Manufacturing Insurance FAQ

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Manufacturing Insurance FAQ Information

Manufacturing Insurance FAQ

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.

What Is A Manufacturing?

According to - 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:

  • Air Conditioning-Commercial
  • Air Conditioning-Residential
  • Aircraft
  • Alarm
  • Apparel
  • Audio and Video Equipment
  • Auto Parts
  • Automobile
  • Boxes Including Paperboard
  • Brick
  • Brooms and Brushes
  • Buses
  • Buttons
  • Cabinets
  • Camp Equipment
  • Cans
  • Canvas Goods
  • Caskets
  • Cement
  • Ceramics-Industrial
  • Ceramics-Non-Industrial
  • Chemicals and Allied Products
  • Clocks and Watches
  • Clothing
  • Communications or Intercommunications
  • Computers
  • Condoms
  • Construction Equipment
  • Cork Products
  • Cosmetics
  • Cutlery
  • Down and Feather Products
  • Dry Ice
  • Dyes and Pigments
  • Electrical Appliances-Major
  • Electrical Appliances-Small
  • Electronic and Other Electrical Equipment
  • Electronic Apparatus-Commercial
  • Electronic Apparatus-Personal
  • Electroplating
  • Elevators
  • Engines
  • Exercise Equipment
  • Farm Equipment
  • Feed and Grain
  • Fences-Metal
  • Fences-Wood
  • Fertilizers
  • Finishing and Coating Operations-Textile
  • Fireworks
  • Foundries-Ferrous
  • Foundries-Nonferrous
  • Fur Garments
  • Furniture
  • Furniture-Other Than Wood
  • Garage Door
  • Gears
  • Glass-Miscellaneous
  • Glassware
  • Gypsum
  • Heat-Treating Operations
  • Hosiery
  • Industrial Machinery
  • Inks
  • Insecticides
  • Jewelry
  • Lawn Mowers
  • Leather Goods-Apparel
  • Leather Goods-Nonapparel
  • Lighting and Wiring
  • Lumber and Wood Products
  • Machine Shops
  • Mattress and Box Springs
  • Millwork
  • Monuments
  • Musical Instruments
  • Ornamental Metalwork
  • Paint
  • Paper and Allied Products
  • Pesticides
  • Pet Food
  • Pharmaceuticals
  • Plastic Goods
  • Plastics
  • Plastics-Molding
  • Forming and Extruding
  • Pottery
  • Pulp and Paper Mills
  • Refractory
  • Rubber and Rubber Products
  • Rugs
  • Sawmills and Planing Mills
  • Screw Machine Products
  • Sheet Metal
  • Shoes-Leather
  • Shoes-Plastic or Rubber
  • Soap and Detergent
  • Sporting Goods
  • Springs
  • Stone Products
  • Tanneries
  • Textile-NOC
  • Tires
  • Tobacco
  • Tool and Die Shop
  • Toys-Metal
  • Toys-Miscellaneous
  • Toys-Plastic or Rubber
  • Toys and Games-Electronic
  • Vending Machines-Metal
  • Vending Machines-Wood
  • Watercraft
  • Wire
  • Wire Rope
  • Woodworking Shops
  • Writing Instruments
  • Yarn Spinning and Weaving

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.

What Kinds Of Insurance Do Manufacturing Businesses Need?

  • At the minimum, manufacturing businesses need general liability insurance.
  • If they have employees they will need workers compensation in most states.
  • If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
  • There are also other specialty coverages and endorsements that might be needed based on their operations.

Following are some suggested commercial policies and coverages applicable for manufacturing businesses:

You can skip to the following types of manufacturing businesses small business insurance policy coverage types using these links:

Manufacturing Businesses Commercial Insurance Policies:

What Kinds Of Commercial Package Policies Do Manufacturing Businesses Need?

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:

  • Businessowners Policy (BOP)
  • Commercial Package Policy (CPP)

What Kinds Of Commercial Property Insurance Do Manufacturing Businesses Need?

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:

  • Building
  • Business Personal Property
  • Personal Property of Others
  • Improvements and Betterments

What Kinds Of Inland Marine Insurance Do Manufacturing Businesses Need?

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:

  • Accounts Receivable Coverage
  • Bailee Customers Coverage
  • Builders Risk Coverage
  • Commercial Articles Floaters
  • Difference in Conditions (DIC) Coverage
  • Electronic Data Processing Equipment Coverage
  • Fine Arts Coverage
  • Furriers Block Policy
  • Installation Coverage
  • Installment Sales Coverage
  • Jewelers Block Policy
  • Patterns and Dies Coverage
  • Transportation Coverage
  • Valuable Papers and Records Coverage

What Kinds Of Crime Insurance Do Manufacturing Businesses Need?

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:

  • Computer and Funds Transfer Fraud Coverage
  • Employee Theft Coverage
  • Forgery or Alteration Coverage
  • Inside The Premises-Theft of Money and Securities Coverage
  • Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
  • Money Orders and Counterfeit Money Coverage
  • Outside The Premises Coverage

What Kinds Of Surety Bonds Do Manufacturing Businesses Need?

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:

  • Contract-Performance of Service or Supply Bonds
  • Court Bonds
  • Fiduciary Bonds
  • License and Permit Bonds
  • Miscellaneous Surety Bonds

What Kinds Of Commercial Liability Insurance Do Manufacturing Businesses Need?

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:

  • Claims-Made to Occurrence Coverage
  • Commercial General Liability (CGL) Coverage
  • Employee Benefits Liability Coverage
  • Employment-Related Practices Coverage
  • Liquor Liability Coverage
  • Owners and Contractors Protective (OCP) Liability Coverage
  • Product Contamination Insurance
  • Product Recall or Product Withdrawal Expense Coverage
  • Railroad Protective Liability Coverage
  • Special Events Liability Coverage

What Kinds Of Commercial Auto Insurance Do Manufacturing Businesses Need?

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:

  • Auto Medical Payments
  • Business Auto Coverage
  • Collision Coverage
  • Comprehensive Coverage
  • Hired & Non-owned Auto Coverage (HNOA)
  • Uninsured/Underinsured Motorists Coverage

What Kinds Of Workers Compensation Insurance Do Manufacturing Businesses Need?

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:

  • Excess Workers Compensation Self-Insurance Bonds
  • Stop-Gap or Employers Liability Coverage
  • Workers Compensation and Employers Liability Coverage

What Kinds Of Excess And Umberlla Insurance Do Manufacturing Businesses Need?

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:

  • Excess Liability Coverage
  • Retroactive Excess Liability Coverage
  • Umbrella Coverage

What Kinds Of Specialty Insurance Do Manufacturing Businesses Need?

The coverage needs for a manufacturer vary widely. Below are some considerations:

Types Of Specialty Coverages:

  • American Expatriate Coverage
  • Business Legal Expense Coverage
  • Commercial Credit Coverage
  • Cyber Liability Coverage
  • Directors and Officers Liability Coverage
  • Environmental Impairment Liability Coverage
  • Export Credit Insurance Coverage
  • Fiduciary Liability (Pension, Welfare and Employee Benefit Funds) Coverage
  • Identity Theft Insurance Coverage
  • International Insurance Coverage
  • Nuclear Energy Liability Coverage
  • Nuclear Energy Property Coverage
  • Patent Infringement Liability Coverage
  • Risk Retention Group Liability Coverage
  • Solar Energy System Coverage
  • Tax Liability Coverage
  • Tender Offer Defense Expenses Coverage
  • Terrorism Insurance Coverage
  • Underground Storage Tank (UST) Liability Coverage

Manufacturing Insurance FAQ - The Bottom Line

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.

Frequently Asked Questions By Industry

Learn about the insurance coverages and surety bonds available for specific industires with the Insurance FAQs below:

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