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:
- What Is Cosmetics Manufacturers Insurance?
- How Much Does Cosmetics Manufacturers Insurance Cost?
- Why Do Cosmetics Manufacturers Need Insurance?
- What Type Of Insurance Do Cosmetics Manufacturers Need?
- What Does Cosmetics Manufacturers Insurance Cover & Pay For?
What Is Cosmetics Manufacturers Insurance?
Cosmetics manufacturers insurance is a type of insurance coverage designed specifically for companies that produce and sell cosmetics products. This insurance provides protection against a wide range of risks that cosmetic manufacturers face, including product liability, property damage, and business interruption. The coverage may also include protection against theft, fire, and other types of physical damage to the manufacturing facilities.
The goal of cosmetics manufacturers insurance is to help manufacturers mitigate the risks associated with producing and selling cosmetics products and minimize the financial impact of any losses that may occur.
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.
What Does Cosmetics Manufacturers Insurance Cover & Pay For?
There are several reasons why cosmetics manufacturers may be sued, including:
- Product Liability: If a cosmetic product causes harm or injury to a consumer, the manufacturer may be held liable. This can include allergic reactions, skin irritation, or more serious health issues.
- False Advertising: If a manufacturer makes false or misleading claims about their product, they may be sued for false advertising.
- Intellectual Property: If a manufacturer uses someone else's trademark or patent without permission, they may be sued for intellectual property infringement.
Insurance can protect cosmetics manufacturers in these situations. Here's how:
- Product Liability Insurance: This type of insurance can provide coverage if a cosmetic product causes harm or injury to a consumer. It can help cover legal fees, settlements, and judgments. For example, if a consumer files a lawsuit claiming that a cosmetic caused a severe allergic reaction, the product liability insurance can help pay for the legal costs associated with defending the lawsuit.
- Advertising Injury Insurance: This type of insurance can provide coverage if a manufacturer is sued for false advertising. It can help cover legal fees, settlements, and judgments. For example, if a competitor sues a cosmetics manufacturer for making false claims about their product, the advertising injury insurance can help pay for the legal costs associated with defending the lawsuit.
- Intellectual Property Insurance: This type of insurance can provide coverage if a manufacturer is sued for intellectual property infringement. It can help cover legal fees, settlements, and judgments. For example, if a cosmetics manufacturer is sued for using a patented ingredient without permission, the intellectual property insurance can help pay for the legal costs associated with defending the lawsuit.
In conclusion, cosmetics manufacturers can be sued for product liability, false advertising, and intellectual property infringement. Insurance can provide protection in these situations by helping to pay for legal fees, settlements, and judgments.
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 Workers Compensation Code(s): 4611 Cosmetics Manufacturing
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.
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
- Industrial Equipment
- Iron & Steel Foundries
- Lawn Mowers
- Leather Apparel
- Leather Goods
- 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
- Vegetable Juice
- Vending Machines
- Wire Rope
- Wood Furniture
- Writing Instruments
- Specialty Manufacturing
- Specialty Product Liability
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.