If you make and distribute products, standard business insurance might not be enough. A dedicated manufacturer insurance policy covers the specific risks you face, leaving you free to concentrate on your business.
How can manufacturer insurance protect you?
Use the yellow hot spots and explore how manufacturer insurance can help protect against common risks.
Commercial General Liability Insurance
The manufacturing business is unique and comes with many exposures, which can lead to a potential lawsuit. What if a fire breaks out and damages the building and halts production - causing you to default on your delivery contracts? Would your business survive?
Commercial general liability insurance is an absolute necessity for a manufacturing business. This type of protection provides broad coverage for premises, operations, completed operations and advertising and personal injury. It will also pay to defend any covered lawsuit or action regardless of its merit. Coverage can be purchased as a separate policy and can be tailored to your specific needs. Coverage limits generally range from $100,000 to $1,000,000.
Commercial Property Insurance
When a gas tank explosion causes an uncontrollable fire, your commercial property and everything within it can suffer a significant loss. This can have a detrimental effect on your manufacturing business.
Commercial property insurance can help protect the property your business owns or leases, including things like equipment, inventory, furniture and fixtures. Whether you own your building or lease your workspace, commercial property insurance can be purchased separately or can be combined with other necessary coverage to protect your business’ physical assets.
Business Interruption Insurance
What would you do if a fire impacted the operation of your production line and prevented you from serving clients for a day or more? Or what if a pipe leak caused a system outage or extended downtime, leaving your production line inoperable? These and other events can destroy your ability to serve clients and bring in revenue, which can have a major long-term impact on the viability of your business.
Business interruption insurance compensates you for lost income if your manufacturing facility cannot operate as normal due to damage that is covered under your commercial property insurance policy, such as fire or water damage. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the incident not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
Product Recall Insurance
When a product you manufacture is found to be defective and causes bodily injury or property damage to others, you may be held financially liable. Product recalls can be involuntary (required by a regulatory agency or the government) or voluntary (the manufacturer notices a defect that is unlikely to force an involuntary recall), and can be costly.
Product recall insurance covers expenses associated with recalling a product from the market. Coverage can include customer notification costs, shipping costs and disposal costs. Coverage generally applies to the manufacturing business itself, though additional coverage can be purchased to cover the costs of third parties.
Workers’ Compensation and Employers Liability
If one of your employees receives an injury or becomes ill due to a work-related occurrence, you are required by law to have the proper coverage in place.
Workers’ compensation and employers liability insurance protects your employees should a job-related injury or sickness occur during the course of employment. Since benefits vary by state law, make sure your insurance agent is aware of all physical locations your business operates in and all physical locations where you hire your employees.
Business Auto Insurance
As a manufacturing business, you have many exposures associated with your business vehicles – owned or leased. With a fleet of cars, trucks, vans or other types of vehicles used in the course of business, a single accident can potentially put your business in financial jeopardy.
Business auto insurance provides coverage for vehicles owned or leased by your manufacturing business and provides coverage for bodily injury, property damage and other exposures, and could include comprehensive and collision coverage as well.
Commercial Umbrella / Excess Insurance Policy
Losses and lawsuits are quite common in the manufacturing business, and settlements can be substantial. If your business is found to be responsible for damage or injury, you could be facing a large liability loss that exceeds the basic limits of your standard policy.
You should consider purchasing a commercial umbrella insurance policy, which provides higher limits, typically between $2,000,000 and $10,000,000, and often broadened coverages. Coverage is extended over your general liability insurance, workers’ compensation and business auto insurance. It provides a great safety net and helps ensure your manufacturing business is well protected.
Motor Truck and Ocean Cargo Insurance
As a manufacturer, you’re constantly shipping your cargo around the world either by land, air or sea – exposing your business to risk as a result of product loss, theft or damage.
You can purchase ocean marine insurance for your products while your shipments of goods are in transit - by truck, rail, air, ship or boat - until they reach their final destination.
A key policy point to look for is a manufacturer’s selling price clause. This means that if your stock is damaged or destroyed by a covered event, you get a payout reflecting the price you would have sold the items for—not the price you paid for the raw materials.
You should also look for errors & omissions coverage. This goes beyond the usual business insurance that protects you against claims of property damage and injury caused by your products. It adds coverage for claims of financial losses. For example, if your customers say their business was hurt by a fault in your product.
Also consider product recall insurance, which kicks in if you’re forced to recall a product because it might cause harm. This insurance covers not only the costs of getting the product back to you, but also safely disposing of the stock. Some policies even cover legal costs or public relations expenses.
Since 1998, we have been the endorsed Insurance Program Manager for the Select Manufacturer’s Association of New York. We offer members solutions to help them control their Workers’ Compensation program costs.
Our Workers’ Compensation Safety Group is underwritten through the New York State Insurance Fund and encompasses machine shops and metal workers. They share a common expiration date of May 1st and eligible members receive an upfront discount and the potential for a year-end dividend. In addition, we offer New York State Statutory Disability at “members only” rates.
If you would like to learn more about why Manufacturers from across New York State trust The Flanders Group with their insurance, risk management and Workers’ Compensation needs, please call Carlos Santiago at 585-485-5863. Our friendly team of experts are here to help you manage your risk and lower your insurance premiums.