Manufacturing companies undoubtedly need insurance coverage to protect both people and their physical facilities from any form of damage or accident. Hazards can happen at any stage of production. In this article, we look at the types of risks in—and insurance policies for—manufacturing companies.
5 Risks Manufacturing Companies Face
1. Damage or theft of goods in transit
When equipment, for instance, is being moved from one location to another, accidents or theft could happen resulting in massive losses, if the organization is not covered by insurance.
2. Equipment breakdown
Equipment used in the manufacturing industry, are critical to day-to-day operations and they are also usually very expensive. For work to be accomplished, several parts must function properly. If a piece of equipment fails, the impact could be severe.
3. Product recall
One risk with manufacturing is that products can sometimes reach the public before it is declared hazardous. This results in product liability where items are pulled back from stores or buyers have to be compensated for the damage caused by the hazardous products.
4. Coverage for off-premise utilities
Power outages, water interruptions, and gas line troubles, for example, can make you temporarily lock your factory doors, resulting in potentially significant financial loss.
5. Breach of software
In today’s world, technology and manufacturing work hand in hand. Unfortunately, as more software is incorporated into the manufacturing environment, hackers and cyber thieves are also out there looking to gain access to sensitive information that could shut down business operations.
3 Types of Insurance for Manufacturing Companies
1. Property Insurance
Manufacturing equipment, regardless of specialty, is expensive, and if destroyed, could put your firm out of commission for a while.
Property insurance protects your building and its contents, inventories, and machinery. In the event of a fire, property insurance will cover the expenses of repairing and replacing your fixed assets.
2. Insurance for Workers’ Compensation
If you have employees, you must have workers’ compensation insurance. This coverage compensates for the injured employee’s medical expenditures and time away from work. This coverage is mandated in most states.
Manufacturing is more hazardous than other business sectors. Operating large printing, stamping, lathes, and other equipment is dangerous; even completely automated industrial equipment must be serviced by humans.
Workers’ compensation is a mandated insurance policy that pays for medical expenditures and rehabilitative services related to a job injury.
3. Insurance for General Liability
Manufacturers’ general liability insurance covers a wide range of eventualities. It is the overarching insurance coverage that protects you against personal harm and property damage caused by your business operations.
General liability insurance protects a manufacturing company’s revenue and assets from common hazards, such as a visitor accident at your factory, from real and alleged claims for physical harm or property damage as a result of your on-site manufacturing processes and the products that you create.
When an accident occurs, this coverage can cover medical expenses as well as the cost of replacing someone’s destroyed goods. If you are sued as a result of an occurrence, this coverage may also cover your legal fees.
It is essential to have the appropriate insurance policy in the event of a disaster. Manufacturing firms that are adequately insured can withstand natural catastrophes, litigation, equipment breakdowns, unfavorable press, and other calamities.
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