Manufacturing can be highly complex, so business owners need lots of protection. One aspect of that protection is proper manufacturing insurance coverage. Legal compliance, asset protection, loss prevention, and risk management are just a few of the areas where business owners can benefit from insurance protection. Here, we explore types of insurance coverage to consider, why they may be necessary, and what to factor in when selecting a policy.
Legal compliance
Manufacturers are required to comply with a variety of regulations that will influence manufacturing operations. These include workplace safety, product quality, and environmental protection requirements. Some insurance providers may consist of risk management services to aid manufacturers in maintaining regulatory compliance to prevent penalties.
Manufacturing insurance may be legally required or may be a mandatory part of business contracts stipulated with financial lenders, suppliers, and customers. Liability insurance might include product defects and third-party claims for personal injury or property damage at a business’s manufacturing location. Good insurance coverage can aid in meeting legal requirements.
Risk management
Risk management is an essential part of running any business as it aids in determining the risks to a business’s success. This kind of management includes minimizing liabilities, reducing the adverse effects of unforeseen events, and operations continuity plans to contain potential losses.
Insurance providers often include risk control and management services to reduce the probability of workplace accidents, property damages, personal injury, and liability claims against a business. By improving safety and efficiency, businesses have a greater chance of achieving and maintaining profitability. Companies that use risk control strategies may benefit from reduced premium costs.
What kind of insurance do manufacturing businesses need?
Several essential kinds of insurance manufacturing business owners should have.
Liability insurance
This insurance protects business owners from claims from operations, products, and services. Coverage may include legal fees, medical expenses, damages, and public relations costs. Good examples are a faulty product that causes damage or an accident on company premises. This insurance coverage is vital protection in the event of lawsuits or requests for compensation.
Commercial property insurance coverage
Property insurance protects the company’s physical assets, such as buildings, equipment, machinery, tools, etc., against theft, vandalism, natural disasters, fires, and more. This coverage may include property stored within business premises or related to business operations, including computers, furniture, and company inventory. If a fire destroys buildings or their contents, this policy will aid in rebuilding and replacement. Property insurance can be customized to a business owner’s needs, such as repair coverage in the event of electrical or mechanical failure of machinery, reducing downtime, and protecting business income.
Business interruption coverage
Manufacturing businesses must maintain a consistent income flow to meet operational expenses, such as supplies and employee wages. Coverage in the event of business interruption can reimburse a company’s lost profits, operating costs, relocation expenses, and more, especially should a natural disaster or fire strike the business. This insurance helps maintain payrolls, loan repayments, or rent a temporary location to continue business operations.
Workers’ compensation coverage
Manufacturing businesses often require workers to operate heavy machinery or perform risky tasks. Health issues such as strains, hearing loss, or accidents on the premises can happen. Workers’ compensation covers medical costs and wage replacement due to injury while on the job and can protect a company against employee lawsuits. This insurance is generally mandatory in most states, with specifics linked to the industry and location.
What you should consider when selecting manufacturing insurance for your business.
When you decide to purchase insurance coverage or renegotiate your current manufacturing insurance, keep these considerations in mind:
- Consider your industry and the specific needs and regulatory requirements for that industry.
- Depending on what you manufacture, a business’s needs may require additional coverage, such as vehicle coverage, employment practices liability, or cyber liability.
- Examine a provider’s conditions for significant exclusions or coverage limitations.
- Evaluate premiums, discounts, and deductibles in terms of the quality of the coverage offered.
In conclusion
Proper manufacturing insurance is essential whether you own a small company or manage a large manufacturing plant. Consult reputable providers that offer wide-ranging coverage. Request offers and estimates from multiple providers to find the most competitive coverage to protect your business.
