Why is manufacturing insurance important for your company?
Well think about it:
What if your product fails?
What if it ends up hurting someone?
What if you’re forced to recall defective products?
What if your production facility experiences equipment failure forcing closure for a period of time?
Would you have the resources to cover the losses incurred? Do you have a contingency plan in place should any, a combination, or all of the factors listed above happen to you?
Now, do you see why manufacturing insurance is important?
Ok, now that we have your attention, let’s learn a little more about this type of insurance policy and how to protect yourself from damages and losses in the future.
What is Manufacturing Insurance?
Manufacturing insurance is a collection of policies designed to provide the utmost protection for your company. This covers everything related to manpower, utilities, equipment, facilities, production capabilities, litigation, and more.
Since it is a collection of policies that the owners take out, there is no one-size-fits-all type of manufacturing insurance out there. Another reason why it has to be custom-fit for your company is that manufacturing covers a wide range of industries.
In fact, almost all industries are involved in manufacturing in one form or another. That includes everything from automotive, aviation, canning, clothing, furniture, medical devices, plastics, and others.
Although it wasn’t a requirement before, manufacturing insurance has since become a standard necessary to protect companies from costly litigation.
What Types of Insurance Should I Get for My Manufacturing Company?
There are many insurance policies you can take out for your manufacturing company to ensure that you cover all of the bases. For starters, here are some you should definitely get:
General Liability Insurance
The first and most important insurance to get for your manufacturing company is General Liability Insurance. This basically covers physical injuries and property damage related to your business’ operations but is not limited to just that. It can also cover litigation costs due to damage to others around your property line, copyright infringement, and others.
Products Liability Insurance
If you go back to the first part of this article, we posed the questions: “What if your product fails?” and “What if it ends up hurting someone?”
That’s what products liability insurance is for. In the event that your products cause harm or fail in any form, products liability insurance acts as your safety net.
This also applies if your product serves as a component of a larger product. For example, a car manufacturer has outsourced the production of panels to you. In the event that the entire car fails, you may be brought in as part of the lawsuit made against the car as a whole product. This helps cover the litigation expenses until you are cleared of any liability.
Another thing that you definitely should include in your manufacturing insurance is property insurance. Running a manufacturing company requires a ton of investment in the form of the equipment you use.
CNC Machines, fabrication machines, printers, boilers, generators, are just some examples of equipment you might have on-site that requires coverage under property insurance. Coverage includes replacement of damaged parts, repairs, protection from losses due to downtime.
Manufacturers’ E&O Insurance
Manufacturers’ E&O (Errors and Omissions) Insurance is also known as Professional Liability Insurance and covers you from lawsuits related to your products that a client claim is late, inaccurate, or undelivered.
It also covers you from lawsuits that the products you produced have led to causing entire systems inoperable.
Intellectual Property Insurance
The best designs are quite often copied. Protect yourself from copyright infringement with Intellectual Property Insurance. This policy also covers you from lawsuits claiming you have infringed on the copyrights, patents, or trademarks of others.
Workers’ Compensation Insurance
This is a requirement in most states that helps protect your workers in the event of a work-related injury. This covers medical bills as well as covers wages during time off.
Product Recall Insurance
Product recalls can be costly and this can have a huge impact on your finances. Oftentimes, product recalls are accompanied by lawsuits.
Product recalls are triggered by events deeming your output as unsafe, defective, or contaminated.
Business Owner’s Policy (BOP) Insurance
BOP is a combination of business property and business liability insurance in one. This means you are covered from damage to your property resulting from fire, natural disasters, theft, and vandalism. It also covers you when there is bodily injury involved.
The great thing about a BOP is that you can add on other forms of insurance that specifically fit your needs.
Inland Marine Insurance
This type of insurance protects your assets on-site or in transit from the source to your worksite. Let’s say you have a delivery of goods to your workplace. If something happens on the highway that causes damage to those products, your Inland Marine Insurance can take care of it.
Don’t Operate a Business Without Adequate Protection
As you can see, there are a lot of insurance policies you can apply for to protect yourself from suffering massive losses. We’ve tried to include everything in this shortlist to get you started in the right direction.
But there will always be an insurance policy out there in its basic or modified form that may be best suited for your needs. It helps to do your research and find out if it is the right one for you.
One thing’s for sure, it is highly recommended that you have at least some basic protection before operating or expanding your business. You never know when you need your insurance company to get you out of trouble. And trouble can strike at the most inopportune times.
Give us a call if you have more questions regarding insurance policies and how to track them with our software. We will be happy to attend to your needs if you give us a call or send us an email.