Tobacco Manufacturers Insurance Policy Information
Tobacco Manufacturers Insurance. People have been cultivating tobacco for around 7,000 years, while its earliest documented use dates to an even earlier era.
Tobacco manufacturers produce cigars, cigarettes, chewing tobacco, pipe tobacco, and snuff. The process begins with the stem being removed from the tobacco leaf, which is then cleaned and cured. Curing involves drying the leaves and sometimes adding flavoring agents.
Tobacco for "light" cigarettes is produced by saturating the tobacco with carbon dioxide and heating it before curing. Once the tobacco is cured, it may be conditioned, blended, shredded, and packaged, either as loose tobacco or in paper (for cigarettes) or leaves (for cigars).
With time, tobacco use has become truly ingrained in societies across the globe - and in modern times, tobacco is chewed, inhaled in the form of snuff, smoked in pipes, hookahs, and used to produce various nicotine-based products including liquids for electronic cigarettes and nicotine patches.
While large cigarette companies hold a significant share of the global tobacco market, the fact that tobacco is incorporated, in various forms, into a broad spectrum of products means that smaller businesses, too, can be successful in this industry.
The fact that long-term tobacco exposure is well-documented to represent a significant health hazard alone highlights that businesses within this field face a broader range of risks than those within many other industries.
Any company making tobacco products needs to implement an air-tight risk mitigation plan, and the right tobacco manufacturers insurance coverage is an essential part of that.
Tobacco manufacturers insurance protects your manufacturing business from lawsuits with rates as low as $97/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked tobacco manufacturing insurance questions:
- How Much Does Tobacco Manufacturers Insurance Cost?
- Why Do Tobacco Manufacturers Need Insurance?
- What Type Of Insurance Do Tobacco Manufacturers Need?
How Much Does Tobacco Manufacturers Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small tobacco manufacturing businesses ranges from $97 to $149 per month based on location, size, revenue, claims history and more.
Why Do Tobacco Manufacturers Need Insurance?
Every business is vulnerable to a range of risks - unforeseen circumstances that incur significant unplanned costs that can sometimes be catastrophic in nature. Companies that make diverse types of tobacco products face some of the same hazards that would be familiar to all businesses, but are also vulnerable to perils unique to their own field.
Theft and vandalism are two examples of risks common to all commercial ventures; both could lead you to lose valuable physical assets as well as potentially causing significant damage to your building, raw materials, and the machines you rely on in your production line.
Acts of nature like tsunamis, hurricanes, serious floods, and wildfires can also hit any company hard, no matter where they are based or what they do.
Examples of threats exclusive to companies that make tobacco products include, but are by no means limited to, the risk that pests or molds damage your raw materials, the possibility that employees fall ill as a result to exposure to tobacco dust, and the risk that an end consumer files a lawsuit after the use of a tobacco product you manufactured caused them health damage.
The more complex a company's risk profile, the greater its need for outstanding insurance coverage that will help their business recover from accidents and other unforeseen circumstances.
For companies that make tobacco products of any kind, being armed with the correct types of tobacco manufacturers insurance is absolutely crucial.
What Type Of Insurance Do Tobacco Manufacturers Need?
Numerous factors influence your exact insurance needs - the exact product you make, where you source your tobacco and how it is transported, your number of employees, the equipment you use in your manufacturing process, and the location of your facility are merely a few examples.
To discover what types of coverage a company that makes tobacco products needs to protect itself against all possible perils, in-depth consultation with a veteran commercial insurance agent who is deeply familiar with your industry is strongly recommended.
The following, however, are examples of tobacco manufacturers insurance coverage vital to companies within your field:
- Commercial Property: This key form of insurance shields your manufacturing facility as well as all the assets therein - including raw materials, manufacturing equipment, and finished products in storage - in case of unforeseen circumstances such as fire, theft, or other accidents.
- Commercial General Liability: Designed to protect you against financial damage resulting from third party personal injury or property damage claims, this type of tobacco manufacturers insurance helps cover your attorney fees and any settlement costs that you may incur in case of a lawsuit. This generally applies to third parties being injured on your premises or as a result of an action an employee took.
- Product Liability: This type of insurance covers third party injury and property damage that may result from the use of or exposure to your product, and is absolutely essential for companies making tobacco products.
- Workers Compensation: Whether an employee suffers a physical injury at work, due to something as simple as slipping and falling, or sustains an occupational illness due to contact with hazardous substances, this kind of insurance assists you in covering the costs. That means it pays injured employees' medical expenses, but also any wages lost if their injury renders them unable to return to their job.
Any of the risks that face your business could, without the correct insurance, lead to major financial losses.
Because this list is not exhaustive and each company's insurance needs are unique, it is vital to consult a commercial insurance broker who will guide you through the process of designing the comprehensive tobacco manufacturers insurance plan your company needs.
Tobacco Manufacturing's Risks & Exposures
Premises liability exposure is normally low due to limited access by visitors. If tours are offered, visitors may be injured by slips, trips, or falls, or may be exposed to toxic or caustic chemicals.
Toxins released in a fire or fumes, spills or leaks from chemical tanks may cause serious injury or property damage to neighboring properties.
Products liability exposure is low. Tobacco products receive a federal exemption from most types of product liability claims because tobacco has been a known carcinogen since the 1960's. Extensive warnings and labels are required on all finished goods alerting users as to the product's dangers.
While some lawsuits have prevailed in lower courts, appellate courts have generally upheld the federal exemption enjoyed by tobacco manufacturers.
Environmental impairment exposures are moderate. Sudden or cumulative discharges of chemicals used as additives (which are both toxic and combustible) may contaminate air, surface or ground water, or soil. Disposal procedures must adhere to all EPA and other regulatory standards.
Workers compensation exposure 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.
Flammable liquids and chemicals can cause skin and eye irritation. Cumulative exposure to tobacco dust creates a potential for lung and respiratory diseases and injuries. Drivers of forklifts and vehicles may be injured in accidents.
Property exposures include offices, processing areas, and warehouses for raw tobacco and finished goods. Ignition sources include electrical wiring, heating systems, and production machinery. The large draft spaces in storage warehouses can contribute to the spread of a fire. Chemical additives may be highly flammable and add to the fire load.
Accumulations of dust can result in explosions. This hazard increases in the absence of well-maintained dust collection systems. Raw goods and finished products, which are highly combustible and easily contaminated by smoke, temperature changes, and humidity, are also targeted by thieves due to the high resale value in the black market.
Vandalism can result from trespassers and protestors. 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 breakdown losses to production equipment, dust collection and ventilation systems, electrical control panels, and other apparatus. Breakdown and loss of use to the conveyor and other production machinery could result in a significant loss, both direct and indirect, such as time element.
Crime exposures are chiefly from employee dishonesty and theft of money and securities due to the high resale value of tobacco products on the black market. 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.
Inland marine exposures include accounts receivable if the manufacturer offers credit, 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.
Backup copies of all records should be made and stored off premises. Goods in transit may be damaged by fire, theft, collision and overturn, or contamination.
Business auto exposure may be moderate 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.
Commercial Insurance And Business Industry Classification
- SIC CODE: 2111 Cigarette Manufacturing, 2121 Cigar Manufacturing, 2131 Chewing And Smoking Tobacco And Snuff Manufacturing, 2141 Tobacco Stemming And Redrying
- NAICS CODE: 312230 Tobacco Manufacturing
- Suggested ISO General Liability Code(s): 59773, 59774, 59775
- Suggested Workers Compensation Code(s): 2172, 2174
Description for 2111: Cigarette Manufacturing
Division D: Manufacturing | Major Group 21: Tobacco Products | Industry Group 211: Cigarettes
2111 Cigarette Manufacturing: Establishments primarily engaged in manufacturing cigarettes from tobacco or other materials.
Description for 2121: Cigar Manufacturing
Division D: Manufacturing | Major Group 21: Tobacco Products | Industry Group 212: Cigars
2121 Cigar Manufacturing: Establishments primarily engaged in manufacturing cigars.
Description for 2131: Chewing And Smoking Tobacco And Snuff Manufacturing
Division D: Manufacturing | Major Group 21: Tobacco Products | Industry Group 213: Chewing And Smoking Tobacco And Snuff
2131 Chewing And Smoking Tobacco And Snuff Manufacturing: Establishments primarily engaged in manufacturing chewing and smoking tobacco and snuff.
- Tobacco: chewing, smoking, and snuff
Description for 2141: Tobacco Stemming And Redrying
Division D: Manufacturing | Major Group 21: Tobacco Products | Industry Group 214: Tobacco Stemming And Redrying
2141 Tobacco Stemming And Redrying: Establishments primarily engaged in the stemming and redrying of tobacco or in manufacturing reconstituted tobacco. Establishments which sell leaf tobacco as merchant wholesalers, agents, or brokers, and which also may be engaged in stemming tobacco, are classified in Wholesale Trade, Industry 5159. Leaf tobacco warehouses which also may be engaged in stemming tobacco are classified in Transportation and Public Utilities, Industry 4221.
- Tobacco thrashing (mechanical stemming)
- Tobacco, stemming and redrying of
Tobacco Manufacturers Insurance - The Bottom Line
Tobacco manufacturers insurance policies can be different in coverage, costs and exclusions. To see if your tobacco manufacturing operation has the best fit insurance policies - talk to an experienced business 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.
- Audio & Video Equipment
- Auto Parts
- 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
- Down And Feather Products
- Dry Ice
- Dyes & Pigments
- Electronic Toys & Games
- Exercise Equipment
- Farm Equipment
- Feed & Grain
- Fur Garment
- Garage Door
- Gypsum Products
- 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
- 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
- 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.