Clerical Office.” (As long as you keep those separate records for each employee affected.)

Q: What documentation is needed in order to leverage class code 0012?

You’ll need to provide a list of all furloughed employees, the employees’ normal workers’ compensation class codes, their weekly wages, furloughed dates, and anticipated dates of return to work. Your insurance agent should be able to help you compile and review these materials before audit.

Q: When does my brewery need to submit this information?

According to the WCRIBMA, employers making payments to furloughed workers need to alert their workers’ comp carrier within 60 days of the rule’s approval (7/10/2020), or within 25 days of beginning to may furlough payments, whichever is later. If your annual audit is approaching, you’ll want to prepare this information even sooner.

Q: I still have questions about the new class code. Who should I ask?

Your insurance agent should help you take advantage of this cost-saving opportunity, along with other pre-audit reviews. If you don’t have a dedicated agent and commercial risk advisor, our team of brewery insurance experts would love to answer any questions you may have. You can reach me, Matt Post, at mpost@candsins.com or 508.504.2012. We recently worked with a new client on their annual audit, and were able to implement the 0012 class code for a variety of employees—saving thousands on the company’s workers’ comp premium. 

What Does Microbrewery Insurance Cover?

In addition to being a craft brewery insurance expert, Ben Cavallo is the owner and principal of C&S Insurance, a proud member of the Mass Brewers Guild. He holds degrees from Emory University and Boston College, as well as CIC, AAI, and CISR insurance designations. He can be reached at 508.339.2951 or ben@candsins.com.

By: Ben Cavallo, owner and principal of C&S Insurance

When breweries are shopping for insurance the most common questions we hear are: 

• What does microbrewery insurance cover? 
• What comes in the “standard” startup package?
• Which coverages am I required to have in place so I can open a microbrewery, nanobrewery, or brewpub?

Folks starting new breweries—and plenty of long-time owners, too—call to ask for the baseline minimum. After all, running a business comes with all sorts of hidden costs and unforeseen expenses. No one wants to shell out extra money for insurance—which is basically a business tool you can’t see, can’t touch, can’t even use unless something goes wrong.

Unfortunately, we have to give these brewers the same answer: it all depends. Not very helpful in the immediate sense, but individualized needs are the reality of craft brewery insurance. There’s not much standard about it, despite the results you can find online for “business insurance packages.” What’s more, shopping for a cheap, generic option often leaves craft brewers exposed to serious gaps. Here’s a quick look at some examples:

1.     Property Insurance

Unlike a typical restaurant or bar, the products and equipment inside your microbrewery are especially costly and time-consuming to replace. In the event of a fire, prolonged power outage, tank leak or other machinery failure, you have to consider the potential loss of business income, product spoilage, and other unique concerns. Only an agent with experience in microbrewery insurance can advise you property coverage blanket limits based on your in-house capacity.

2.     General Liability Insurance

Allegations of wrongdoing don’t just damage your brewery’s reputation; they’re often expensive and drawn-out legal events—and that’s before they even get to a courtroom. It’s difficult to anticipate how much liability coverage you’ll need (on a “per occurrence” basis and in aggregate) without enlisting an industry professional. Even if you opt to forego certain coverages as a startup operation, it’s important to at least understand the different types of risk and protection—from liquor liability, to special events, to employment practices liability (employee lawsuits)—as your brewery grows and evolves.

3.     Workers’ Compensation Insurance

We know lots of microbrewery startups begin with a pair of spouses, siblings, or hometown buddies, which might seem to negate the workers’ compensation discussion… But the truth is that most small businesses in the Commonwealth of Massachusetts are  required by law to have a valid workers' compensation policy at all times—even for a staff of just two people. If your business is an LLC, LLP or otherwise qualifies for exemption, there’s still a conversation to be had. Chances are you don’t intend to be a two-man (or two-women) show forever. Anticipating the measures and protocols that will affect your workers’ comp rates is a smart thing to start doing now. Take advantage of the free advice you can get from a dedicated brewery insurance agent.

Bottom line: when you ask yourself, “what does insurance cover?” you should be prepared to sit down and have a longer conversation with an agent who is an expert in your industry. He or she will listen to your complete business description and ask a series of questions designed to map your unique risk profile. Meanwhile, learn more about the factors that affect microbrewery insurance rates and carrier options: 

Three Keys to Crafting a Better Business Protection Plan

By: Matt Montesano
A craft brewery insurance consultant at Cavallo & Signoriello 

It’s a warm, sunny day in Massachusetts. The Red Sox are up by five runs. The food truck is serving your favorite grilled cheese (the one with the fontina and the perfectly caramelized onions...). Clusters of friends are gathered outside on the patio, sipping your summer special—a smooth brew of honey and citrus.

Leave it to an insurance agent to spoil this idyllic scene, but hey, risk management is our job. And at the end of the day, most craft brewers thank us for pointing out the gaps they hadn’t seen before. Are any of the following exposures lurking around your craft brewery? If so, these three tips will help you take action.

1.     Understand Your Risk Profile

Craft breweries and brew pubs are unique businesses in every sense, but especially in terms of their insurance requirements. Sure, you need general liability, workers’ comp, and property insurance—just like any commercial outfit. But beyond these basics, coverage types get pretty specific. (Or at least they should.) Don’t settle for an insurance package that’s designed for a neighborhood bar or a manufacturing plant. Neither one is synonymous with your risk profile.

Instead, ask your agent about niche coverages that might need to be bundled into your program. Commonly overlooked coverages include tank collapse, tank leakage, boiler and machinery breakdown, water processing disruption, product contamination or recall, and key employee coverage for your head brewer or brew master. (Yep, that’s right. There’s an endorsement available to help you recoup the costs of recruiting and hiring a new point person if necessary.)

Business interruption insurance is another biggie. A lot of breweries have it, although not often for the right amount. With dozens of breweries entering the market each week, the wait time associated with new tanks and equipment orders has skyrocketed. Following a fire, major storm, or other door-closing event, your policy needs to account for this prolonged lag.

2.     Partner with the Right Team

Okay, so now you’re aware that craft brewery insurance is a super-nuanced product, much like the flavor profiles you create. It stands to reason that not every insurance agency is up to the task of quoting your business, nor every commercial insurance carrier. (You don’t want your business to be the guinea pig for someone’s foray into brewery insurance.)

Before choosing an insurance partner, find out if the different candidates are fully invested in your industry. For starters, do they spend any personal time at local breweries? Do they know the difference between Golding and Chinook hops? Do they even enjoy beer? Admittedly, these aren’t essential criteria, but it’s always easier to work with someone who recognizes and appreciates the value of what you do every day. More important qualifiers include number of years in business, customer references, value-added service offerings, industry association membership (e.g. the MBG), network and carrier relationships.

Why do networks matter? Because your insurance agent should be helping you more than once a year. As your business evolves, your footprint and risk profile can change, too. Maybe you’ll want to add a roof deck, start leasing kegs, bring in live entertainment, build an in-house kitchen, take your business on the road… In cases like these (and so many others!), a legal and/or financial expert should be guiding your path; brewery insurance professionals already have relationships with the folks you should consult. Meanwhile, they know how all of the above changes will affect your coverage needs.

3.     Prevent Loss Events before They Happen

Remember the Chris Rock bit that defines insurance as, “in case sh*t happens”? Good insurance partners don’t approach business protection this way, and neither should you. Ongoing, proactive risk management should be a built-in component of your business plan. If you don’t have the time or resources to get it done independently, don’t be shy about calling on your agent.

Some preventable loss events are obvious: liquor liability claims, for example. You staff should receive regular training on how to avoid over pouring, over-serving, or allowing intoxicated patrons to drive. But you can also take steps to prevent employee injuries and costly business disruptions. Hosting onsite trainings to teach proper lifting techniques, believe it or not, can save you a lot vis-à-vis workers’ compensation claims.

Here are some other pieces that belong in a thorough craft brewery safety program: employee handbooks, first aid and CPR training, defensive driver training for fleet drivers (if applicable), hazard analyses and written procedures in accordance with OSHA guidelines. Your brewery insurance partner should be available to help with all of it.

Because ultimately, creating the good stuff—the atmosphere, the flavors, the throngs of loyal fans—is your job.  Protecting your ability to thrive and grow: that’s the real definition of insurance. And when you leverage it correctly, it’s every bit as idyllic as a summer day on the patio.

Matt Montesano is a craft brewery insurance consultant with more than five years of experience in customer service and sales. He holds a degree in finance from Providence College, where he was a member of the Friars’ Division I hockey team. Outside the C&S Insurance office, Matt enjoys discovering new restaurants and breweries in and around Boston. He can also be found at the park or the beach with his 10-month-old English shepherd, Gordie. Follow Matt’s tweets @MattMontesano26.

Craft breweries and brew pubs have an extremely unique risk profile. Not every insurance provider is up to speed on the industry’s exposures and available products. At C&S, we work with leading carriers—several of whom offer brewery-specific insurance packages, designed to bundle the appropriate coverage into one, hassle-free insurance program. Ask our experts how your brew pub or craft brewery insurance should be structured, based on your individual operation.