Contract
CONTRACT PRODUCTION
“ production” is one company hiring another to manufacture products on its behalf, and it is common practice in the production of wine, beer & spirits. This practice is great for start-ups and organizations that want to crawl before they walk; however, as Brokers we are seeing substantial losses in this space, some covered by insurance and some not.
• Regular Insurance Marketplace / Products do not understand what is happening in the winery, brewery and distillery industries when it comes to contract production, and offers limited to no coverage for these revenue streams.
When entering into a contract production agreement one of the most commonly overlooked areas, and leading cause of denied insurance claims, is the lack of a signed contract between client and facility.
We appreciate the following comments from Joe Hannigan, a beverage industry insurance specialist and VP of one of our exclusive partner markets:
“ If you are considering using a third party company to produce your wine, craft beer or spirits it is imperative that an operating contract be put in place to protect all involved. If the third party produces bad product most insurance policies will not cover the loss, which is why a contract is so important.
It is critical that winery and craft brewery owners and operators work with insurance brokers like Beverage Protect, with specialized expertise, who can help protect the unique business operations in this sector.”
• Limited to no regulatory body overseeing the wine, beer and distilling operations which can lead to problems for contract production operations for both parties, specifically due to a lack of regulated operational procedures and / or health & safety practices.
If you hire a company to produce your products for you and their facilities are not properly maintained, or have no health & safety protocols in place, or a lack of sound operating procedures- as the contractual client, your business may be exposed.
Beverage Protect works closely with CE Safety and notes the following comments from their President and CEO, Bill Godkin:
“ When it comes to using contract facilities, workers or contracting out work to another company, most businesses are unaware of their potential liability and responsibility under Ontario’ s Occupational Health
“... ONE OF THE MOST COMMONLY OVERLOOKED AREAS, AND LEADING CAUSE OF DENIED INSURANCE CLAIMS, IS THE LACK OF A SIGNED CONTRACT BETWEEN CLIENT AND FACILITY.”
and Safety Act. Put simply, a customer bears no responsibilities of operations under the OHS Act. However, if the contract winery is using some of their client’ s workers or recommended standard operating procedures, then the contract winery is deemed to have responsibilities as an“ employer”.
Why risk your business’ reputation and potentially its viability by not ensuring
that the winery, distillery or brewery who is making your product has simply complied with provincial law? I recommend working with a Brokerage like Beverage Protect who consult with firms like ours, CE Safety, to ensure efficient and affordable peace of mind.”
Beverage Protect recognizes the importance of ensuring proper coverage when our clients are engaged in contract production. It is our goal to ensure all associated risks are understood, and appropriately insured.
As an avid supporter of the success of local wineries and breweries, and as an Insurance Broker, I have developed a unique insurance program to help protect an industry I am quite passionate about. Beverage Protect was created to match the specialized insurance needs of the alcohol-based beverage industry in Ontario and across the country. By teaming up with the right insurance companies we are able to offer wineries, craft breweries and distilleries a customized insurance program that offers the best coverage available with the best rates in Canada. This national program provides beverage manufactures, from start-ups to global producers, with tailored coverage to fit their budget and their specialized needs. For more information please feel free to contact me or visit www. bkifg. com / beverageprotect +
BY: JOSHUA KEARLEY PROGRAM SPECIALIST, BEVERAGE PROTECT POWERED BY BENSON KEARLEY IFG
Joshua Kearly is a Program Specialist at Benson Kearley IFG. Contact him today at jkearley @ bkifg. com
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