Table of Contents
- What are the types of components of manufacturing insurance?
- The Bottom line
Manufacturing companies play a crucial role in any society because it fulfills the demands of people.
Besides the importance, the liability risk for manufacturing companies is also higher. So it is necessary to safeguard your business. The manufacturing insurance coverage protects the business from product recall in case of some manufacturing defect, saves you if your product fails.
If you are a metal producer, plastic manufacturer, making automobiles, and any medical or food product, it is necessary for you to be insured.
In this article, we will discuss different manufacturing insurance policies or how you can protect your assets.
Which industries can consider taking manufacturing insurance?
Businesses working with big or costly machines need to safeguard their equipment and property. The larger the asset you have, the more the chances of facing challenges.
Here is the list of few manufacturers that can claim manufacturing insurance:
- Food producer
- Machinery manufacturer
- Livestock farmer
- Beverages producers
- Plastic maker
- Automobiles manufacturer
- Commercial-scale printing companies
- Metal and concrete manufacturer
What are the types of components of manufacturing insurance?
Depending on the manufacturing industries, there are different manufacturer business insurance options.
We will discuss the pain point of these different insurance policies. So you will get the maximum benefits from the policy you selected.
Business owner policy insurance
A BOP bundles two different insurance policies and brings them under one plan. Separately Insuring property damage, income interruption, and bodily injury may cost higher than BOP insurance.
Coverage may vary among the insurance provider, but a few protections that business owner policy offers include:
- Protection of property damage like equipment and instruments and customer injury.
- Cover payroll and counterfeit.
- Cover expenses of legal action if the other party files lawsuits.
Insurance companies have different criteria for BOP, and if the business is eligible, meeting those criteria, they can avail the manufacturing insurance policy.
The eligibility criteria for BOP include companies having 100 or fewer employees and 5 million dollars annual revenue. Businesses that can qualify for BOP can be small restaurants, apartments, and stores.
You can also tailor the BOP for manufacturing companies according to your need. You might add product spoilage coverage if your business is based on the manufacturing of food products.
General Liability insurance
In this type of manufacturing insurance policy, the insurance company provides coverage to the injuries that occur on business premises, advertising injury, and property damage. It includes two policies these are:
- In the first type, the policy covers the loss occurring in the specified period.
- In the second type, the claim is not restricted to the duration. In this type of general liability policy, the insurer covers the incident that happens at any period.
Coverage provided by general liability insurance to manufacturing industries include:
- The general liability policy covers the expenses of visitor injury at your factory.
- Coverage of medical bills of any accidental happenings is also included in this type of manufacturer insurance policy.
- This policy covers your legal expenses if you want to sue an accident.
- It protects the charges of a lawsuit to defend the claim.
Coverage excluded in the general liability policy are:
- Coverage of Intentional accidents or employees injury
- The cost associated with Recall of products
If your manufacturing company needs additional coverage, you can also customize your policy, like insurance of errors and omissions and employment practice liability.
Commercial Or Business Property Insurance
As the name suggests, this insurance policy is used to protect commercial properties. It is the best way to protect the costly assets of your business. Manufacturers use this insurance policy to cover the cost of property loss. Loss may occur in case of a natural disaster (storm and flood) or fire.
The business property insurance policy also covers the damage of worthy equipment and instruments of manufacturing companies. Many successful investors considered it the smartest investment.
Commercial property insurance does not cover the loss when a renter-occupied your property (tenant).
The commercial property insurance policy protects the following property:
- Assets like the computer, mobile phone, and other gadgets
- Manufacturing instruments and equipment and manufacturing plants.
- Building’s fence, gates, landscape, outdoor sign, and satellite dishes.
- Owned and rented building
The cost of commercial property insurance depends on the location of the property and the occupancy and construction. On average, this manufacturing insurance costs around $37 to $79 per month. The cost may also vary based on which insurance company you are selecting.
Workers’ compensation insurance
It is another type of manufacturing insurance that saves the cost of an employee’s injury, rehabilitation, death, and lost wages at the workplace. This coverage is awarded on a no-fault basis, which means if an employee got injured during a business operation, he/she will receive the insurance money for medical care regardless of the employer’s fault.
The premium of workers’ compensation insurance is based on payroll, experience, performance of employees. The cost of this manufacturing insurance policy is also based on the location of the business.
Companies can also buy excess liabilities if the number of employees is higher and if you want extra coverages.
Product liability risk evaluation and management
Before getting the manufacturing insurance policy, it is necessary to evaluate the product liability risk. The insurer examines this area before deciding your premium plan of any insurance policy.
Product liability risk management not only decreases the incident rates but will also help you in developing premium insurance policies in trouble-free terms.
Here are a few tips for decreasing product liability risks:
- Design the product by considering the possible hazard and label the warning note on the product.
- Try to research deeply before designing the product so you would be able to remove most of the peril.
- Keep proper documentation or record of the requirements that will save the manufacturer from lawsuits.
The Bottom line
The term manufacturer covers a wide range of businesses and is an essential part of our society. This widely spread industry is a higher liability risk, and the insurance policies of this business are also diverse.
Different insurance companies offer different insurance policies that include insurance for manufacturing equipment, property, worker insurance, coverage from lawsuits, and for others.
This business insurance is the smart investment to keep your business in perfect working order.