Many businesses have general insurance policies in place, but if you run a manufacturing business, you’re right to question whether that’s enough. Every industry has its own special considerations and risks, and the work done by manufacturers is no exception.
As a result, in addition to the standard general liability, business owners, workers’ compensation, and other forms of coverage that you likely already have, it makes sense to consider more specialized forms of insurance.
There are lots of options available, but we’ve selected five main types of coverage that best meet the needs of many different manufacturing businesses. You should consider each of these policies and whether they apply to your business if you want to ensure your company is properly protected. Find out more about each of them below.
1. Excess Casualty Insurance
The main aim of excess casualty insurance is to fill any gaps missed by general liability insurance. It’s an additional layer of protection in the event that your primary liability policy falls short and is not able to offer the level of coverage that might be required for large claims.
If your product is alleged to have caused harm or injury, you could be left to pay significant legal fees and settlements. And in cases where those costs exceed the coverage of your liability insurance, you’ll be left footing the bill. Businesses that should consider excess casualty insurance include companies that manufacture food; whose products are used as part of other products, which have the potential to malfunction; who have acquired another business (plaintiffs could come after you to settle the past wrongs of an acquired company); etc.
It’s also a good idea to keep an eye on lawsuits occurring in your industry to get an idea of potential risks, how expensive a lawsuit in your industry can be, and whether you need excess casualty insurance.
2. Errors & Omissions Insurance (E&O)
When carrying out work for clients and customers, there’s always a risk that the work completed might be questioned at a later date if something goes wrong. With errors & omissions insurance, protection is offered if the manufacturing company is found liable when claims of negligence of inadequate work are leveled against it.
This type of insurance product can protect the business and its employees, and it covers everything from settlements made as a result of these claims to any court costs that may be incurred. If you run a company that provides services to other businesses or consumers, this kind of insurance policy provides extra protection for when mistakes are made by employees or by the company in general.
3. Product Recall Insurance
Government agencies in charge of regulating products due to their safety, such as the Food and Drug Administration (FDA), the Consumer Product Safety Commission (CPSC), and the National Highway Traffic Safety Administration (NHTSA), recall products when they are defective or can cause injury. The FDA, for example, recalls around 4,500 drugs and products each year. And many more recalls occur voluntarily when companies recognize the need to recall and replace products.
As the name suggests, product recall insurance covers businesses when they have to recall products from the market. Doing so is expensive, and this kind of insurance covers the costs of return shipping, disposal, and more, helping to mitigate the overall financial impact of the recall. Types of manufacturers that commonly use this coverage are food, beverage, electronics, and toy producers.
4. Equipment Breakdown Coverage
Many manufacturing businesses rely heavily on the equipment they use each day. In the event of equipment breaking down and needing to be repaired or replaced, businesses can lose out massively due to both the cost of downtime and the expense of repairing or replacing specialized machinery.
That’s why many businesses that rely on specialized machinery choose to take out equipment breakdown coverage. For a start, the cost of repairs or replacements are covered, including the labor costs involved. Loss of income brought about by the accessibility of this equipment will also be covered, as well as any spoiled inventory and other related expenses. Everything from mechanical equipment and electrical equipment to computers, air conditioners, and boilers can be covered by equipment breakdown coverage.
5. Inland Marine Insurance
If you transport property over land, including delivering the products you manufacture, transporting equipment and inventory, etc., we recommend getting inland marine insurance.
Inland marine insurance can cover a broad range of situations, including protection from theft, fire, water damage, accidental drops and damages, and mysterious disappearances, as well as protecting a range of products, such as transported property, computer equipment and data, etc.
Get Guidance from a Professional Insurance Agency
The nature of the manufacturing industry and the inherent risks it presents mean that having the right insurance in place is essential. To avoid unnecessary risks and costs, be sure to consider the various specialized types of insurance products we’ve discussed here today and evaluate whether they apply to your business. For more help determining which types of manufacturer’s insurance will be most beneficial for your business, give us a call to talk to an experienced insurance agency at Bethany Insurance today.
