You’ve mastered homebrewing beer and decided to take the next step: distilling your own whiskey. You buy a beautiful $2,000 copper still, set it up in your detached garage, and start your first batch of moonshine.
You walk away to check your phone. The cooling water line slips, the condenser fails, and highly flammable ethanol vapor fills the garage. The vapor reaches the pilot light on your garage heater. The resulting explosion blows the roof off the garage, destroys your car parked inside, and causes $60,000 in damage. You file a fire and explosion claim with your homeowners insurance, confident that fire is a covered peril.
The Brutal Truth: Why Standard Policies Deny This Claim
Fire and explosion are absolutely covered perils on a standard HO-3 Homeowners Policy. However, your claim is going to be instantly denied because of what you were doing when the explosion happened.
Brewing beer for personal use is federally legal. Distilling spirits (alcohol) at home is a federal felony under US law, regardless of state laws, unless you have a commercial permit from the TTB. Because you were manufacturing illicit spirits, the insurance carrier will instantly invoke the Illegal Acts Exclusion.
Insurance contracts are legally binding agreements that do not underwrite criminal activity. Because the $60,000 in property damage was the direct result of a federally prohibited act, your entire policy is voided for this loss. They will not rebuild the garage, and your auto insurance will deny the claim on your car for the same reason.
How to Actually Protect Yourself (The Fix)
If you are going to play with pressurized, flammable liquids, you must stay on the right side of the law and the underwriter.
- Stick to Beer and Wine: Do not distill spirits. As long as you are brewing beer or wine within federal limits (up to 200 gallons per year for a household of two or more), you avoid the Illegal Acts exclusion.
- Declare the Hobby to Your Broker: Even legal brewing involves massive propane burners and glass carboys. Tell your broker so they don’t hit you with an Increased Hazard Exclusion (materially altering the risk of the home without telling the carrier) if a legal brewing accident causes a fire.
- Buy Commercial Insurance if Selling: The second you sell a six-pack of homebrew to a friend, you trigger the Business Pursuits Exclusion. If you want to monetize your brew, you must form an LLC and buy a Commercial General Liability (CGL) policy with Liquor Liability coverage.
The Claims Adjuster’s Secret
When an explosion happens in a garage, we send a highly specialized fire investigator (Cause and Origin expert). We aren’t just looking for the spark; we analyze the debris. If the investigator finds a ruptured copper still and a barrel of fermenting corn mash, the jig is up. You cannot lie and say the lawnmower gas tank exploded. The chemical residue of ethanol production is unmistakable, and lying to the investigator upgrades the situation to Insurance Fraud.
The Verdict (TL;DR)
The Risk Level: Extreme (Distilling creates explosive vapor and triggers federal illegal acts exclusions). The Solution: Only brew legal beer/wine, disclose the hobby to your insurer, and use commercial policies if selling. Estimated Cost: Free (just follow the law); $1,000+ if stepping up to a commercial microbrewery policy.
Your homeowners policy will happily cover a grease fire in the kitchen, but it will absolutely abandon you if you blow up the garage making moonshine.