According to experts in the beverage insurance sector, the average wine collection is worth $200,000, though some are valued well into the millions. Despite this, experts also estimate that only about 5 percent of wine collections actually have adequate coverage.
Unfortunately, life does not always have the hue of Provence Rosé, and sometimes disaster strikes. However, if you take steps to obtain the right coverage for your valuable collection, you are more likely to join Ernest Hemingway in saying, "My only regret in life is that I did not drink more wine."
The Benefits of Beverage Insurance
A wine collection valued at $200,000 is rarely fully covered by a standard insurance policy. This is because most policies fail to cover common risks associated with wine storage, such as flood damage, power outages and bottle breakage.
If your wine collection represents a substantial investment, I recommend specific insurance above and beyond the coverage offered by your home insurance carrier. Your main policy will cover your collection to some extent, but it is not the best option if you want to insure high-value bottles or a costly overall collection.
The fact that more and more people are investing in fine wines makes insurance increasingly necessary. The right insurance allows you to protect your financial investment and attain peace of mind.
Wines Collections and Other Beverages
If your property's collection contains a number of high-value bottles, you may benefit from insuring each separately. This process is called “scheduling” in the wine industry and has long been considered the traditional approach.
On the other hand, the more modern blanket insurance policy covering an entire wine collection is becoming more common. These policies offer a total amount of coverage for your entire collection as well as coverage for individual bottles capped at a certain amount per bottle.
A blanket insurance policy frees you from contacting your broker every time you buy, sell or consume a bottle of wine. As long as you don't go over your policy's per-item or overall limits, your collection will be covered.
You can opt for coverage for individual bottles or for your entire collection. In a nutshell, wines of greater monetary value should be insured by the bottle, while wines of lesser monetary value should be insured under a blanket policy. A beverage insurance specialist can help you evaluate your collection and make this decision.
A specialty beverage policy should cover claims against a variety of issues. These can include theft, fire, flood, lost or misplaced bottles, accidental bottle breakage, power outages impacting your climate-controlled storage, drain or sewer blockage, and natural disasters such as hurricanes or earthquakes.
How to Obtain Beverage Insurance
The first step in obtaining beverage insurance is to talk with a specialist. Several companies specialize in wine and beverage collections and have specific coverage options designed to protect highly valuable items.
On the whole, the insurance industry is not equipped to offer you guidance and personalized service as you attempt to safeguard your beverage collection because most insurance carriers (and agents) know very little about this topic. To find the information you need, look for an insurance agent who works specifically within the wine community, as they have the knowledge to answer your questions, offer advice and suggest the coverage that best meets your needs.
When selecting an insurer, make sure that your collection is covered in the case of fire, natural disasters, theft and spoilage. In the beverage insurance industry, those are the most common losses people encounter. I have not been able to find a source that will cover bottles affected by cork taint, faded labels or damaged bottles.
When exploring beverage insurance, ask plenty of questions and do not make assumptions about the coverage options you are offered. If the worst happens and you have to make an insurance claim, you want to know all of the ins and outs of your coverage beforehand.
How to Find the Value of the Coverage
To gauge the coverage you need for your wine collection, you'll need assistance from a professional appraiser. Over time, you will also need to update this appraisal by maintaining an accurate and up-to-date inventory of your collection.
Find a knowledgeable appraiser to help you value your collection. A fine line exists between over-insuring and under-insuring a valuable item, so you'll find that seeking professional help in valuing your wine collection is well worth the cost.
After your collection is evaluated, keep accurate records and a running tally of what you currently have in stock. In many cases, your ability to insure valuable bottles of wine comes down to record-keeping—the more meticulous your records are, the easier it will be for an insurance claims team to reimburse you for your loss.
Do not trust your record system to paper or a single hard drive. If there is a fire or natural disaster, your notebook or computer can also go up in flames, so always make sure you update and store your files on the cloud.
Beverage insurance offers peace of mind to everyone, from hotel managers and vineyard owners to wine enthusiasts. Your beverage collection represents a substantial investment, so don't leave its coverage to chance. If disaster strikes, being prepared with the right policy and accurate records will make all the difference in the outcome of your claims experience.
Heidi Moore is the host of Wine Crush Podcast.