Tool And Die Shops Insurance Policy Information

Tool And Die Shops Insurance. Tool and die makers are craftspeople who make tools and other instruments that are usually subsequently used to produce other tools and (metal) components. As they do so, tool and die makers may rely on either mechanical or computer-guided machinery.

Tool and die makers require mathematical skills, as well as cutting, filing, polishing, and testing the products they make.

Tool and die shops design, build, rebuild, and repair custom tools such as operational parts for industrial machines, jigs, gauges, punches, fixtures, and dies. While some shops manufacture parts to the specifications of others, they frequently provide engineers to do actual design work or work with customers to improve their specifications.

Many operations cut, drill, lathe, grind, polish, shape, and stamp steel, aluminum, brass or copper. Machinery can range from hand calibrated to numerically controlled (punched tape calibration), to computer numerically controlled (CNC) and multi-function machining centers.

Tool and die shops, also called machine shops, manufacture specialized equipment that requires skilled hands. In the process, however, such companies can encounter a range of perils, including those relating to the reality of working with both metal and expensive machinery.

This is why owners and operators of tool and die shops will be quite aware that they require protection in the event that something goes wrong.

What kind of tool and die shops insurance do companies in this industry need? You will find more information in this brief guide.

Tool and die shops 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 tool and die shops manufacturing insurance questions:

What Is Tool And Die Shops Insurance?
How Much Does Tool And Die Shops Insurance Cost?
Why Do Tool And Die Shops Need Insurance?
What Type Of Insurance Do Tool And Die Shops Need?
What Does Tool And Die Shops Insurance Cover & Pay For?

What Is Tool And Die Shops Insurance?

Tool and die shops insurance is a type of commercial insurance that is specifically designed to protect tool and die shops against potential financial losses due to risks and hazards associated with their operations. This type of insurance typically covers risks such as property damage, theft, equipment breakdown, liability claims, and loss of income due to business interruption. It also may provide protection for specialized tools and machinery, as well as for employees' injuries sustained on the job.

How Much Does Tool And Die Shops Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small tool and die shops manufacturing businesses ranges from $57 to $79 per month based on location, size, revenue, claims history and more.

Why Do Tool And Die Shops Need Insurance?

Tool and die shops require insurance, regardless of their scope and size, because they face the same risks shared by any commercial venture as well as certain threats more exclusive to the field of metalworking. Even if the unforeseen circumstances you may face are not of bankrupting proportions, they may still prove to be costly.

Your trade might not be as hazardous as people outside the field are likely to think, but even if you do your utmost to adhere to safety standards, stray metal pieces could still injure workers in this industry, as well as perhaps third parties attending your premises.

Even the loud working environment could pose a hazard, in the form of potential hearing loss.

Tool and die shops are also prone to the same risks as other companies - theft, vandalism, and acts of nature that could include fires and floods, could damage your manufacturing facility and the assets inside it.

Without the safety net of solid tool and die shops manufacturers insurance coverage, your company would be left to shoulder the financial consequences on its own. Thankfully, it does not have to be this way.

What Type Of Insurance Do Tool And Die Shops Need?

Tool and die shops will need to carry several different forms of insurance. Their exact needs depend on factors that include the nature of your manufacturing equipment, including whether it is mechanical or computerized, the number of workers you employ, and the location of your facility.

A skilled commercial insurance agent who understands your field is best equipped to guide you through the process of acquiring the right tool and die shops insurance for your company. Among the types of insurance needed, however, are:

Commercial Property: Designed to protect your company from financial losses resulting from circumstances beyond your control, such as acts of nature and theft, commercial property insurance covers your physical building, your valuable machinery, and your inventory. It is even able to compensate your company for revenue lost to such perils.
Equipment Breakdown: A sub-category of commercial property insurance, this type protects you should valuable machinery suddenly need to be repaired or replaced. Lost revenue resulting from interruptions to your production can be covered as well.
Commercial General Liability: This type of tool and die shops insurance deals with third party bodily injury as well as property damage claims. Should a third party, such as a contractor or buyer, be injured on your premises, their medical bills are covered. Legal fees in the event of general liability claims also fall under this type of insurance.
Product Liability: A more specific form of liability insurance, this type covers third party property damage and bodily injury claims relating to the products you manufacture. Should another manufacturer that uses your components face a workplace injury, for instance, they might attempt to hold your company liable. Product liability insurance is able to protect you in these cases.
Workers Compensation: Even with the best health and safety practices, workers can sustain occupational injuries. Workers' comp insurance serves to cover their medical bills and any lost wages if they are unable to return to work.

Although these essential types of tool and die shops insurance will give you a solid start, firms in this industry may need additional kinds of coverage. To find out what your exact needs are, team up with a reputable commercial insurance broker.

Tool And Die Shop's Risks & Exposures

Premises liability exposure is higher than for other metal working shops because customers may need to be on premises to review the process and to evaluate the ability of the firm to deliver the product desired.

If customers send their own employees to do quality control, these employees are subject to the same hazards as the tool and die shop's employees. Other visitors may be injured by slips, trips, or falls. If the shop does installations, there may be frequent small property damage claims. Fumes, dust, and noise from the shop could affect neighbors.

Products liability exposure may be very high if the final product is used to make a critical operating part or systems, such as parts for autos, aircraft, watercraft, medical devices, military uses, or industrial machinery. The tool and die shop may be more concerned about their ability to handle the customer's specifications than evaluating the end use of the product and what could happen if the part should fail.

It may be impossible to defend against questionable claims unless there is an aggressive quality control program including high standards for materials, testing and monitoring of components, and documentation of sources down to individual items in a run. If the components are made to customer specifications, the contract may limit the exposure.

Hazards may increase without contracts that clearly describe the responsibilities of the respective parties, plus quality standards that must be met for customer satisfaction. Older parts made before improved safety features were introduced may still be in use.

Professional liability exposure arises from the design work and recommendations to customers. While some work is simply done to customers' specifications, there is often a high degree of expertise involved in recommending appropriate alloys and design elements.

Environmental impairment liability exposures may be significant due to possible contamination of ground, air, and water, from the cutting oils and solvents used, as well as the disposal of tailings (the greasy metal shavings produced during manufacture). Disposal of wastes must adhere to all federal and state guidelines.

Workers compensation exposures can be extensive. Workers on a production line with punch presses and cutting machines can suffer severe loss from cuts or amputations. Eye injuries from metal shavings and skin irritations from chemicals are additional causes of loss. Common injuries include slips, trips, falls, back injuries from lifting and material handling, hearing loss from noise, and repetitive motion injuries.

Workstations should be ergonomically designed. Employees should be provided with safety training and protective equipment. If there is high-volume production work involved, schedules may lead workers to remove guards on the machinery, or to postpone maintenance and repair to increase production. Safety consciousness and commitment of management, especially in the form of ongoing enforcement and awareness programs, are important considerations.

Materials used may be toxic (such as metals like mercury and beryllium), or combustible (such as magnesium). Other materials, such as dust from graphite, may pose respiratory concerns. Employees must be fully informed as to the potential effects of the chemicals, including long-term occupational disease hazards so that they can take action as quickly as possible.

Property exposures consist of an office, production plant, and warehouse for storage of raw materials and finished goods. Ignition sources include electrical wiring, heating systems, production machinery, and sparks from grinding or lathe operations. Many stages of the work have low fire hazard since most machines are cutting and punching devices, and the parts are all metal.

Grinding and lathe operations may generate dust and sparks that could cause a fire or explosion. The risk increases in the absence of proper dust collection systems, ventilation, and adequate disposal procedures.

Degreasers and solvents may be flammable and must be adequately controlled. Poor housekeeping may be a serious fire hazard. Unless disposed of properly, greasy, oily rags (such as those used to clean the machinery) can cause a fire without a separate ignition source.

Business income is a concern because machines used to produce the tools and dies may have been specially made for a particular need and difficult to quickly replace.

Equipment breakdown exposures include malfunctioning production equipment, ventilation and dust collection systems, electrical control panels and other apparatus. A lengthy breakdown to production machinery could result in a severe loss, both direct and under time element.

Some machines may have to be ordered from international suppliers. Computer Numerically Controlled (CNC) lathes or turning centers increase the hazard.

Crime exposures are chiefly from theft, either by third parties or employees, especially for one-of-a-kind parts or those made with exotic materials. Background checks should be conducted on all employees.

There must be a separation of duties between persons handling deposits and disbursements and handling bank statements. The manufacturer should have security methods in place to prevent theft.

Inland marine exposures include accounts receivable if the manufacturer offers credit, computers (which may include computer-run production equipment), contractors' equipment for forklifts, goods in transit and off-site for dies at another processor's premises, and valuable papers and records for customers' and suppliers' information.

Coverage for employees' tools may be needed as some skilled workers will have their own tools and jigs with very high replacement costs. There will be a bailees exposure if patterns or dies of customers are kept on premises. Parts, tools, and dies are expensive to replace. The primary causes of loss are fire, theft, collision, overturn, and water damage.

Business auto exposures are high if the tool and die shop is responsible for pickup of raw materials or delivery of finished parts. Deadlines placed on drivers (such as just-in-time processing schedules) increase the hazard. 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 Tool And Die Shops Insurance Cover & Pay For?

Tool and Die Shops can be subjected to a variety of lawsuits for a multitude of reasons. Here are some common examples and how insurance can protect them:

1. Workplace Accidents: Tool & Die Shops, like many other businesses in the manufacturing industry, operate heavy machinery which can sometimes lead to accidents. If an employee is injured on the job, they may sue the business for compensation. Workers Compensation Insurance is a type of coverage designed to protect businesses from such claims. It typically covers medical expenses and lost wages for injured employees, and in return, employees usually forfeit their right to sue their employer. This insurance can help Tool & Die Shops avoid costly lawsuits and maintain their reputation.

2. Product Liability: If a product made by a Tool & Die Shop is defective and causes harm or damage to a customer or third party, the business could be sued for product liability. Product Liability Insurance can protect the shop from such claims. This type of insurance covers the legal and court costs of defending against the claim, as well as any settlements or judgments that are awarded if the business is found to be at fault.

3. Property Damage: Tool & Die Shops use heavy machinery and chemicals that can potentially cause property damage, either to their own premises or to a client's property. If a lawsuit arises due to this damage, Commercial Property Insurance and General Liability Insurance can help cover the costs. Commercial Property Insurance covers damage to the business's own property, while General Liability Insurance covers damage caused to a third party's property.

4. Professional Errors: If a Tool & Die Shop makes a mistake in their work, such as producing a faulty tool that results in a client's financial loss, they could be sued for professional negligence. Professional Liability Insurance (Errors & Omissions) can protect the shop in these situations. This insurance covers legal defense costs, settlements, and judgments related to claims of professional negligence or mistakes.

By having the right insurance coverage, Tool & Die Shops can significantly mitigate the financial risks associated with these potential lawsuits. It's always essential for businesses to discuss with their insurance providers to ensure they have adequate and appropriate coverage for their specific needs and risks.

Commercial Insurance And Business Industry Classification

SIC CODE: 3544 Special Dies And Tools, Die Sets, Jigs And Fixtures, And Industrial Molds
NAICS CODE: 333514 Special Die and Tool, Die Set, Jig, and Fixture Manufacturing
Suggested Workers Compensation Code(s): 3113 Tool Manufacturing - Not Drop or Machine Forged NOC, 3114 Tool Manufacturing - Drop or Machine Forged NOC - Machining or Finishing of Tools or Die Making Operations

Description for 3544: Special Dies And Tools, Die Sets, Jigs And Fixtures, And Industrial Molds

Division D: Manufacturing | Major Group 35: Industrial And Commercial Machinery And Computer Equipment | Industry Group 354: Metalworking Machinery And Equipment

3544 Special Dies And Tools, Die Sets, Jigs And Fixtures, And Industrial Molds: Establishments commonly known as contract tool and die shops and primarily engaged in manufacturing, on a job or order basis, special tools and fixtures for use with machine tools, hammers, die-casting machines, and presses. The products of establishments classified in this industry include a wide variety of special toolings, such as dies; punches; diesets and components, and subpresses; jigs and fixtures; and special checking devices. Establishments primarily engaged in manufacturing molds for die-casting and foundry casting; metal molds for plaster working, rubber working, plastics working, glass working and similar machinery are also included. Establishments primarily engaged in manufacturing molds for heavy steel ingots are classified in Industry 3321, and those manufacturing cutting dies, except metal cutting, are classified in Industry 3423.

Diamond dies, metalworking
Dies and die holders for metal die-casting and metal cutting and
Dies, metalworking, except threading
Dies, plastics forming
Dies, steel rule
Diesets for metal stamping (presses)
Extrusion dies
Forms, metal (molds): for foundry and plastics working machinery
Industrial molds
Jigs and fixtures (metalworking machinery accessories)
Jigs: inspection, gauging, and checking
Punches, forming and stamping
Subpresses, metalworking
Welding positioners (jigs)
Wiredrawing and straightening dies

Tool And Die Shops Insurance - The Bottom Line

Tool and die shops insurance policies vary coverages and exclusions. To see if your manufacturing operation has the best fit insurance policies - talk to an experienced business 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.

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.

Buy Tool And Die Shops Insurance

Tool And Die Shops Insurance Policy Information

What Is Tool And Die Shops Insurance?

How Much Does Tool And Die Shops Insurance Cost?

Why Do Tool And Die Shops Need Insurance?

What Type Of Insurance Do Tool And Die Shops Need?

Tool And Die Shop's Risks & Exposures

What Does Tool And Die Shops Insurance Cover & Pay For?

Commercial Insurance And Business Industry Classification

Description for 3544: Special Dies And Tools, Die Sets, Jigs And Fixtures, And Industrial Molds

Tool And Die Shops Insurance - The Bottom Line

Additional Resources For Manufacturing Insurance

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