Manufacturing businesses are at risk for losses and liabilities that can be different when compared to other organizations. These can include equipment breakdown, theft, pollution, and cyberattacks. Mitigating these risks requires careful planning, monitoring, and comprehensive manufacturers insurance.

Manufacturing business risks

Manufacturers have several distinctive features that impact their insurance needs. Here are some of the key risk-related factors that make manufacturing businesses different from other companies:

High capital investment

Manufacturing businesses often have custom-built facilities to accommodate and facilitate their manufacturing processes. They also invest heavily in equipment, specialized tools, and transportation and logistics infrastructure.

Complex supply chains

Manufacturers depend on the timely delivery of supplies, raw materials, and component parts, as well as reliable outbound transportation. Effective and efficient supply chain management is crucial to their survival. However, no one can control everything, and supply chain challenges are never more than one major storm, labour shortage, infrastructure failure, or regulatory change away.

Labour needs

Manufacturing businesses typically need skilled labour and highly trained specialists. Manufacturers insurance can help these companies deal with short-term labour shortages that may arise without losing financial ground.

Compliance requirements

Manufacturers can be subject to stringent quality control standards, health and safety regulations, and environmental laws. Changes in these standards can mean adjustments to production processes, including retooling, retraining, and sourcing new materials.

Technology integration

Manufacturing businesses are increasingly dependent on technology for their internal and external communications, production processes, monitoring systems, and logistics control. Manufacturers insurance can help companies protect these expensive upgrades and mitigate the additional risk that comes with them.

Product defects and recalls

In spite of a business’s best efforts to maintain the highest standards, manufacturing defects can happen. These events can be extremely damaging to a company’s reputation and very costly if a company must recall its products.

Inventory losses

Manufacturers often keep a great deal of raw materials, work-in-progress, and finished products in their inventory. Loss of these inventories due to theft, fire, or other hazards can significantly impact the business’s financial health.

How manufacturers insurance can help with losses and liabilities

Manufacturers insurance can play a vital role in helping manufacturing businesses mitigate the risk of losses and liabilities:

Commercial property insurance

This coverage can help cover physical assets such as buildings, equipment, tools, inventory, supplies, furniture, and technology from the threat of theft or vandalism and from damage or destruction by fire, flood, and some natural disasters.

Product liability insurance

If a manufacturer faces a claim that one of their products caused physical injuries or property damage, this type of insurance can help with the associated costs.

Cyber insurance

Given the increasing prevalence and sophistication of cyber-attacks, all businesses need to defend against these potentially catastrophic crimes. Even the most up-to-date cyber security system cannot always keep up with the techniques and strategies being used by hackers.

Manufacturing businesses face unique threats because their manufacturing processes and logistics operations can be highly technology-dependent, and this will only increase in the future. Cyber insurance can help mitigate costs associated with a cyber-attack, including recovering and restoring the data, investigating the data breach, cybersecurity consulting services, ransomware payments, public relations expenses, regulatory fines, and liability claims for data breaches that involve sensitive customer or supplier data.

General liability insurance

General liability insurance can help cover costs associated with third-party liability claims, such as physical injuries that occurred at the manufacturing facility and property damage that resulted from the company’s operations.

Pollution or environmental insurance

If a manufacturing business’s processes result in hazardous substance spills or other environmental impacts, this insurance can help cover the cost of cleanup and environmental remediation, emergency response, and third-party claims for bodily injury and property damage.

Business interruption insurance

If your manufacturing business must close temporarily due to a major event such as a fire or flood, business interruption insurance may be able to help with the associated expenses, including replacing business income, ongoing operating expenses such as rent and utilities, salaries and wages for employees, loan and tax payments, and relocation costs if the business is able to move to another location.

Ensure you’re protected with manufacturers insurance

Manufacturing businesses face unique risks that can benefit from tailored insurance protection. Federated understands the constantly evolving threat landscape for manufacturers, and we maintain strong ongoing relationships with major manufacturers across the country. Learn more about manufacturers insurance today.

 

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.