Winery Wildfires: How Record Wildfires Are Impacting Wineries Today

By Larry Chasin, chief executive officer, PAK Programs

The events of recent years have truly tested the resilience of wineries. Wildfires dominating headlines in wine country since 2017 were interrupted briefly by the start of the COVID-19 pandemic, only to return again – and with a record-breaking vengeance.

Wineries faced a plethora of challenges related to pandemic-related lockdowns that started last March, as did businesses nationwide. One year later, businesses are still working through the challenges left in its wake. Fortunately, many wineries found ways to navigate some of the difficulties presented by the pandemic, with innovative solutions – think virtual tastings and wine clubs. But just when wineries got a feel for operating in a pandemic environment, fresh waves of wildfires dealt California wineries another devastating blow. 

In this article, we’ll discuss how wineries have been impacted by these challenging events and what they can do to mitigate future losses. 

The 2020 California Wildfire Season

The 2020 California wildfire season was astonishing, burning 4.2 million acres, the most ever on record and more than the previous three years combined. The state experienced five of the six largest fires in its history. In a normal year, it would have been difficult for wineries to make it through such an active season; the ongoing pandemic exacerbated those challenges.

As a winery insurer, we’ve seen firsthand how wildfire response has been affected by the pandemic. In years past, our response to wildfires threatening our policyholders involved immediately flying out to offer them hands-on support and provide them with a check to jumpstart the recovery process. 

During the pandemic, we’ve had to change our approach and adapt accordingly. We’ve shifted toward using tools like Google Maps and leaned more heavily on information we had previously gathered from drone assessments. Of course, all along, our priority was to stay in communication with our policyholders, as well as our other contacts on the ground, as we coordinated the recovery efforts and secured the resources our clients needed. 

A Look at Losses

Reuters reported that the 2020 wildfire season could cost the insurance industry up to $13 billion. We’ve certainly seen a variety of losses from across the wine industry. After a wildfire, buildings, equipment, inventory, and vehicles are often hit hard and can require heavy repairs due to fire damage. Aside from these losses, wineries can also experience costly business interruptions due to damage to infrastructure, that led to a loss of electricity, internet, water, power, wastewater treatment or all of the above. 

Think about the extent of the fire’s impact here. Even for wineries not directly impacted by the fires, road closures and evacuation zones shutdown access to the wineries. Others experienced limited capacity issues due to the fires and the pandemic or loss of vintage.

Looking forward, as wildfire season moves to a year-round occurrence, homeowners and business owners see more challenges in preparing for this peril. That said, it’s critical that winery owners work to understand their risk and take the time to mitigate their risk exposures where they can. 

Fortunately, the tragic events have brought the subject of loss control to the forefront for many winery owners. In the past, we would regularly reach out to insureds with tips and best practices and offer fire risk assessments. These days, our clients are proactively contacting us, asking for advice on mitigating their risks as everyone seems to know someone who has been affected by the wildfires. 

Taking Action

There are several steps winery owners can take to prepare their businesses for a wildfire. One of the first steps we take when surveying property is to evaluate defensible space. Defensible space management entails controlling vegetation around buildings, essentially landscaping the area to reduce the amount of “fuel” on site so that fires die out before reaching buildings. One of the most important recommendations we give winery owners is to make sure they don’t have unkept vegetation surrounding their buildings that could help the fire catch as it nears the property.

Another successful practice we recommend is to have remote control sprinklers on rooftops that can be activated from phones. Similarly, it may also help to have privately contracted firefighters. Resources are limited in the midst of a fire and first responders are often inundated with work. So, if the winery can get a jumpstart on mitigating damages while first responders work to get there, it could go a long way toward limiting or preventing any damage. 

All winery owners should also have a documented fire response plan. This plan should have protocol for red flag warnings in place, detailed instructions for securing equipment, for sealing off ventilation and for how to clearly mark infrastructure. Similarly, they should also have a risk management plan ready. The risk management plan should detail backup generators, remote temperature controls for tanks and communication plans for interacting with employees, customers and vendors.

Preparing for Claims

Of course, even with the best risk mitigation plans in place, there is always a chance damage will occur. Winery owners should be prepared to navigate the claims process. We recommend winery owners take a proactive approach to record keeping. Keep detailed sales information and wine club data to determine how much income was lost during the covered period of loss. Also, track extra expenses that insurers would normally pay to mitigate loss, such as the cost to secure generators or transit of goods from dangerous to safer locations. Proper tracking of this information will make it much easier for insurers to evaluate claims and award wineries the funds they need to recover.

Furthermore, we recommend wineries work with a trusted insurance partner who understands the nuances of a winery and its many risk exposures. You want someone you know and trust, given how severe the consequences of a wildfire can be on your business.

As the threat of wildfires continues to intensify, risk mitigation should be top of mind for winery owners. With a recent record-breaking season, and the many challenges presented by the pandemic, winery owners should take the time to make sure they have detailed plans in place and proper mitigation practices to lessen the chance of a large loss. If the worst does happen, they will know they have done everything they could to get back to business as soon as possible.