Clothing Manufacturers Insurance Policy Information
Clothing Manufacturers Insurance. The clothing industry, which plays a crucial part in the global economy, comprises companies involved in all stages of the manufacture of garments — from textile production to the manufacture of buttons. Clothing manufacturers, who play a direct part in the manufacture of apparel, can offer a range of services.
Clothing manufacturers produce a wide range of apparel items for men, women, infants and children. Clothing may be produced from natural or synthetic fibers. Natural fibers come from animal, plant, and insect sources, and include cotton, hair, linen, silk and wool.
Common synthetic fibers include acrylic and nylon. Natural and synthetic fibers are commonly blended to produce desired qualities such as absorbency, comfort, durability, or water resistance.
The process consists of designing the item, developing patterns, cutting the individual pieces, sewing the parts together, applying trims or clasps, applying finishing, and then packaging for shipment. Although some automation may be possible in the cutting process, sewing of individual items is a labor-intensive process.
Because of the varieties of materials and processes involved in production, the different phases of manufacture may be carried out in different locations or different countries.
They may be full-package clothing manufacturers responsible for the entire process, from pattern-making to procuring textiles, and from cutting to sewing. Clothing manufacturers may also work to client specifications, with materials provided by the customer. In some cases, a clothing manufacturer may work "piecemeal", handling only a very specific part of the manufacturing process for numerous clients at a time.
These specialized companies may be cutting houses, sewing houses, or embroiders, for example. Some clothing manufacturers engage in large-scale operations, while others are small, family-run, companies.
As diverse as manufacturing within the clothing industry is, the one thing common to them all is this — they all need to carry clothing manufacturers insurance, because they all face the possibility of unforeseen circumstances. What type of insurance do clothing manufacturers need to carry, and why? This quick guide will get you started.
Clothing manufacturers insurance protects your manufacturing business from lawsuits with rates as low as $57/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked clothing manufacturing insurance questions:
- What Is Clothing Manufacturers Insurance?
- How Much Does Clothing Manufacturers Insurance Cost?
- Why Do Clothing Manufacturers Need Insurance?
- What Type Of Insurance Do Clothing Manufacturers Need?
- What Does Clothing Manufacturers Insurance Cover & Pay For?
What Is Clothing Manufacturers Insurance?
Clothing manufacturers insurance is a type of insurance coverage designed specifically for businesses that manufacture clothing products. It provides protection for various risks that clothing manufacturers face, including property damage, liability, product liability, business interruption, and more. The coverage helps to protect the financial stability of the business in the event of an unexpected loss, ensuring that the business can continue to operate even after a covered loss. This insurance may also help to provide compensation for damages or legal fees incurred as a result of a lawsuit.
How Much Does Clothing Manufacturers Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small clothing manufacturing businesses ranges from $57 to $89 per month based on location, size, revenue, claims history and more.
Why Do Clothing Manufacturers Need Insurance?
Regardless of its size or the aspect of clothing production a clothing manufacturer handles, your company will be vulnerable to a myriad of risks. Some of those risks are shared by all companies, regardless of their field. They would include acts of nature — earthquakes, wildfires, and hurricanes, for example — as well as theft and vandalism.
Other hazards will be specific to your own industry. A worker may be injured while sewing, for instance, and the fact that you are working with textiles can increase your risk of fire. Third-party lawsuits are another very real prospect clothing manufacturers could face.
All of these possibilities illustrate why it is vital to have the right clothing manufacturers insurance. Clothing manufacturing firms that are incorrectly insured or under-insured risks being liable for costs that could potentially deal a fatal blow to their growing businesses.
What Type Of Insurance Do Clothing Manufacturers Need?
The sheer variety of available clothing manufacturers insurance policies can be confusing and difficult to navigate for any clothing manufacturer. Nonetheless, the success of your business depends, in part, on having the right insurance coverage.
Because your precise insurance needs may differ from those of other companies, even within the same industry, it is crucial to build a relationship of trust with a seasoned commercial insurance agent. Very often, it is best to get all your coverage from the same insurance company.
Your commercial insurance agent will deeply familiarize themselves with the size of your business, the location and nature of your manufacturing facilities, the number of employees, and the exact nature of your activities, among other things. From there, they can recommend clothing manufacturers insurance coverage that truly suits your needs. This will nearly always include:
- Commercial Property: This essential type of insurance serves to protect your property from a range of risks, including acts of nature, theft, and damage that can strike any business. It also, however, covers the contents of the property, including equipment and inventory.
- Commercial General Liability: Clothing manufacturers also need to make sure that they obtain the right commercial general liability insurance. It is there to protect you in the event of third-party damage and personal injury, and will (partially) cover your company's legal fees and settlement costs.
- Equipment Breakdown: As a clothing manufacturer, you are likely to use valuable equipment in your manufacturing process. Should any of your equipment become damaged or be subject to catastrophic breakdown and need to be replaced, equipment breakdown insurance will have you covered.
- Workers' Compensation: Legally required in many jurisdictions, workers' compensation insurance serves to protect your employees, but also your company. Workplace accidents pose a realistic risk in the clothing industry, but this type of insurance covers injuries resulting from, for instance, falls or even repetitive stress injury, as well as situations like worker entanglement in equipment. Workers comp covers medical expenses, lost wages for workers who cannot return to their duties, and even death benefits.
It is important to realize that clothing manufacturers insurance coverages can vary. You may require additional kinds of insurance, such as product liability insurance that covers damage caused by the use of your products, or business interruption insurance that guards against loss of income in case your company needs to halt production for a time, as well. Your commercial insurance agent is your trusted partner in making sure that all your needs are met.
Clothing Manufacturing's Risks & Exposures
Premises liability exposure is normally low due to limited access by visitors. If the manufacturer has a showroom or offers tours, visitors may be injured by slips, trips, or falls. Chemicals used in the coating and finishing may be corrosive and/or toxic. Fumes, spills or leaks may cause serious injury or property damage to neighboring premises.
Products liability exposure is normally light unless infants', children's wear or sleepwear is manufactured or if there are other special conditioning or fabric treatment processes. Infants' and children's clothing must meet all federal flammability guidelines.
Environmental impairment exposure is light unless the manufacturer performs any fabric dyeing or chemical treating. Fumes and improper disposal of scrap can result in air, ground, or water contamination. Disposal procedures must adhere to all EPA and other regulatory standards.
Workers compensation exposures can be moderate to high. Injuries from production machinery are common, as are burns, cuts, slips, trips, falls, foreign objects in the eye, hearing loss from machinery noise, and back injuries from lifting. Employees should be provided with safety training and protective equipment.
Areas that generate dust require respiratory protection devices, as well as eye protection and eye wash stations. Flammable liquids and chemicals used to treat fabrics can cause skin irritation, eye irritation and possible long-term occupational disease. The high volume required for production schedules may lead workers to remove guards on the machinery, or to postpone maintenance and repair. Repetitive motion injuries can result from ongoing use of machinery. Workstations should be ergonomically designed.
Safety consciousness and commitment of management, especially in the form of ongoing enforcement and awareness programs, are important considerations. A large amount of the piece work may be done by individuals whose status (employee or independent contractor) must be clear. Production incentives can be a disincentive to safety if the only consideration is by piece production.
Property exposures consist of an office, production plant, and warehouse for raw materials and finished goods. Ignition sources include electrical wiring, heating systems, and production machinery. Chemicals used in fabric dyeing or coating are often flammable and should be properly labeled, separated, and stored in approved containers. Dust from textile processing operations can explode if ignited.
This hazard increases in the absence of well-maintained dust collection systems attached to the knitting and cutting stations. Fabrics (raw materials, supplies, scrap and finished goods) and foam fillers are often highly combustible, especially if poorly stored without adequate aisle space and shelving. Fabric is susceptible to damage by fire or smoke, water and moisture, or temperature.
Minor fires may result in major inventory losses. Poor housekeeping, such as failure to collect and dispose of scraps on a regular basis, could contribute significantly to a loss. Unless disposed of properly, greasy, oily rags (such as those used to clean machinery) can cause a fire without a separate ignition source.
Appropriate security controls must be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Equipment breakdown exposures include malfunctioning production equipment, dust collection and ventilation systems, electrical control panels and other apparatus. These should be properly maintained and records kept in a central location.
Crime exposure comes from employee dishonesty and theft. Employees may act alone or in collusion with outsiders in stealing money, raw materials or finished stock. 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. There should be security methods in place to prevent theft.
Inland marine exposures include accounts receivable if the manufacturer offers credit, computers (which may include computer-run production equipment), exhibitions, goods in transit, and valuable papers and records for customers' and suppliers' information.
Backup copies of all records should be made and stored off premises. Goods in transit may be damaged by fire, collision, overturn, and theft or water damage.
Business auto exposure may be high if the manufacturer transports raw materials or finished products. 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.
What Does Clothing Manufacturers Insurance Cover & Pay For?
Clothing manufacturers can face various legal challenges for a multitude of reasons. Here are some of the most common ones and how insurance can provide coverage:
1. Product Liability: This is perhaps the most common reason. If a garment is found to be defective or causes harm to a customer (for example, due to a choking hazard from a loose button), the manufacturer could be sued for damages. Product liability insurance is designed to cover the costs associated with these types of claims. This can include legal defense fees, court costs, and any settlements or judgments awarded to the plaintiff.
2. Intellectual Property Infringement: Clothing designs can be subject to copyright, trademark, or patent protection. If a manufacturer is accused of infringing on another company's intellectual property rights, they could face a lawsuit. Intellectual property insurance can cover legal defense costs and any damages awarded to the plaintiff, protecting the manufacturer from significant financial loss.
3. Workplace Injuries: If an employee is injured on the job, they may sue the manufacturer for damages. Workers' compensation insurance can provide coverage for medical expenses, lost wages, and legal costs associated with these types of claims, reducing the financial impact on the manufacturer.
4. Breach of Contract: Manufacturers often work with various business partners, and if they fail to meet the terms of a contract, they could be sued. Professional liability insurance (also known as errors and omissions insurance) can help cover the costs associated with these types of lawsuits, including legal defense fees and any damages awarded to the plaintiff.
5. Environmental Damage: The manufacturing process can sometimes result in environmental damage, leading to lawsuits from affected parties or fines from regulatory bodies. Environmental liability insurance can provide coverage for clean-up costs, legal defense fees, and any fines or damages awarded.
It's important for clothing manufacturers to work with an experienced insurance broker to ensure they have the right types and amounts of coverage to protect against potential risks.
Commercial Insurance And Business Industry Classification
- SIC CODE: 2300 Apparel and Other Finishd Prods Of Fabrics and Similar Matl, 2311 Men's and Boys' Suits, Coats, and Overcoats, 2320 Men's and Boys' Furnishgs, Work Clothg, & Allied Garments, 2321 Men's and Boys' Cut and Sew Apparel Manufacturing, 2322 Men's and Boys' Underwear and Nightwear, 2323 Apparel Accessories and Other Apparel Manufacturing, 2325 Men's and Boys' Separate Trousers and Slacks, 2326 Men's and Boys' Cut and Sew Apparel Manufacturing, 2329 Men's and Boys' Cut and Sew Apparel Manufacturing, 2330 Women's, Misses', and Juniors Outerwear, 2331 Women's, 2335 Women's, Misses', and Juniors' Dresses, 2337 Women's, Misses', and Juniors' Suits, Skirts, and Coats, 2339 Women's, Misses', and Juniors' Outerwear, Not Elsewhere Classified, 2340 Women's, Misses', Children's and Infants' Undergarments, 2341 Women's, Misses', Children's, and Infants' Underwear and Nightwear, 2342 Brassieres, Girdles, and Allied Garments, 2353 Apparel Accessories and Other Apparel Manufacturing, 2361 Girls', Children's, and Infants' Dresses, Blouses, and Shirts, 2369 Girls', Children's, and Infants' Outerwear, Not Elsewhere Classified, 2371 Other Cut and Sew Apparel Manufacturing, 2381 Apparel Accessories and Other Apparel Manufacturing, 2384 Robes and Dressing Gowns, 2385 Waterproof Outerwear, 2386 Leather and Sheep - Lined Clothing, 2387 Apparel Belts, 2389 Other Cut and Sew Apparel Manufacturing, 2390 Miscellaneous Fabricated Textile Products, 2391 Curtain and Linen Mills, 2392 Curtain and Linen Mills, 2393 Textile Bag and Canvas Mills, 2394 Textile Bag and Canvas Mills, 2395 Pleating, Decorative and Novelty Stitching, and Tucking For The Trade, 2396 Apparel Accessories and Other Apparel Manufacturing, 2397 Narrow Fabric Mills and Schiffli Machine Embroidery, 2399 All Other Misc. Textile Product Mills
- NAICS CODE: 315110 Hosiery and Sock Mills, 315190 Other Apparel Knitting Mills, 315210 Cut and Sew Apparel Contractors, 315220 Men's and Boys' Cut and Sew Apparel Manufacturing, 315240 Women's, Girls', and Infants' Cut and Sew Apparel Manufacturing, 315280 Other Cut and Sew Apparel Manufacturing, 315990 Apparel Accessories and Other Apparel Manufacturing
- Suggested Workers Compensation Code(s): 2501 Umbrella Manufacturing, 2362 Knit Goods Manufacturing NOC, 2388 Embroidery Manufacturing
Description for Major Group 23: Apparel And Other Finished Products Made From Fabrics And Similar Materials
OSHA says, "This major group, known as the cutting-up and needle trades, includes establishments producing clothing and fabricating products by cutting and sewing purchased woven or knit textile fabrics and related materials, such as leather, rubberized fabrics, plastics, and furs.
Also included are establishments that manufacture clothing by cutting and joining (for example, by adhesives) materials such as paper and non-woven textiles. Included in the apparel industries are three types of establishments:
- The regular or inside factories
- Contract factories
- Apparel jobbers
The regular factories perform all of the usual manufacturing functions within their own plant; the contract factories manufacture apparel from materials owned by others; and apparel jobbers perform the entrepreneurial functions of a manufacturing company, such as buying raw materials, designing and preparing samples, arranging for the manufacture of clothing from their materials, and selling of the finished apparel.
Knitting mills are classified in Industry 2253 if primarily knitting outerwear, and in Industry 2254 if primarily knitting underwear and nightwear. Custom tailors and dressmakers not operating on a factory basis are classified in Retail Trade, Industry 5699; and establishments which purchase and resell finished garments but do not perform the functions of the, apparel jobbers are classified in Wholesale Trade, Industry Group 513."
Industry Group 231: Men's And Boys' Suits, Coats, And Overcoats
- 2311 Men's and Boys' Suits, Coats, and Overcoats
Industry Group 232: Men's And Boys' Furnishings, Work Clothing, And Allied Garments
- 2321 Men's and Boys' Shirts, Except Work Shirts
- 2322 Men's and Boys' Underwear and Nightwear
- 2323 Men's and Boys' Neckwear
- 2325 Men's and Boys' Separate Trousers and Slacks
- 2326 Men's and Boys' Work Clothing
- 2329 Men's and Boys' Clothing, Not Elsewhere Classified
Industry Group 233: Women's, Misses', And Juniors' Outerwear
- 2331 Women's, Misses', and Juniors' Blouses and Shirts
- 2335 Women's, Misses', and Juniors' Dresses
- 2337 Women's, Misses', and Juniors' Suits, Skirts, and Coats
- 2339 Women's, Misses', and Juniors' Outerwear, Not Elsewhere Classified
Industry Group 234: Women's, Misses', Children's, And Infants'
- 2341 Women's, Misses', Children's, and Infants' Underwear and Nightwear
- 2342 Brassieres, Girdles, and Allied Garments
Industry Group 235: Hats, Caps, And Millinery
- 2353 Hats, Caps, and Millinery
Industry Group 236: Girls', Children's, And Infants' Outerwear
- 2361 Girls', Children's, and Infants' Dresses, Blouses, and Shirts
- 2369 Girls', Children's, and Infants' Outerwear, Not Elsewhere Classified
Industry Group 238: Miscellaneous Apparel And Accessories
- 2381 Dress and Work Gloves, Except Knit and All-Leather
- 2384 Robes and Dressing Gowns
- 2385 Waterproof Outerwear
- 2386 Leather and Sheep-Lined Clothing
- 2387 Apparel belts
- 2389 Apparel and Accessories, Not Elsewhere Classified
Industry Group 239: Miscellaneous Fabricated Textile Products
- 2391 Curtains and Draperies
- 2392 House furnishing, Except Curtains and Draperies
- 2393 Textile Bags
- 2394 Canvas and Related Products
- 2395 Pleating, Decorative and Novelty Stitching, and Tucking for the Trade
- 2396 Automotive Trimmings, Apparel Findings, and Related Products
- 2397 Schiffli Machine Embroideries
- 2399 Fabricated Textile Products, Not Elsewhere Classified
Description for 315 - Apparel Manufacturing
The NAICS says, "Industries in the Apparel Manufacturing subsector group establishments with two distinct manufacturing processes:
- Cut and sew (i.e., purchasing fabric and cutting and sewing to make a garment)
- The manufacture of garments in establishments that first knit fabric and then cut and sew the fabric into a garment.
The Apparel Manufacturing subsector includes a diverse range of establishments manufacturing full lines of ready-to-wear apparel and custom apparel: apparel contractors, performing cutting or sewing operations on materials owned by others; jobbers, performing entrepreneurial functions involved in apparel manufacturing; and tailors, manufacturing custom garments for individual clients.
Knitting fabric, when done alone, is classified in the Textile Mills subsector, but when knitting is combined with the production of complete garments, the activity is classified in the Apparel Manufacturing subsector."
3151: Apparel Knitting Mills
- 315110: Hosiery and Sock Mills
- 315190: Other Apparel Knitting Mills
3152: Cut and Sew Apparel Manufacturing
- 315210: Cut and Sew Apparel Contractors
- 315220: Men's and Boys' Cut and Sew Apparel Manufacturing
- 315240: Women's, Girls', and Infants' Cut and Sew Apparel Manufacturing
- 315280: Other Cut and Sew Apparel Manufacturing
3159: Apparel Accessories and Other Apparel Manufacturing
- 315990: Apparel Accessories and Other Apparel Manufacturing
Clothing Manufacturers Insurance - The Bottom Line
All clothing manufacturers insurance polices are not the same - there are different policies, exclusions and coverages available. To find out if your company has the best fit insurance program, speak with an experienced commercial insurance agent.
Often they are able to save you on premiums and offer you better policy options than you currently have.
Additional Resources For Manufacturing Insurance
Learn all about manufacturing insurance. Manufacturers face many unique risks such as product libility and/or product recall exposures due to the nature of their business operations.
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The manufacturing industry is a vital part of the economy and plays a significant role in the production of goods and services. However, it is also an industry that is prone to risks and accidents, which can result in costly damages and lawsuits. Therefore, it is essential for businesses in the manufacturing industry to have insurance to protect them against potential losses.
Business insurance can cover a wide range of risks, including property damage, liability, and worker injuries. For instance, if a fire were to break out in a manufacturing facility and destroy equipment or inventory, commercial insurance could cover the costs of replacing or repairing the damages. Similarly, if a worker were to be injured on the job, business insurance could cover medical expenses and lost wages.
In addition to protecting against physical damages, insurance can also provide financial protection against legal liabilities. If a customer were to sue a manufacturing business for a faulty product, the commercial insurance could cover the costs of legal fees and settlements.
Overall, insurance is essential for the manufacturing industry as it helps to mitigate risks and protect against unexpected costs. Without it, businesses in the industry could face financial ruin in the event of an accident or lawsuit.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, 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.