Frequently Asked Questions About Small Business Insurance
Manufacturing Insurance FAQ. Manufacturing is an extremely broad category that includes countless potential hazards and exposures in virtually all coverage areas. Because of this, every individual manufacturer is unique and a specific risk survey of every operation is advisable.
The basic insurance needs for every class of business or operation includes property coverage for buildings, machinery and equipment, as well as for raw stock and finished products. Liability insurance for premises exposures is important but products liability insurance presents greater concerns so these exposures and coverage needs must be evaluated carefully.
In addition, protection for injuries to workers, environmental coverages and automobile insurance are priority items.
We wanted to provide a deeper dive into small business insurance to help our readers get a better understand of the commercial insurance policies they want and need with the Manufacturing Insurance FAQ.
Read the Manufacturing Insurance FAQ to learn what type of commercial insurance coverages are right for manufacturers - including liability, property, workers compensation and other specialty policies.
According to Dictionary.com - manufacturing is, "the making of goods or wares by manual labor or by machinery, especially on a large scale."
Manufacturing include - but are not limited to - the following types of businesses:
You can reference the Insurance Definitions, Dictionary And Glossary to better understand the commercial insurance policy terms and language used in our Small Business Insurance FAQs.
Following are some suggested commercial policies and coverages applicable for manufacturers:
At one time the only package option for manufacturers was the commercial package policy (CPP). A number of insurance companies are now allowing smaller, less hazardous manufacturers to be written on their businessowners policies as well. One especially positive feature of this is that business income coverage is automatically included in the form on a 12-month actual loss sustained basis.
Types Of Manufacturing Package Policies:
Output policies were designed for manufacturers as a way to close coverage gaps as raw material moved through the manufacturing processes and became finished stock. The same coverage may be achieved by combining the inland marine coverages with the building and business personal property coverage form, but the coverage is not as seamless, leaving the potential for a coverage gap.
A number of valuation options are available that should be considered. Time element coverages are a vital component and the form and limits should be reviewed carefully.
Business income from dependent and secondary dependent properties is an especially important coverage to be considered as companies utilize fewer and fewer suppliers and may supply fewer and fewer very large customers.
Types Of Property Coverages:
Stock and other property is constantly on the move and must be covered wherever it is. Inland marine coverages are designed to follow that stock and other property. A thorough review of the manufacturing processes and operations helps determine potential coverage gaps and highlights the correct coverages needed in each situation.
A transportation policy should always be written, even if the insured does not have a fleet and uses carriers for hire. Patterns and dies can be extremely valuable and are sometimes overlooked because they are located away from the insured's premises.
Types Of Inland Marine Coverages:
Employee theft is the most important crime coverage needed by most manufacturers. Because of the way business is now transacted, computer fraud and funds transfer fraud are also major coverage and loss concerns. Forgery coverage should not be overlooked because checks are regularly written for large amounts.
Money and securities are not usually subject to holdup losses but loss to or destruction of them is only covered under crime forms. Extortion, kidnap and ransom coverages should be seriously considered if international travel makes up part of the operation.
Types Of Crime Coverages:
Bonding may be a major coverage concern for some manufacturers, especially if they enter into service or supply arrangements with governmental entities.
Types Of Surety Coverages:
Products liability is the major liability exposure for most manufacturers. The limitations within the CGL on products-related issues have prompted some new coverages that should be carefully reviewed with the customer. A liquor and alcoholic beverage manufacturer is wise to purchase a liquor liability policy because even limited liquor exposures are excluded in the CGL policy.
If a manufacturer has a railroad sidetrack or spur on the premises, a railroad protective liability policy may be needed. When the CGL coverage form is moving from a claims-made basis to occurrence basis form then a claims-made to occurrence coverage form is vital in preventing a significant coverage gap.
Types Of Liability Coverages:
The commercial automobile exposures of manufacturers can vary tremendously. Some may have no exposures while others have only a salespersons' fleet. In other cases, a manufacturer may use a fleet of owned commercial trucks to deliver its finished products.
The amount of international travel, if any, should be determined, due to territorial limits restrictions in the commercial auto policy, and due to restrictions, laws and regulations in a number of foreign countries.
Types Of Business Auto Coverages:
Employers are required by state statute to provide coverage for on-the-job injuries sustained by their employees through either a workers compensation policy or a state-approved self-insurance plan.
If the manufacturer uses independent contractors at off-site locations, they must verify that they actually qualify as subcontractors before an accident occurs. Otherwise, the injured party could be treated as an employee.
Types Of Workers Comp Coverages:
The types of injuries that might occur because of a faulty manufactured product are the major issues in considering the appropriate higher limits and type of excess or umbrella policy to use. If the underlying coverage is written on a claims-made policy, retroactive excess liability coverage should be considered.
Types Of Excess Liability Coverages:
Larger manufacturers may own or lease aircraft and use them as a convenient way to visit their other plants and customers. In addition, some products may be transported and delivered by air cargo.
Types Of Aviation Coverages:
Manufacturers that export products need to arrange for coverage through an ocean marine cargo policy on products shipped at their risk. In addition, if they ship to or through a war risk area, a separate cargo war risk policy should be purchased. Finally, some manufacturers own boats or yachts used to entertain both customers and employees.
Types Of Ocean Marine Coverages:
The coverage needs for a manufacturer vary widely. Below are some considerations:
Types Of Specialty Coverages:
There are many commercial insurance policies available for Manufacturing. To find out what types of coverage your business needs, speak to a professional insurance broker with experience in insuring manufacturers.
Learn about the coverages available for specific industires with the Insurance FAQs below: