Cosmetics Manufacturers Insurance Policy Information
Cosmetics Manufacturers Insurance. The cosmetics manufacturing industry is responsible for the production of personal care commodities as varied as makeup, skincare products, perfumes and other fragrances, hair care products, and even oral hygiene products.
Divided into stages that include the handling and processing of the raw materials that will become cosmetics, quality assessment and inspection for microorganism contamination, as well as packaging, there is no doubt that this global industry is a complex one.
Cosmetic manufacturers produce items designed to enhance the appearance or smell of the human body.
Products include makeup; hair care products such as shampoos, conditioners, gels and hair dyes; skin care products from sunscreens to exfoliates to anti-aging creams; dental products from toothpaste to whiteners; nail products; perfumes and fragrances; deodorants and antiperspirants; and shaving products for both men and women.
Raw ingredients include organic, chemical, or synthetic substances. Processes may include aeration, blending, cooling, crushing, filtering, heating, molding, tinting, washing, or pressurizing of aerosol containers. Many cosmetic manufacturers have laboratories for product development, testing, and quality control.
The industry is regulated by the Food & Drug Administration (FDA). Some cosmetic products that claim to have medicinal qualities are regulated by the FDA as over-the-counter (OTC) drugs.
While we have all heard of the giants in the cosmetics industry, beauty and personal care brands like L'Oreal, Unilever, Proctor and Gamble, and Estée Lauder, the cosmetics industry is far from limited to these titans, and boutique cosmetics companies have been booming in recent decades.
To ensure the continued success of a company within the cosmetics manufacturing industry, you simply cannot neglect to take a very close look at your insurance policies.
What should companies involved in any part of the manufacture of personal care products know about insurance? What type of cosmetics manufacturers insurance can you not do business without? Let's take a look.
Cosmetics 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 cosmetics manufacturing insurance questions:
- How Much Does Cosmetics Manufacturers Insurance Cost?
- Why Do Cosmetics Manufacturers Need Insurance?
- What Type Of Insurance Do Cosmetics Manufacturers Need?
How Much Does Cosmetics Manufacturers Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small cosmetics manufacturing businesses ranges from $57 to $89 per month based on location, size, revenue, claims history and more.
Why Do Cosmetics Manufacturers Need Insurance?
Think of your insurance as a bodyguard that keeps your business safe — most of the time, you will not need it, but unforeseen circumstances such as acts of nature, vandalism, theft, equipment breakdown, workplace accidents, and even legal action, can threaten any business.
A cosmetics manufacturing company of any size can lose income to spoiled raw materials, a fire in their manufacturing facility, or a machine that suddenly stops working, for instance. Unfortunately, you may also be held liable if a consumer suffers a severe reaction to one of your products.
When catastrophe strikes, you need to be prepared. That is why cosmetics manufacturers are not merely legally required to carry certain kinds of insurance, but should also actively welcome a partnership with an experienced commercial insurance agent.
You will find, in most cases, that it is most effective to get all your cosmetics manufacturers insurance policies from the same company if possible.
What Type Of Insurance Do Cosmetics Manufacturers Need?
Like other manufacturers, cosmetics manufacturing companies will legally be required to carry several different types of insurance. Your exact insurance needs are dependent on many factors; the size of your company, the number of manufacturing facilities you have, and the kinds of materials you work with will all determine what types of insurance you ultimately require.
To make sure that all your cosmetics manufacturers insurance needs are completely covered, cosmetic manufacturing companies will need to develop a comprehensive plan with their commercial insurance agent. Types of insurance you can simply not do without will, however, include:
- Commercial Property: Protecting both buildings and the contents within them from risks such as theft, fire, and storms that can result in the destruction of property and inventory loss, commercial property insurance is essential for any cosmetics manufacturing company, whether the property itself is owned or rented.
- Commercial General Liability: The harsh reality is that nearly anyone can file a lawsuit against your company — whether they happen to trip over something while visiting your manufacturing facility, or have an adverse reaction to a cosmetic product you manufactured. In these cases, commercial general liability insurance covers your company's legal expenses as well as possible settlement fees. For boutique cosmetics companies, small business liability insurance may be an alternative.
- Equipment Breakdown: Should manufacturing equipment stop working, equipment breakdown insurance guards you against the resulting loss of income, as well as covering the repair or replacement of the equipment in question.
- Workers Compensation: Whether resulting from human error or a malfunction in your manufacturing equipment, employees may suffer workplace injuries that result in costly medical fees or render a worker unable to continue working. When that happens, workers' compensation insurance will protect your company.
It is important to realize that cosmetics 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.
Cosmetics Manufacturing's Risks & Exposures
Premises liability exposure can be severe, especially if aerosols are stored on premises. The manufacturer may have a showroom for sales representatives from vendors, or may conduct tours. Visitors may be injured by slips, trips, or falls, or may be exposed to toxic or caustic chemicals.
Ingredients may be reactive or toxic. Dust particles from dryers and fumes, fires, or spills or leaks from tanks may cause serious injuries to passersby or damage neighboring properties.
Products liability exposure tends to be limited to skin rashes and minor eye infections from irritants, allergic reactions, chemical burns, and contamination during use (for example, diseases transmitted by the sharing of a product). Although products must comply with FDA standards, for cosmetics these standards are generally limited to labeling and purity.
Advertising or packaging showing that products are "anti-aging," "hypoallergenic," "alcohol free," or made from "natural" ingredients may be misleading as the FDA has no standards for these terms. Unless the products claim medicinal qualities (in which case they are monitored by the FDA as over-the-counter drugs), the prime product considerations are the manufacturer's safety, testing, labeling, and overall quality control methods.
Environmental impairment exposure can be moderate to high. Sudden or cumulative discharges of chemicals used as additives may contaminate air, surface or ground water, or soil. Disposal procedures must adhere to all EPA and other regulatory standards. Processing may cause thermal or noise pollution. There may be tanks on premises with the potential for spillage and contamination. If there are underground tanks, a UST policy may be required.
Workers compensation exposures may be high. Injuries from production machinery are common, as are burns, cuts, slips, trips, falls, hearing loss from machinery noise, and back injuries from lifting. Employees should be provided with safety training and protective equipment. Ergonomically designed workstations can prevent repetitive motion injury.
Aerosol containers may explode and injure workers. Exposure to chemicals could result in skin and eye irritations and respiratory problems. Chemicals should be labeled so that workers and their supervisors are aware of the contents and can be aware of early warning signs of problems. Drivers of forklifts and vehicles may be injured in accidents.
Property exposures include offices, processing areas, and warehouses for raw materials and finished goods. Ignition sources include electrical wiring, heating and cooling equipment, overheated production machinery, buildup of static electricity, escape of fumes from storage tanks, and refueling of forklifts. The large draft spaces in storage warehouses can contribute to the spread of a fire.
Hair sprays, nail polishes, nail polish removers, perfumes, and colognes are highly flammable. Cosmetics are very susceptible to spoilage and may have little salvage value if contaminated by heat, smoke, or water.
Cooling equipment may contain ammonia, which can explode if not property monitored. If there is a laboratory, Bunsen burners and chemicals may ignite or explode. Firms that use animals for product testing may be subject to vandalism in connection with protests.
Appropriate security controls should 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.
Business interruption exposure can be high because a large loss can result in lengthy downtime for repairing or replacing production equipment.
Equipment breakdown exposures include breakdown of building systems, cooling equipment, conveyors other production machinery, electrical control panels and other apparatus. Breakdown and loss of use to the production machinery could result in significant loss, both direct and indirect, notably, time element.
Crime exposures are chiefly from employee dishonesty and theft of money and securities. The exposure may be substantial for manufacturers of name brand or high-end cosmetics. Employees may act alone or in collusion with outsiders in stealing money, raw materials, trade secrets, 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.
Inland marine exposures include accounts receivable if the manufacturer offers credit to customers, computers (which may include computer-run production equipment), goods in transit, and valuable papers and records for customers' and suppliers' information as well as quality control testing results and proprietary formulas used for products. Goods in transit may be damaged by fire, theft, collision and overturn, spillage, contamination or aerosol explosion.
Business auto exposure may be very 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.
Each driver should have an appropriate license and an acceptable MVR. All vehicles must be well maintained with documentation kept in a central location. Transport of aerosols is hazardous because the products need to be kept at cooler temperatures. Refrigerated trucks used for this purpose should be well maintained to prevent overheating and explosion.
Commercial Insurance And Business Industry Classification
- SIC CODE: 2844 Perfumes, Cosmetics, and Other Toilet Preparations
- NAICS CODE: 325611 Soap and Other Detergent Manufacturing, 325620 Toilet Preparation Manufacturing
- Suggested ISO General Liability Code(s): 51970
- Suggested Workers Compensation Code(s): 4611
Description for 2844: Perfumes, Cosmetics, and Other Toilet Preparations
Division D: Manufacturing | Major Group 28: Chemicals And Allied Products | Industry Group 284: Soap, Detergents, And Cleaning Preparations; Perfumes, Cosmetics, and Other Toilet Preparations
2844 Perfumes, Cosmetics, and Other Toilet Preparations: Establishments primarily engaged in manufacturing perfumes (natural and synthetic), cosmetics, and other toilet preparations. This industry also includes establishments primarily engaged in blending and compounding perfume bases; and those manufacturing shampoos and shaving products, whether from soap or synthetic detergents. Establishments primarily engaged in manufacturing synthetic perfume and flavoring materials are classified in Industry 2869, and those manufacturing essential oils are classified in Industry 2899.
- Bath salts
- Bay rum
- Body powder
- Concentrates, perfume
- Cosmetic creams
- Cosmetic lotions and oils
- Denture cleaners
- Deodorants, personal
- Depilatories, cosmetic
- Dressings, cosmetic
- Face creams and lotions
- Face powders
- Hair coloring preparations
- Hair preparations: dressings, rinses, tonics, and scalp conditioners
- Home permanent kits
- Manicure preparations
- Perfume bases, blending and compounding
- Perfumes, natural and synthetic
- Shampoos, hair
- Shaving preparations: e.g., cakes, creams, lotions, powders, tablets
- Soap impregnated papers and paper washcloths
- Suntan lotions and oils
- Talcum powders
- Toilet creams, powders, and waters
- Toilet preparations
- Toothpastes and powders
- Towelettes, premoistened
- Washes, cosmetic
Cosmetics Manufacturers Insurance - The Bottom Line
Not all cosmetics manufacturers insurance polices are the same - in fact - they can vary widely in both coverage, cost and exclusions. To find out if your company has the best fit insurance program, speak with an experienced commercial insurance broker.
Often they are able to save you on premiums and offer you better policy options than you currently have.
Types Of Small Business Insurance - Requirements & Regulations
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.
Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.
Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.
Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.
Small Business Insurance Information
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.
Types Of Small Business Insurance
Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:
- What type of business am I running?
- What are common risks associated with this industry?
- Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
- Does my state require me to carry this type of insurance?
- Does my lender or do any of my investors require me to carry this type of policy?
A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:
|Business Insurance Policy Type||What Is Covered?|
|General Liability Insurance||What is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.|
|Workers Compensation Insurance||What is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.|
|Product Liability Insurance||What is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.|
|Commercial Property Insurance||What is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.|
|Business Owners Policy (BOP)||What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.|
|Commercial Auto Insurance||What is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.|
|Commercial Umbrella Policies||What is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.|
|Liquor Liability Insurance||What is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.|
|Professional Liability (Errors & Omissions)||What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.|
|Surety Bond||What is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).|
Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.
Business Insurance Required by Law
If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.
Your insurance agent can help you check applicable state laws so you can bring your business into compliance.
Other Types Of Small Business Insurance
There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:
- Business Interruption Insurance
- Commercial Flood Insurance
- Contractor's Insurance
- Cyber Liability
- Data Breach
- Directors and Officers
- Employment Practices Liability
- Environmental or Pollution Liability
- Management Liability
- Sexual Misconduct Liability
Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.
Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.
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.
- 3D Printing
- Audio & Video Equipment
- Auto Parts
- Bottling Plants
- Brooms & Brushes
- Camping Equipment
- Canned Fruit & Vegetables
- Canvas Products
- CBD Oil And Hemp
- Clock & Watch
- Commercial Air Conditioning
- Commercial Electronics
- Communications Equipment
- Construction Equipment
- Cork Products
- Dairies & Creameries
- Down And Feather Products
- Dry Ice
- Dyes & Pigments
- Electronic Toys & Games
- Exercise Equipment
- Farm Equipment
- Feed & Grain
- Flavoring Extracts
- Frozen Foods
- Fruit Juice
- Fur Garment
- Garage Door
- Gypsum Products
- Ice Cream
- Iron & Steel Foundries
- Lawn Mowers
- Leather Apparel
- Lighting & Wiring
- Lumber & Wood Products
- Machine Shop
- Major Electrical Appliances
- Marijuana Products
- Mattresses & Box Springs
- Metal & Plastic Furniture
- Metal Heat Treating
- Metal Toys
- Musical Instruments
- Nonferrous Foundries
- Ornamental Metalwork
- Paper & Allied Products
- Pet Food
- Plastic & Rubber Toys
- Plastic Goods
- Plastics Molding, Forming & Extruding
- Product Liability
- Psychedelic Drugs
- Pulp & Paper Mills
- Residential Air Conditioning & Heating
- Rubber Goods
- Sawmills & Planing Mills
- Screw Machine Products
- Sheet Metal
- Soap & Detergent
- Small Electrical Appliances
- Sporting Goods
- Stone Products
- Textiles Finishing & Coating
- Tool & Die Shops
- Vending Machines
- Vegetable Juice
- Wire Rope
- Wood Furniture
- Writing Instruments
For manufacturers, 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.
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, 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.