From rootstock to bottle

Text and photos by Ingrid Sapona    |    June 2018    |    27 minute read

To some, wine is just a beverage – sometimes an expensive beverage. Wine lovers may even describe it as an elixir that – when properly paired with food – heightens one’s enjoyment of a meal. But, as any winemaker will tell you, it all starts in the farmer’s field (aka the vineyard). If this trends paper were for wine lovers, the discussion would veer toward the topic of terroir. (A romantic term for the soil and climactic conditions that are specific to a particular piece of land and that combine to imbue the grapes with a unique character.) But, a discussion of terroir might not be of interest to insurance professionals. So instead, this paper focuses on the risks inherent in the winemaking business – from the time vines are planted through the sale of the bottle of wine.

Canadian Wine Industry Facts and Figures


Before delving into the insurance issues, some information about the Canadian wine industry and its place in the Canadian economy will provide some perspective. The wine industry is bigger than many people realize. There are over 600 wineries in Canada with over 31,000 acres “under vine” (bearing fruit). To give you an idea of how fast the industry is growing, in 2011 there were 476 wineries. In 2015, the wine industry contributed $6.2 billion of business revenue to the Canadian economy and contributes over 37,000 full-time equivalent jobs. Its impact on tourism is significant as well, generating revenue (direct and indirect) of $1.5 billion with about 3.7 million tourist visits to Canadian wineries in 2015. The industry is also a significant source of tax revenue: $1.1 billion in 2015.

The main wine producing provinces are British Columbia, Ontario, Quebec and Nova Scotia, though there are pockets of wine producing regions elsewhere, like New Brunswick. Here are some statistics by province (as of 2015):
• B.C. has 275 wineries and over 10,000 acres under vine.
• Ontario has 180 wineries and, with over 18,000 acres under vine, it produces over 70% of the total volume of Canadian wine.
• Quebec has 115 wineries and over 1600 acres under vine.
• Nova Scotia has 17 wineries and over 650 acres under vine.
New Brunswick has 10 wineries and about 100 acres under vine.

Provincial incentive programs offered in the past to encourage farmers to grow wine grapes no doubt played a role in the growth of the industry. And, provincial agriculture and tourism departments are still coming up with creative incentives to encourage further growth of the industry. In 2016, for example, Nova Scotia announced the Vineyard Development & Expansion Program, a $1 million incentive program intended to expand grape production in the province. In 2013, the Ontario Ministry of Agriculture, Food and Rural Affairs announced a five-year renewed Wine and Grape Strategy that offers grants to wineries to grow their businesses, including tourism development activities.

Structure of this Paper

Wineries are basically commercial manufacturing operations (they produce wine) and they typically also produce their own product inputs (the grapes) through a farm operation. Given the unusual combination of activities, the distinct types of insurable interests at play, and the different sources of applicable insurance, this trends paper is divided into two parts:
Part I – insurance issues related to grapes as a crop
Part II – insurance issues related to running a farm operation and to producing wine

Part I. Insuring Grapes

Grapes on vinesIn Canada, crops grown outdoors are generally not covered by insurance provided by traditional property and casualty insurers. Crop insurance (sometimes referred to as production insurance) is primarily available through government agencies.

The federal AgriInsurance Program is set up to help provinces support farmers. Under this program, the federal government contributes a portion of premiums and administrative costs to provinces for production insurance plans and other programs aimed at supporting farmers. Each province has its own crown corporation or branch that’s responsible for administering the AgriInsurance Program. In Ontario, for example, Agricorp is a crown corporation that provides production insurance. Through Agricorp, the Federal and Provincial governments subsidize crop insurance, paying 60% of premium costs and 100% of the administration costs, with Ontario farmers enrolled for insurance paying the remaining 40%.

“Where Agricorp gets involved in an insurable product is when the grapevine or rootstock has been planted into a vineyard and we insure that under our grape production insurance plan. That covers both the fruit and the vine,” explained Rebecca Metzger, Sr. Industry Specialist at Agricorp.

In Ontario, where there’s a thriving wine industry, subscription for production insurance for grapes is pretty consistent and pretty high. “Uptake for production insurance for so-called processing grapes (those used in winemaking) is between 75% and 80%,” says Metzger. “The enrollment varies over time, but grapes have always been one of the higher percentage of enrollment crops for Agricorp.”

Figures released by Agricorp for 2013-2017 to the Grape Growers of Ontario show that the number of crop insurance accounts has remained fairly steady (a high of 279 accounts in 2015 and a low of 267 accounts in 2017). The number of claims over that period has varied quite significantly though, with a low in 2013 of only 20 claims totalling $275,000 and a high in 2014 of 198 claims totalling $10,587,000.

How Production Insurance Works

Production insurance runs from the date of the contract through the time the insured crop is harvested. Once the grapes are harvested, the grower must report the yield to the insurer, who will then issue a yield confirmation report.

Agricorp’s Production Insurance covers the following perils:
• Blossom set failure due to adverse weather
• Drought
• Excessive moisture
• Freeze injury
• Frost
• Hail
• Excessive wind
• Excessive heat
• Excessive rainfall
• Tornado
• Wildlife
• Lady beetles (also known as ladybugs)

Interestingly, certain perils that can befall a vineyard are not covered by crop insurance. Theft of grapes, damage caused as a result of someone else’s spraying, or damage resulting from someone accidentally driving into the vineyard, is not covered under crop insurance. (One of the experts quoted in this paper heard of an case from a few years back where a group of people entered a vineyard at night and picked the entire crop of one particular variety of grapes. It had been a hard year for growers and the market price for that variety was quite high, so someone stole the grapes. That kind of incident would not be covered under production insurance.) Losses from such actions may, however, be covered under third party liability provisions of someone else’s policy (for example, an auto policy). Smoke taint that can be suffered by grapes that are growing in a vicinity of forest fires (for example, vineyards in certain regions of British Columbia and California), is not covered by crop insurance in Ontario because wildfires are not an insured natural weather peril. Ann Sperling, Director of Winemaking & Viticulture at Southbrook Vineyards in Niagara-on-the-Lake and owner/winemaker at Sperling Vineyards in Kelowna, B.C., confirms that smoke taint is a very real problem and it is not covered by insurance in Ontario.

Wine shootsAs many may remember, in 2001 wineries in certain parts of Ontario had a problem with Asian lady beetles that were brought into the province specifically to deal with soy bean aphids. After the soy crop was picked, the lady beetles went looking for food in the vineyards. The beetles give off a smell when they are agitated. When the grapes were picked with the beetles on the leaves, they gave off their signature smell and it ended up getting into the wine. The claims process under production insurance for lady beetles is somewhat unusual. “Producers who identify lady beetles close to, or at, harvest must contact Agricorp to open a damage report and inform their adjuster of the presence of lady beetles,” says Metzger. “Wineries have thresholds and limits of visible lady beetles on the surface of a bin per tonne. For example, one winery could have a limit of one visible lady beetle per tonne and a maximum of four lady beetles per tonne on all of the bins delivered to the winery,” she says. Agricorp has a rejection protocol for such situations: “The grower has to obtain two rejection notices from two separate wineries and those notices must be sent to the grower at the time of delivery. These notices can be used for claim eligibility purposes,” says Metzger.

Production insurance coverage has two basic components for an indemnity payment:

1. Production shortfall indemnity – this protects growers if an insured peril causes their harvested production to be less than the guaranteed production. Guaranteed production is determined by multiplying the final average yield x coverage level selected by the grower.
2. Quality reduction indemnity – this protects growers if an insured peril impacts the quality of the grapes harvested. Guaranteed value is determined by multiplying the grower’s guaranteed production times the claim price selected by the grower and is used in the calculation for the quality reduction indemnity.

The following factors are relevant in determining the guaranteed production and guaranteed value components:
Final Average Yield (FAY) – this is based on the grower’s average yield for that type of grape over a five- to 10-year period. The FAY is a benchmark against which that grower’s current year production is measured. For growers without a five-year yield history, the insurer assigns a final average yield based on various factors, such as vineyard location, the age of the vines, the soil type, and so on.
Final Average Brix (FAB) – this is based on the average Brix recorded by the processor after the grapes are harvested and the associated claim price per BRIX. Like the crop yield, the quality component is based on the grower’s final average Brix
Claim price selected by the insured – claim prices determine the grower’s guaranteed value. Claim prices are determined by class grape: vinifera, hybrid, and labrusca. And by variety: Merlot, Chardonnay, Vidal, Cabernet Franc, and so on.
Coverage level selected by the insured – this determines the grower’s guaranteed production amount. Insureds can choose coverage ranging from 70%  85% of total liability. The average coverage level for grapes is 80%, according to Metzger.

Both the yield and quality are converted to a dollar value.

Underwriting Crop Insurance
When underwriting a crop policy, the underwriter will consider the area and site of the vineyard, the varieties planted, the density of the planting, the health of the vines, the probable yield, and so on. The grower should also be able to provide a plan with reasonable target yields and a good farm management plan, as well as records of their farm management activities. Interestingly, in terms of underwriting concerns, Metzger says whether a grape grower is certified organic or uses biodynamic farming techniques does not really matter.

Coverage for the Vines

In Ontario, Agricorp’s Production Insurance provides some coverage for the grape vines themselves, though the standard coverage is subject to a deductible of 12.5%. Ontario grape growers can also add a grapevine rider to their Agricorp Production Insurance that features a deductible of 8% for vinifera, 5% for hybrid varieties, and 3% for labrusca.

Agricorp’s vine coverage protects growers in the event planted vines die as a result of these perils :
• Drought
• Excessive wind causing structural damage
• Flood
• Freeze injury
• Hail
• Ice damage
• Lightening
• Tornado

This coverage applies to planted vines that are still too young to bear fruit, as well as vines that are producing grapes. “The grape grower would enroll in the production insurance plan and we would assess their production at zero. They would pay the minimum we have listed on the crop as an insurable payment. If the farmer’s policy had the grapevine rider, we would assess their vines and they would be covered,” Metzger says.

In terms of what’s involved in assessing a vine, Agricorp inspects the vineyard. “We look at things like the rootstock from the nursery where they got the vines; whether they are planted in a suitable area; do they have a trellis system, irrigation, and so on,” says Metzger. As well, the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) publishes information on good farm management practices and Agricorp sometimes references that information.

If a grower loses grapevines and they have the rider, Agricorp will pay a dollar amount for each vine that is lost, to the extent the loss exceeds the chosen deductible. Because it may not be immediately apparent that a vine subject to freezing injury is dead (it may take an additional growing cycle to determine this), the grower may seek carry-over coverage to the following year.

The Agricorp grapevine rider also includes a write-off feature. This provision allows growers to receive a payment for the cost of removing all vines in a defined section when at least 80% of the vines in that section are destroyed as a result of an insured peril. “A deductible applies and the cost per vine includes components attributable to the cost of removal and replanting. The underlying premise is that the grower will replant or reinvest in growing a crop,” says Metzger.

The base premium rate is set by Agricorp annually. It’s based on factors like plan performance, changes to claim prices, and the level in the claim reserve fund. The grower selects a coverage level ranging from 70% to 85% of total liability. The rate associated with each coverage level depends on the grape category.

Premium discounts and surcharges (up to a maximum of +/- 25% of the base premium) can also come into play. A premium discount or surcharge amount depends on:
• the grower’s claim history and how it compares to the claim rate for other growers of that crop, and
• the number of years the grower has been enrolled for production insurance.

There is a minimum total premium under the Agricorp production insurance for grapes ($100).

Sorting grapesClaims Adjusting
Grape growers are expected to report damages to Agricorp fairly quickly – typically within five to seven days. The grower calls Agricorp and indicates they had damage as a result of a particular peril. Agricorp logs damage reports when they are called in and sends out an adjuster to go look at the damage. Agricorp has adjusters and regional managers throughout the province and most adjusters have an agriculture background, says Metzger.

The type of damage the adjuster looks for depends on the nature of the claim. “If there’s freeze or frost, the yield may be impacted because the damaged vine might not produce as much. The adjuster may look to see whether the fruit bud is developing. Hail, for example, typically effects the fruit itself. It can damage or puncture the fruit, depending on the time of year it hits and how much damage it causes,” Metzger says.

When it comes to any type of disease or insect infestation, one of the things the adjuster will look at is the grower’s spray and treatment records. “We’ll look to see whether they employed good farm management practices. If they’ve done pretty much everything they can that is reasonable, then we’d take a look at the damage and assess it for claim eligibility,” Metzger says.

On claims related to dead grapevines, the adjuster must verify that the vines are dead, which means there’s no way to re-establish the vine as a viable producer of fruit. As well, the adjuster will look for evidence that the grower employed good farm management practices and will consider whether other growers within a one kilometre radius also suffered dead vines at that time as a result of the same peril. If other nearby vines did not die, the grower will have to demonstrate that vines that died were on rootstock that has been shown to be viable in that same climate sub-zone.

Production Insurance in other Provinces

British Columbia, which has over 900 vineyards, also offers production insurance for grapes. The B.C. program, which is run by the B.C. Ministry of Agriculture, is similar to Agricorp’s production insurance, though slightly different perils are covered. For example, in B.C. there are two perils that Ontario does not cover: loss of yield resulting from landslide and fire. Unlike Ontario, B.C. does not cover yield loss due to excessive moisture, excess heat, tornado, wildlife, or lady beetles. Rather than choosing a coverage level, B.C. growers choose a percent of yield loss. The choices are 50%, which means that over half the crop must be lost before a claim is paid , 30%, and 20%.

B.C. production insurance, unlike Ontario’s, provides coverage for smoke taint, including smoke from fires that are simply nearby – they need not be on the vineyard property itself. In effect, B.C. treats smoke as a primary cause of loss arising from the insured peril of fire. A Ministry of Agriculture Risk Management Branch Representative says they adopted a procedure to adjust production losses arising from smoke taint as a result of fires in the Okanagan in 2015. When considering smoke taint severity, a number of factors come into play, including the variety of the grape, the exposure time, the stage of fruit development and the smoke concentration. Smoke taint is verified through testing for specific chemical compounds in the unprocessed berry juice.

There are parameters around making a smoke taint claim. There are testing protocols that involve testing the grapes for chemical markers of smoke taint. The grapes basically have to be tested by an independent lab to determine the level of relevant guaiacol (G) and 4-methylguaiacol (4MG). There are established threshold levels for acceptable amounts of these chemical smoke markers for each variety. The grower must also demonstrate that they attempted to harvest, process, and market the crop. If they had a contract to sell the grapes, they have to demonstrate that the buyer is no longer interested in buying the tainted grapes. If a grower’s grapes are found to have elevated levels of the smoke marker chemical compounds, the insured decides whether to process the grapes (or sell them), or whether to claim the loss. If the grower decides the crop can’t be used, it won’t be counted as production. There are extraordinary processing techniques that can help, so sometimes growers decide to process the grapes instead of make a claim. Interestingly, a loss in value as a result of poor juice quality due to smoke taint is not covered under the policy. In other words, a claim for smoke taint will only be paid (assuming all the criteria are met, including requisite lab test results) if the grapes end up not being used.

In terms of how common smoke taint claims are, the Ministry of Agriculture Risk Management Branch Representative noted that last year was very smoky in B.C., so the potential was there for a lot of claims – but there weren’t that many claims. According to the Representative, though smoke is more perceptible in some varieties, in the end, the smoke didn’t prove to be an overwhelming issue last year for B.C. growers.

B.C. also insures vines for loss due to four perils: drought, freeze, landslide, and fire. (Ontario does not cover vines lost due to landslide or fire.) Unlike Ontario, however, B.C. does not cover loss of vines due to flood, hail, lightning, or wind.

Nova Scotia’s Crop Insurance Plan for Grapes “provides insurance against a reduction in yield of grapes” as a result of a covered peril. The Nova Scotia plan covers basically the same perils as Ontario, though it does not cover tornado. In addition, Nova Scotia covers a peril that neither Ontario nor B.C. cover: unavoidable pollination failure. The coverage levels available in Nova Scotia range from 70% to 90%. The coverage is provided by the Nova Scotia Crop and Livestock Insurance Program.

La Financière agricole du Québec, the provincial agency that offers crop insurance to Québec farmers, does not offer crop insurance for grapes.

Part II. Running a Farm and Producing Wine

Grapes in boxesGiven that wineries have farm exposures and commercial exposures, comprehensive winery insurance packages or programs include coverage for both. Some insurers offer winery coverage under a single policy with different endorsements. Some, such as Intact, end up issuing two policies: a farm policy and a winery policy, according to David Harder, CIP, CAIB, Partner, Hope & Harder Insurance Brokers Inc., a brokerage in the Niagara region that works with over 350 farms and over 30 wineries. “A lot of times what happens is the insured starts with a farm policy – because they were just running a farm and growing grapes. The insurance company’s office that deals with farm properties issued the policy. Then the family decides to run a winery, and they realize they need winery coverage, which is issued by a different office. But even if the company issues two policies, there’s one renewal date and if there’s a claim, one adjuster that looks after it,” says Harder.

Farming-related Risks

Farm policies include certain specific coverages that are particular to farming activities. In this section we look at some of the most important coverages for vineyards.

Farm Equipment Coverage
Obviously, to farm you need equipment like tractors and sprayers. Farm equipment, along with the barns and buildings on the farm, is covered under the property provision of a farm policy.

Paolo Perciballi, Commercial Retail Sales Leader, Hub International, explains, “All stationary tools, equipment furniture, and so on are insured to replacement cost, while stock and items like wrapping materials are insured at actual cash value or cost. Large farm implements, like tractors, are typically covered for their first five years at replacement cost and after that they are typically covered at actual value. Often large items will be scheduled on the policy. So, for example, we’ll list that there’s a large tractor, a cultivator, sprayers, and so on. Anything that stays stationary is insured to a limit agreed by the insured and broker.” Farm policies will also have a deductible that applies per claim (not per piece of equipment).

Farm equipment that is not stationary is typically insured on a “floater basis,” according to Harder. “If something is insured on a floater basis, that means that we’re not providing coverage based on a specific location. So, if you drive the tractor off the vineyard and down the road to another property and you leave it there overnight and it’s stolen, the tractor is covered,” says Harder. Bird bangers – the machines that produce those loud cannon-like sounds growers use to scare birds – are another example of movable property vineyards might have that are insured on a floater basis. A farm equipment floater can be done on a scheduled form or on a blanket basis, according to Harder.

Equipment used in winemaking (things like tanks, presses, hoses, and barrels) is not covered under traditional farm policies, even if they’re housed inside a barn on the farm property. Instead, as discussed below, if the winery has a comprehensive wine insurance program that includes commercial coverage, there is an endorsement for specialized winemaking equipment.

Coverage for Structures Unique to Farms

Things like trellises that support the vines, row posts, wind machines (for pulling warm air down to ground level when it’s cold), are considered structural and can be covered under the farm or commercial policy, or a combination of the two, according to Perciballi. They are either specifically listed or sub-limited in extensions, he says. Harder adds that often vines and unharvested grapes can be insured up to $50,000, and coverage for trellises can go up to a maximum of $250,000 as an extension or sublimit.

Pollution Coverage
Farming operations use a number of products, such as insecticides, herbicides, fungicides, and stored diesel fuel, that can give rise to pollution liability claims. For example, if diesel fuel spills on the property or into a ditch, or if some crop spray accidentally gets onto an adjoining property, there could be 1st or 3rd party liability. Even grape juice can be considered a pollutant if it gets into the water supply. Harder says that vineyard operations should include pollution coverage of $100,000 – $250,000 for 1st party claims and $1or $2 million for 3rd party claims.

Farm Insurance Providers

A number of insurers offer farm coverage in Canada – from local farm mutuals to large multinationals, like Intact and Aviva. “Farm mutuals are fantastic local insurers with exceptional claims service, in my experience,” says Perciballi. “There are times, however, that a winery’s or grape grower’s operations diversify deeper into hospitality, banquets/restaurants, or accommodation destinations. Such operations may outgrow the scope of the farm mutual and then we’d use larger, national insurers and their products,” he says.

Risks Related to Winemaking

As noted, in addition to crop insurance and farm coverage, for proper protection, wineries need all risk coverage for property and general liability. In this section we discuss some of the unique risks a winery policy should cover.

Wine Tasting Activities, Winery Events, and Farm Gate Retail Operations

Besides growing grapes and making wines, Canadian wineries also sell wine on-site and often host events aimed at getting people to visit. The insurance issues related to these activities, for example, liquor liability coverage, are beyond the scope of this paper, but should be part of the discussion of what coverages the winery needs.

Wine barrelsWine Making Equipment

There’s lots of expensive, specialized equipment involved in winemaking. Things like destemmers and crushers, vats and filters, hoses used to transfer wine between storage vessels, bottling equipment, barrels, and so on, should be included in the blanket property coverage.

“Winery equipment, because it’s in the building and it’s not going anywhere – unlike a tractor which can be driven off the property – is consider contents included in the building,” explains Harder. “The winery policy will have a ‘a property of every description’ (POED) limit. The POED limit is meant to cover three things: all buildings on the property; all the contents in the buildings; and all the stock in the buildings. Then the insurer issues a policy with a single limit that addresses those three things. The unique thing about winery coverage is that the buildings and the contents are covered on a full replacement cost basis – no deduction for depreciation,” he says.

Because the stock a winery has is unique (in-process wine, as well as wine that’s completed and in bottles), the coverage on the wine works a bit different from other types of stock. “If stock that is wine is lost, the winery can’t go out and buy it. They can’t phone up their supplier and order more wine. The vintage is gone. So, on that type of claim, we compensate them based on the selling price of the wine, less the taxes – because the taxes aren’t payable because they didn’t sell the wine – and the deductible, which is usually $1,000. Larger wineries may have a $2,500 or $5,000 deductible,” Harder says.

Consequential Loss

When it comes to insuring wineries, consequential loss coverage insures against risk of loss due to temperature changes. Temperature changes, for example, could result from mechanical breakdown of cooling equipment used to maintain the temperature of the wine, explains Harder. “This coverage would also be done as a sublimit. The amount depends on the winery, but it’s often for $150,000,” says Harder.

Contamination Coverage
In normal property insurance coverage, contamination is usually a specific exclusion, so it’s important that the winery policy include an endorsement that covers contamination. “We tend to look at wine as a food product,” explains Harder. “So, a lot of the endorsements or extensions that apply to other food product makers, like cheesemakers, apply to wines. If there’s a foreign material in the wine that makes it unsuitable for human consumption – and that fact is confirmed by a government agency, then the winery would have a claim under their contamination coverage.” Insurance companies view the Vintners Quality Alliance (VQA) as a government agency and so when there’s a question of contamination, that’s who decides. The VQA has a tasting panel and if they say the wine is not acceptable, that would confirm the claim,” says Harder. “We have also used the Lab at Brock University’s CCOVI (Cool Climate Oenology and Viticulture Institute),” he says.

Contamination can occur as a result of something falling into a tank or if there are mechanical problems with a tank. “I know of a situation where a winery owner had stainless steel tanks. Inside the tanks are tubes that cool the wine. When wine starts to ferment, the fermentation creates heat and the temperature of the wine goes up, If the temperature gets too high, it’ll stop the fermentation. So, they have to keep the wine cool enough for the yeast to live and produce alcohol. A pin hole in a cooling tube occurred and all the freon in the tubes bled into the wine. The wine became contaminated,” explains Harder. “Unfortunately, in that case, the winery approached their farm mutual with a claim because they lost a tank of wine and they found out the loss was not covered because farm policies don’t have a contamination endorsement.”

Harder says the winery coverage he normally places for his clients include contamination coverage, but it is subject to a sub-limit. “The contamination endorsement is fairly broad, but it often has a sub-limit of $150,000,” he says. As Harder explains it, “‘Contamination’ means the unintentional alteration of a food or beverage product; or the introduction of a foreign material or substance into the food or beverage product in such a way as to render the food or beverage product unfit for intended consumption as determined by any government authority.”

Product Recall

If wine has gone out and it is later determined that it was contaminated or mislabelled, product recall coverage will pay the cost of getting it back. It will also cover costs associated with reputation damage control. There is usually a sub-limit for product recall, says Harder.

Winery policies cover infestation, in case there are problems with rodents or bugs. As Harder explains it, “‘Infestation’ means the inhabiting of the premises or the food or beverage product by insects or vermin in numbers or quantities large enough to render the food or beverage product unfit for its intended consumption as determined by any government authority.”

Unusual Application of Business Interruption Coverage
In a winery context, business interruption covers more than the traditional loss of income in the event the winery is closed due to an insured peril. For example, say bottles of wine that cost $10 to make but that retail at $40 are lost in a fire on the winery property and none of the bottles are salvageable. The property policy would cover the $10/bottle on lost bottles and business interruption could cover the additional $30/bottle of lost profits, less the tax that is avoided.

“We would start with the selling price less taxes, which works well for finished product. In a recent claim where wine was lost days after it was pressed, the property section compensated based on the selling price of grape juice, and the business interruption was used for the difference,” says Harder.

Wines in Transit to Farmers’ Markets and Festivals
If a winery transports their own wine to a farmers market or an event like a festival, they should consider an extension that covers the wine while they are driving it to the venue. Perciballi says he often recommends a rider or extension that will give the winery $10,000 – $25,000 coverage for such activities. This coverage can be endorsed to include: 1. loading and unloading, 2. breakdown or failure of refrigeration equipment, and 3. vehicle equipment coverage, explains Harder. For large shipments of wine, for example, cases shipped to liquor board warehouses, wineries usually rely on the shipper’s insurance.

Claims Adjusting
Because the coverages applicable to claims involving wines are unique, claims adjusters should have knowledge about winemaking and the wine industry. “If you have a winery claim where lightning hit the building, anyone can do that. But adjusting a claim on wine is not like adjusting a claim for lost stock on a retail clothing store,” Harder says. “If you don’t understand how a consequential loss endorsement works, or how an infestation or contamination endorsement works, or the selling price clause, you’re at a disadvantage,” he says.

In a contamination claim, for example, the adjuster may want to look at liquor control board audit records, VQA testing results, logs and records of inspection, and so on. To determine what caused the contamination it may be necessary to take a sample to a lab for analysis. An expert also may be needed to determine the consumability of the wine.


Given the risks inherent in producing wine – literally from the time the rootstock is planted until the consumer swills the wine in a wine glass – it’s no wonder that insurance plays an important part in the success of the industry.

ADVANTAGE Monthly trends papers

This paper is part of an open online library of ADVANTAGE Monthly trends papers, published by the CIP Society for the benefit of its members and of the p&c insurance industry. The trends papers provide a detailed analysis of emerging trends and issues, include context and impact, and commentary from experts in the field.

The CIP Society represents more than 18,000 graduates of the Insurance Institute’s Fellowship (FCIP) and Chartered Insurance Professional (CIP) programs. As the professionals’ division of the Insurance Institute of Canada, the Society’s mission is to advance the education, experience, ethics and excellence of our members. The Society provides a number of programs that promote the CIP and FCIP designations, continuous professional development, professional ethics, mentoring, national leaderships awards, and research on the issues impacting the p&c insurance industry in Canada.