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Tool And Die Shops Insurance Policy Information

Tool And Die Shops Insurance

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:

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?

Insurance For Manufacturers

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.

Commercial Insurance And Business Industry Classification

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.

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.

Small Business Information

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 InsuranceWhat 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 InsuranceWhat 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 InsuranceWhat 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 InsuranceWhat 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 InsuranceWhat 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 PoliciesWhat 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 InsuranceWhat 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 BondWhat 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
Small Business Commercial Insurance

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.

Manufacturing Insurance

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.

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