When a food or beverage brand produces in a facility it does not own, insurance follows the brand rather than the building, so the business whose name is on the label usually carries the product liability. Five arrangements set that allocation differently: custom crush, alternating proprietorship, contract brewing, co-packing, and shared commercial kitchens. This page covers who counts as the manufacturer, how each arrangement decides coverage, which coverages matter, who insures what, what certificates require, how much liability the market expects, and what a shared-facility policy excludes.
Key Takeaways
- Insurance in a shared facility follows the brand, not the building. The business whose name is on the label is treated as the manufacturer for product liability, regardless of who physically produced the product.
- Your arrangement decides whose policy responds. Each of the five allocates title, labeling, and liability differently.
- The TTB producer of record and the product liability manufacturer are not always the same party. They diverge in contract brewing.
- Product liability is the primary exposure, because it travels with the product after it leaves a facility the producer does not own.
- The host needs bailee coverage. A host’s general liability policy excludes property in its care, custody, and control.
- Most co-packers, shared kitchens, distributors, and retailers require $1 million per occurrence and $2 million aggregate, rising to $5 million as distribution widens.
- Certificates of insurance run in both directions, with additional insured status, waiver of subrogation, and primary and non-contributory wording set in the production agreement.
Why Insurance Works Differently When You Share Production Space
Insurance works differently in a shared facility because the producer, the product, and the premises no longer sit under one policy. Three structural shifts create the difference.
- Product liability travels with the brand off-premises. A consumer, retailer, or court identifies the label, not the building, as the source of the product, and that exposure does not stay at the facility when the product leaves.
- Inventory and finished product sit on property the producer does not control. The building owner’s policy protects the building. The producer’s policy has to protect what the producer owns inside it.
- Two policies have to be interlocked by contract. Coverage is allocated through the production agreement, backed by certificates and endorsements, and that allocation is where gaps appear because the policies are written independently.
Who Counts as the Manufacturer When Production Is Shared
The business whose name is on the label is treated as the manufacturer for product liability purposes, regardless of who physically produced the product. When a consumer buys a bottle of wine, a can of beer, or a bag of cold brew concentrate, they identify the labeled brand as the source, and courts and retailers do the same. That liability follows the product into the market whether or not the brand ever operated a tank, a still, or a roaster.
TTB Producer of Record vs. Product Liability Manufacturer
Federal alcohol regulation assigns a producer of record, and that party is not always the one carrying market-facing product exposure. The two concepts separate in contract brewing.
- Alternating proprietorship: the tenant labels the product with its own name and address, holds its own COLA, pays its own excise tax, and retains title throughout, so the tenant is both the producer of record and the product liability manufacturer.
- Contract brewing: the contract brewer labels the product, holds the COLA, and retains title until the product is taxpaid or removed, so the brewer is the producer of record while the brand on the label still faces consumer-side product liability. Both parties carry exposure and both need coverage.
How Title to Product Sets the Allocation
Title is the mechanism that sets the allocation at each stage of production, and it moves differently depending on the arrangement.
- Custom crush and alternating proprietorship: the tenant holds title throughout and carries product liability, even though the host performs the physical work.
- Contract brewing and co-packing: the producer holds title until sale or transfer, so the brand carries product liability once the product reaches market while the producer carries liability for the work it performed.
A brand needs its own product liability even if it has never touched a tank, and a producer needs its own for the work it performs. How title transfers in a specific agreement is worth confirming with your agent before the policy is placed.
How Your Arrangement Determines Your Coverage
Your arrangement sets who holds title, who labels the product, who counts as the manufacturer, and whose policy responds to a loss, so coverage starts with naming the arrangement you operate under.
| Arrangement | Title to product | TTB producer of record | Product liability sits with | Whose policy responds | PAK program |
| Custom crush (wine) | Tenant winery throughout | Tenant winery | Tenant winery | Tenant product liability; host property | Winery PAK |
| Alternating proprietorship (beer, cider, mead) | Tenant producer throughout | Tenant producer | Tenant producer | Tenant product liability; host property | Brewery PAK, Cider PAK |
| Contract brewing | Contract brewer until taxpaid | Contract brewer | Brand on the label, and often the brewer | Both, set by contract | Brewery PAK, Distillery PAK |
| Co-packing | Producer until sale or transfer | Varies by product and label | Brand on the label | Both, set by contract | Winery PAK, Brewery PAK |
| Shared commercial kitchen (non-alcoholic) | Brand owner throughout | Not applicable | Brand owner | Brand product liability; facility premises | Coffee PAK |
The closer a producer sits to controlling the process and holding title, the more the producer’s own policy carries the load. The shared kitchen row applies to cold brew concentrates, kombucha, and similar products, where the brand owner holds title from the start and carries full product liability through sale.
Which Coverages Matter Most in a Shared Facility
Shared-facility producers rely on a coverage stack built around the product, because the product is the asset most exposed once it leaves a facility the producer does not own. Seven coverages matter most.
- Product liability. The primary exposure, because it follows your label off-site. The labeled brand can be named in a claim even when it does not own or operate the space.
- Property and stock coverage. Insure your ingredients, equipment, and finished product inside a facility you do not own. Your host’s policy covers the host’s property, not yours.
- Equipment breakdown. Responds to sudden mechanical or electrical failure of fillers, glycol systems, and refrigeration, and matters most when the failing equipment belongs to the host.
- Product recall and contamination. Addresses commingled-batch and shared-line risk, where a problem in one run can affect product from several producers.
- Business interruption and contingent business interruption. Replaces income lost when the shared facility shuts down after a covered loss. A standard property policy does not pay for this, because the damage is not to the producer’s property.
- Liquor liability. Applies only if tastings, tours, or events happen in the shared space.
- Spoilage and leakage. Covers product loss while held off-site, a signature exposure for fermented and temperature-sensitive products.
What Shared-Facility Insurance Does Not Cover
Shared-facility insurance does not cover everything. Six common losses fall outside a producer’s policy and belong to the other party, to a separate policy, or to an added coverage.
- The other party’s building, equipment, or product. A producer’s coverage protects the producer’s property and liability, not the host’s.
- Product recall. Excluded from a standard commercial policy unless added by endorsement or separate policy.
- Liquor liability. Not covered unless specifically added, and relevant only if alcohol is served on-site.
- Flood and earth movement. Excluded from standard property coverage and available only through separate or specialty policies.
- Employee injuries. Handled by workers’ compensation, and whose employees were involved is its own question in a shared facility.
- Contractual liability beyond insured-contract terms. A broad indemnification clause may require more coverage than a standard commercial policy provides.
How Host and Tenant Decide Who Insures What
Host and tenant decide who insures what by separating the building and host-owned equipment from the tenant’s ingredients, work in progress, and finished product. The host insures the building and its own equipment; the tenant insures its own product. That split breaks down at one point: property in the host’s care, custody, and control.
The Bailee Gap Most Parties Miss
A host’s general liability policy does not cover property in its care, custody, and control, so the tenant’s product being processed, stored, or held for pickup is not covered by the host’s standard GL. The host closes that gap with bailee’s customer coverage, a form of inland marine insurance for property held on behalf of another party. Two sublimits commonly leave parties short:
- Damage to rented premises on a tenant’s GL policy typically caps between $100,000 and $300,000.
- Processors’ coverage on a host’s policy is often written near $25,000 per occurrence.
Neither covers a full tank or a full production run. Without bailee coverage, the tenant’s product may have no coverage under either party’s policy.
What COIs, Additional Insured Status, and Indemnity Mean
A certificate of insurance, additional insured status, and indemnity are the tools that connect a shared-facility agreement to the policies behind it, and they run in both directions between host and tenant.
- Additional insured vs. certificate holder. An additional insured receives coverage under the other party’s policy for claims arising from that party’s work or product. A certificate holder receives only proof of coverage and notice of changes. Requiring a certificate does not make you an additional insured, and this is the distinction most parties get wrong.
- Waiver of subrogation. Prevents one party’s insurer from recovering against the other after paying a claim. The agreement should require it in both directions and the policies should carry the endorsement.
- Primary and non-contributory wording. Makes one policy respond first, which prevents disputes between insurers over which pays when both could apply.
- Indemnity and hold-harmless. The contractual promise to cover the other party’s losses, backed by insurance. The indemnity is only as good as the policy behind it.
Limits Commonly Required
What the other party demands usually sets the program, and the requirements cluster in predictable bands.
| Who is asking | Typically requires |
| Shared commercial kitchen | $1M per occurrence / $2M aggregate GL, host as additional insured |
| Co-packer | $1M / $2M general and product liability, additional insured, often waiver of subrogation |
| Regional retailer or distributor | $2M per occurrence, primary and non-contributory |
| National retailer or wide distribution | $5M total, commonly built with an umbrella layer |
| Additional insured endorsement | $25 to $100 per endorsement |
A host typically requires these provisions from a tenant. A careful tenant requires them back.
How Much Product Liability Insurance Do You Need?
Most food and beverage brands produced in shared facilities carry $1 million per occurrence and $2 million aggregate, rising to $5 million total once distribution widens beyond regional accounts. Four variables move that number.
- Distribution breadth. Direct-to-consumer and local accounts sit at the low end. National retail usually pushes a brand to $5 million through vendor requirements before it evaluates its own risk.
- Product category. Spirits and higher-proof products raise exposure compared with beer, wine, or non-alcoholic beverages.
- On-site alcohol service. Tastings, tours, and events add liquor liability and premises exposure on top of the product limit.
- The largest account in your contract stack. The highest limit any single contract requires sets the whole program.
Build to the strictest requirement you expect within twelve months rather than the one in front of you today, because adding a mid-term limit costs more than buying it at inception.
What Drives the Cost of Coverage
Cost depends on what is being insured and how the production relationship is structured, so premiums vary from one producer to the next. PAK Programs writes through licensed agents and brokers, and an agent can provide an accurate figure for a specific operation. Five factors drive most of the variation.
- Annual sales and production volume, and how revenue splits between host and brand.
- Product type, since spirits and higher-proof products raise exposure.
- On-site tastings, tours, or events, which add liquor liability and premises exposure.
- Recall and contamination exposure, which rises when multiple producers share lines and tanks.
- Limits required by distributors and retailers, which drive program structure and umbrella needs.
How Shared-Facility Coverage Fits a Full Craft Beverage Program
Shared-facility coverage protects the product and property exposure, but it is one part of a complete program. Five companion coverages typically sit alongside it.
- General and premises liability for any location the producer operates from outside the shared facility.
- Commercial auto and fleet for delivery vehicles moving product to wholesale accounts and retailers.
- Umbrella and excess for the higher limits distributors and retailers require.
- Workers’ compensation, including whether the policy extends to off-site production activity.
- Cyber for payment and account data risk at direct-to-consumer brands.
Frequently Asked Questions
Do I need my own insurance if I produce at someone else’s facility?
Yes. The name on the label is treated as the manufacturer, so you can be named in a product liability claim even when another business produced the product. Retailers and distributors also commonly require a certificate of insurance and additional insured status before they will carry your product.
Who is liable if a product made in a shared facility makes someone sick?
The business whose name is on the label is usually the first target, regardless of who physically produced it. Depending on the cause, the producer that performed the work can also be liable, which is why both parties carry product liability and the agreement allocates responsibility through indemnity and additional insured status.
Does the host’s insurance cover my product?
No, not by default. A host’s general liability policy excludes property in its care, custody, and control, so your product is not covered unless the host carries bailee coverage. Your own property and product liability coverage protects your ingredients, work in progress, and finished product.
Is product liability insurance required to use a co-packer or shared kitchen?
Often, yes. Many co-packers, shared kitchens, retailers, and distributors require proof of coverage and additional insured status before they will work with you. Even where it is not contractually required, product liability is the core coverage for a shared-facility brand.
Is contract brewing different from alternating proprietorship for insurance purposes?
Yes. In an alternating proprietorship the tenant labels the product, holds the COLA, and retains title throughout, making it both producer of record and product liability manufacturer. In contract brewing the brewer labels and holds title until taxpaid, which splits the producer of record from the brand facing consumer-side liability, so both parties need coverage.
What insurance limits will a co-packer require?
Most require $1 million per occurrence and $2 million aggregate in general and product liability, with the co-packer named as additional insured and often a waiver of subrogation. Brands entering national retail are commonly pushed to $5 million total.
Does my policy cover products stored at the host’s facility?
Not automatically. Products sitting in a facility you do not own has to be scheduled on your property and stock coverage at the correct location and value. Confirm the location schedule and limit with your agent before the product moves.
Find an Agent Who Writes Craft Beverage
Producing in a shared facility changes who insures what, from product liability that follows your label to bailee coverage for product held in a building you do not own. PAK Programs designs specialty insurance programs for wineries, breweries, distilleries, cideries, meaderies, and specialty coffee businesses, underwritten by Great American Insurance Group and placed through licensed agents and brokers.
Already work with an agent? Ask them to request a shared-facility coverage review from the PAK program that fits your operation.
Don’t have an agent who writes craft beverages? Request a quote or contact us.
Disclaimer: This article is for general informational purposes only and is not insurance, legal, or tax advice. Coverage and eligibility vary by state and underwriting, and coverage is determined solely by the issued policy and its endorsements. This content is not an offer to insure. Please consult a licensed insurance professional regarding your specific operations.
Risk Management Disclaimer: Risk control suggestions are general guidelines and may not be appropriate for every operation. They are not a guarantee of safety, compliance, or loss prevention and do not create any duty or obligation on the part of PAK Programs. Consult qualified professionals regarding codes, fire protection, and regulatory compliance.
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