Machine Shop Insurance New Mexico Policy Information
Machine Shop Insurance New Mexico. As a machine shop owner or operator, you offer a variety of products and services to the clients that you serve. For example, you might create unique items for your customers, or you may offer repair services for companies that utilize certain types of machinery. Machine shops in NM receive unfinished parts from customers, generally manufacturers, and then grind, bore, or perform other processes based on the customers' specifications.
The traditional job shop does a low volume but offers high-quality work, such as grinding teeth into gear blanks or boring precision holes into forged or cast parts. Other job shops handle high-volume work, commonly using computerized (CNC) lathes to thread screws, bolts, and similar items.
Larger shops may provide expanded services to include such finish work as deburring, heat treating, or electroplating. The shop's specialty is often based on the equipment that they have available. Like contractors, they may bid on jobs and receive contracts with set terms and conditions.
No matter what the specifics of your business may be, as the proprietor of your machine shop, you have a lot of responsibilities and are liable for any mishaps and mistakes that can happen. In order to ensure that your employees and customers are safe and satisfied - and in order to ensure that your business is safe and you are protected - it's important to make sure that you carry the right type of insurance coverage.
If you've just opened your own shop, trying to navigate the world of insurance can be confusing. To help you make the best possible choices and to ensure that you are well protected, keep on reading to find out why insurance is so important and what type of machine shop insurance New Mexico coverage you should invest in.
Machine shop insurance New Mexico protects custom machining, electroplaters, foundries, machine parts manufacturers, or metal finisher operations from lawsuits with rates as low as $77/mo. Get a fast quote and your certificate of insurance now.
Why do Machining Shops Need Insurance?
Running a machine shop can be extremely rewarding; however, it also comes with a lot of responsibilities. Third-parties or employees could become injured, your equipment could malfunction or become damaged, the property your shop is located in might be vandalized, or a client could file a lawsuit against you alleging that a member of your crew damaged their property.
The above-mentioned scenarios are just some of the incidents that could arise. If something serious should happen, as the proprietor of the business, you will be held liable. That means that you could end up having to pay a significant amount of money in order to repair or replace damaged property, cover the cost of medical expenses, and pay for legal fees. Having to pay such costs could put you in financial ruin. Ultimately, you could end up filing for bankruptcy or even having to shut down your business.
Having the right type of machine shop insurance New Mexico coverage will protect you from financial burden. Should a client become injured while visiting your shop and file a lawsuit, for example, commercial insurance will cover the cost of any necessary medical bills, as well as legal fees.
What Type Of Insurance Do Machine Shop Owners Need?
Do to the nature of owning and operating a machine shop, there are several different types of insurance policies that are recommended for individuals in this industry. Some coverages are compulsory, meaning that you are legally required to carry them, and some are optional; however, it is strongly recommended that you consider investing in the policies that you aren't obligated to carry in order to avoid serious losses and financial hardship. Some of the types of policies that machine shop owners should carry include:
- General Liability. You probably have a lot of heavy machinery at your shop. Should a customer, vendor, or any other third-party become injured by any piece of machinery, bodily injury insurance will help to pay for the necessary medical care. It will also help to cover the cost of legal fees should a lawsuit be filed against you.
- Commercial Property. This type of coverage protects your business - both the physical structure and the contents inside of it - should an act of nature or vandalism occur.
- Products and Completed Operations. If any of the products that you offer or the services that you provide malfunction and harm a customer after the service or purchase was completed, this type of insurance coverage will protect you.
- Workers' Compensation. When a member of your staff is injured on the job or suffers a work-related illness, workers' comp insurance will pay for the employee's medical care, lost wages, and even any job training that he or she might require. It can also cover legal fees, should the injured employee file a lawsuit against you.
These are just some of the different types of policies that machine shop owners should carry. You can purchase individual policies; or, you might be able to invest in a policy that lumps several different coverages together.
NM Machining Risks & Exposures
Premises liability exposure is higher than for other metal working operations as customers need to be on premises to review the process and to evaluate the ability of the firm to deliver the product desired. If customers put their own employees on site for quality control purposes, these employees are subject to the same hazards as the machine shop's employees. Other visitors may be injured by slips, trips, or falls. Fumes, dust, and noise from metal work could affect neighboring properties.
Products liability exposure may be very high if the final product is a critical operating part or system (such as parts for autos, aircraft, watercraft, military uses, or industrial machinery). The machine shop may be more concerned about their ability to handle the customer's specifications rather than evaluating the end use of the product and what could happen should the part fail.
It may be impossible to defend against questionable claims unless there is an aggressive quality control program including high standards for materials, testing and monitoring of components, and documentation of sources (often down to the individual item in a run). If the machine shop is following specifications provided by the customer, the contract may limit the exposure. Hazards increase without contracts that clearly describe the responsibilities of the machine shop and the quality standards that must be met for customer satisfaction. Older parts made before improved safety features were introduced may still be in use.
Environmental impairment liability exposure may be significant due to possible contamination of ground, air, and water from the chemicals, paint, and solvents used. Disposal of wastes must adhere to all federal and state guidelines.
Workers compensation exposure is moderate to high. Workers on a production line with punch presses and cutting machines can suffer severe loss from cuts or amputations as they push to meet quotas. Eye injuries from metal shavings and skin irritations from chemicals are additional causes of loss. Common injuries include slips, trips, falls, back injuries from lifting and material handling, hearing loss from noise, and repetitive motion injuries.
Workstations should be ergonomically designed. Employees should be provided with safety training and protective equipment. Jobs are bid and deadlines set with penalties if timeframes are not met. The high volume required for production schedules may lead workers to remove guards on the machinery, or to postpone maintenance and repair to increase production.
Property exposures consist of an office, production plant, and warehouse for storage of raw materials and finished goods. Ignition sources include electrical wiring, heating systems, production machinery, and sparks from grinding or lathe operations. Many stages of the work have low fire potential since most machines are cutting and punching devices, and the parts are all metal.
Grinding and lathe operations may generate dust and sparks that could cause a fire or explosion. The risk increases in the absence of proper dust collection systems, ventilation, and adequate disposal procedures. Degreasers and solvents may be flammable and must be adequately controlled. Poor housekeeping may be a serious fire hazard. Unless disposed of properly, greasy, oily rags (such as those used to clean the machinery) can cause a fire without a separate ignition source.
There is often a significant amount of property of others exposure that may be better insured on an inland marine bailees customers form. Business income can be a significant exposure if the machines are special-ordered for a specific job.
Equipment breakdown exposures include malfunctioning production equipment, electrical control panels, and other apparatus. A lengthy breakdown to production machinery could result in a severe loss, both direct and under time element.
Crime exposures are chiefly from employee dishonesty, especially for high-tech parts or exotic metals. Background checks should be conducted on all employees. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements. The manufacturer should have security methods in place to prevent theft.
Inland marine exposures include accounts receivable if the manufacturer offers credit, bailees customers for goods belonging to others, computers (which may include computer-run production equipment), goods in transit, and valuable papers and records for customers' and suppliers' information. Items being treated that belong to customers are subject to the same causes of loss as property owned by the machine shop, plus transit and the processing itself. For goods in transit, the primary causes of loss are fire, theft, collision, overturn, and water damage.
Business auto exposure can be high if the machine shop picks up raw materials or customers' property or delivers finished parts. Deadlines placed on drivers (such as just-in-time processing schedules) increase the hazard. Drivers should be trained in handling whatever product they are required to carry, including the tie-down of unwieldy pieces of metal.
Manufacturers generally have private passenger fleets used by sales representatives. There should be written procedures regarding the private use of these vehicles by others. Drivers should have an appropriate license and an acceptable MVR. All vehicles must be well maintained with documentation kept in a central location.
Machine Shop Insurance New Mexico Coverage
For the safety of yourself, your employees, and your livelihood, having the right NM machine shop insurance coverage is essential. To find out what types of options are available to you, how much coverage you should invest in, and how much your coverage will cost, speak to a reputable insurance broker.
New Mexico Economic Data, Regulations And Limits On Commercial Insurance
Owning and operating a business can prove to be financially and personally rewarding. However, if you want to have as much success as possible, it's essential that you choose the best possible location for your company.
After all, it doesn't matter how exceptional your products are and how top-notch your products and/or services are, if the location isn't favorable for your specific business, chances are you won't reap the success you are hoping for.
When considering where to start a business, it's important to consider the economic trends of a state. These trends provide insight into the health of a state's economy, which can help prospective business owners determine whether or not a specific location is favorable for their particular operation. Additionally, it's important to understand what type of commercial insurance policies you'll need to invest in to properly protect your business.
If you're thinking about starting a business in the state of New Mexico, read on to find an overview of the economy and the commercial insurance requirements of the Land of Enchantment.
Economic Trends For Business Owners In New Mexico
A state's unemployment rate is an important factor to consider when assessing the economy, as it illustrates whether or not the area offers a favorable environment for businesses.
According to the Bureau of Labor Statistics, as of December, 2019, the unemployment rate in New Mexico was 4.7%, which is 1.2% higher than the national average. However, the rate has fallen; in July of 2019, for example, the unemployment rate was 4.9% and in November of the same year, it was 4.8%.
This rapid decrease shows promise for the Land of Enchantment. Furthermore, economists predict that the jobless rate of the state will continue to decrease moving forward.
New Mexico is a large state with varied topography and demographics. As such, the best locations prospective business owners can expect to see the most success include urban areas and the surrounding regions. Examples include:
- Las Cruces
- Rio Rancho
- Santa Fe
The industries that are seeing the most economic growth in the Land of Enchantment include:
- Administrative and federal government
- Advanced manufacturing
- Aerospace and defense
- Digital media and film production
- Distribution, logistics, and transportation
- Hospitality and tourism
Commercial Insurance Requirements In New Mexico
The New Mexico Office of Superintendent of Insurance regulates insurance in NM. New Mexico mandates very few forms of insurance coverage by law. They enforce worker's compensation.
New Mexico requires you to have worker's compensation insurance if you hire 3 or employees on a regular basis in the construction industry, businesses with even one employee must provide workers compensation insurance. This includes part-time employees, family members, minors, and immigrant employees. It is not required for independent contractors or domestic employees, though you should check to make sure any contractors you have are true contractors, and not employees.
New Mexico also requires all business-owned vehicles to be covered by commercial auto insurance. Other types of business insurance that business owners should carry depend on the specific industry.
Additional Resources For Manufacturing & Wholesaler Insurance
Read informative articles on small business manufacturing and wholesale insurance. Manufacturing and wholesale companies face many risks due to the nature of their business operations.
- Canned Fruit & Vegetable Manufacturers
- CBD Oil And Hemp
- Machine Shop
- Product Liability
- Wholesaler Distributor
For manufacturers and wholesalers, having the proper coverage is very important. You will need Products/Completed Operations Liability Coverage to protect you against injuries or property damage cause my the products you make or sell.
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.
Wholesale and distribution operations have many of the same physical damage and property coverage concerns as warehouse operations. In both, the value of both real property and stocks of merchandise is very high. Loss control and other techniques appropriate to the types of merchandise involved are needed. For these reasons, adequate and appropriate property insurance coverages are important.
The commercial auto exposure can also be significant, based on the extent of merchandise delivery. In addition, transportation or motor truck cargo insurance on the merchandise must also be arranged.
Employee theft is always an issue and can be a significant exposure, depending on the type of property involved. Finally, the types of merchandise and material handled makes workers compensation insurance another very important coverage.
What does the insured does that could result in a covered loss? The insuring agreement only requires that the insured be legally obligated to pay damages for injury to others or damage to their property included within the products-completed operations hazard covered by the insurance.
Because of this, every product manufactured and completed operation exposure for each named insured must be determined, described and evaluated to be certain that each represents acceptable exposures, or are acceptable classes of business to the insurance company providing coverage.
Once the extent of all business activities and operations is determined, the process of identifying hazards begins. The first step in the process is completely listing and describing all current products being manufactured and projects being worked on.
The next step is obtaining the same information for discontinued products and completed projects for the past five to 10 years, depending on the products or projects involved. This should include an explanation of why the products were discontinued. If some completed projects were of a different type than those currently being worked on, an explanation is in order, including whether the insured may resume them in the future.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, Bailees Customers, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Employee Benefits Liability, Environmental Impairment Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.
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Also learn about New Mexico small business insurance requirements for general liability, business property, commercial auto & workers compensation including NM business insurance costs. Call us (855) 767-7828.