What Insurance Coverage Do Manufacturers Need?


Jun 26, 2020

Find out what insurance coverages your Manufacturing business needs.

No matter what you manufacture, you need insurance coverage to stay protected from physical and financial risk. Your insurance solutions may vary based on the kind of Manufacturing business you operate and what your products are. Regardless, you will likely need these coverages common for Manufacturing businesses.

Who Needs These Insurance Coverages in the Manufacturing Industry?

Whether you work with food, alcohol, metals, plastics, medical products, textiles, machinery or more, if you manufacture a product or good, you need insurance coverage. As a Manufacturer, you face unique business risks because you could be held responsible for property damage or bodily injury arising from your products; this responsibility extends beyond just the point of sale.

What Insurance Coverages Do Manufacturers Usually Need?

Product Liability

Production insurance can help protect you against property damage or bodily injury lawsuits potentially arising from your product. 

Commercial General Liability (CGL)

CGL insurance will help provide coverage for your staff, production facility and property belonging to your business and others.

Professional Liability (E&O Insurance)

If you or any member of your staff, regardless of hierarchical status, makes a mistake or are negligent in the course of producing your product and results in a financial loss to a client/partner (without property/bodily damage), E&O Insurance can cover the third party's financial loss and your legal costs.

Property Insurance

Property Insurance provides financial reimbursement, due to loss or damage, to the owner or renter of a structure and its contents including equipment, inventory, finished products, supplies and electronics.

Cyber Insurance

Although there are also many positives, the ever-advancing application of technology in the Manufacturing industry also brings about new challenges and sophisticated threats - potentially leaving Manufacturing businesses exposed. Cyber and Data Breach Liability coverage can protect businesses against threats like ransomware attacks, social engineering, IP theft and supply chain attacks.

Here Are Examples of When Insurance Can Help Protect Your Manufacturing Business:

A tainted batch of cough syrup containing a poisonous substance made by a pharmaceutical manufacturing company causes injury to a third-party; their Product Liability coverage helps cover the legal costs of the lawsuit.

A gasket accidentally comes off some production equipment and unfortunately, injures a machinery technician. Commercial General Liability can cover the medical costs of the technician's injuries.

A manufacturing company prints and packages hair accessories for a customer. The adhesive used to seal the packages fails, causing the product to fall out of its packaging when displayed. The printing company is sued by its customer for lost revenue and expenses; E&O Insurance can cover the legal costs and financial losses.

A distillery company's brewing system breaks down suddenly; their Property Insurance is able to cover the costs of replacing it.

A toy manufacturer allows one of their plastics suppliers access to their IT system and some additional data. A hacker gains access to the plastics supplier’s IT network and is subsequently able to also attack the toy manufacturer due to their partnership. They steal data and cause significant harm to the toy company - financially and otherwise. The toy manufacturer's Cyber Insurance is able to help cover the costs of cyber recovery and other additional damages.

Other Frequently Asked Questions:

How much does Insurance Coverage for Manufacturers cost?

Insurance premiums vary widely for each individual Manufacturer, based on several factors, including, but not limited to:

  • The type of products you create (For example, an automobile producer versus a small-scale craft brewer),

  • Their relative value in terms of cost to produce and replace – revenue generated by the business,

  • Your building or workspace (Age, size, location, potential reconstruction cost),

  • Claims History

  • Preventative measures to suppress fires and flooding,

  • The coverage, limits, and deductibles you opt for

How important is it to have this type of insurance?

Depending on the nature of your Manufacturing operations, having the right insurance is crucial to protect your business. It's worth considering the threats specific to your business, how they’d affect your livelihood, how likely they are to happen and how it would affect your finances to resolve them on your own. Some of the aspects considered in designing your manufacturing insurance programme are the risks inherent to:

• The product,
• how it will be used
• and the markets in and to which it will be distributed.

Every business and situation is different - especially in the individualized manufacturing industry. That's why, it's important to speak to a broker to help examine your scenario and assess your specific insurance needs as a Manufacturer. At Foxquilt, we can help provide you smarter business insurance customized to fit your needs. We work with each manufacturer on a tailored basis to deeply understand their unique risk exposures and to determine the right risk management solution for them. By joining our Foxquilt community of Manufacturers, you can receive better buying power and even unlock group savings on your insurance premiums. Get started on a quote for insurance built for your business.

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