california-wine-guide

[california-wine-guide]

Climate Change & Wine Insurance

Hotter temperatures, devastating wildfires, and drought conditions were always common place in Napa Valley, and up until the last decade or so, some of the largest wine producers in the country were able to combat its effects. However, things are changing in wine country and its happening fast. In the last five years Napa has experienced bigger and bigger wildfires, such as Tubbs and Atlas fires in 2017 that decimated the southern and western portions of the valley. More recently in 2019, the valley endured yet another large fire, the Hennessy fire erupted on the Vaca Mountain range and quickly spread into the north area like St. Helena and Pope Valley. Sterling, Castello di Amorosa, and Davis Estates were among the many wineries that fell within the fire's path. These disasters not only affect how these wineries operate, but how they cover their business and environmental risks are becoming increasingly difficult. Insurance in Napa Valley has become more expensive and harder to obtain, and a lot of insurance companies have limited the cover they offer to these properties in the fire danger zones. This leaves the wineries, many family-owned and operated, liable for any and all risks associate to property damage or loss, which is enough to bankrupt any business.

I am native to Napa Valley, born and raised, and throughout my lifetime I've seen the effects the changing climate has had on my home. When I was younger, my family never had to evacuate our home from impending fire danger, summers were not filled with smoke and haze, and rarely was our power shut off due to dry, hot wind. Today, these things have become a reality for my hometown.

Every year, more and more wineries are met with significant challenges that they must overcome to continue business operations. Many winery owners, like Dario Sattui, were told that they are being dropped by their current insurers due to the significant pay out the property required. With more and more claims being made each year, other insurances companies have left the valley completely. Many insurance companies have also written their unaffected clients letters stating that they will no longer cover fire as a loss. Deemed an ineligible risk, many wineries are facing climate change head on and alone.

What are these wineries to do? Well, just like what happened in Louisiana after Katrina, fire insurance will now have to be provided through a state run program, which acts merely as a band-aid on the overarching problem of climate change. The federal mandated flood insurance in southern Louisiana, where insurance companies refuse to cover, has been met with more costs than it can sustain, and ends up costing the government more than they bring in through premiums. The same fate awaits Napa and their increasing fire dangers. Wineries are expensive to maintain. The tanks, barrels, and crushing equipment can easily cost in the millions, let alone the grapes that are insured for millions within themselves. The insurance will cost more than before and cover way less.