Manufacturers Insurance: Liabilities, Costs, Coverages & More

The US Bureau of Labor Statistics defines manufacturers as follows:
The manufacturing sector is part of the goods-producing industries supersector group. The Manufacturing sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products.

Published on September 23, 2021

manufacturers
Robots Working On Conveyor Belt In Warehouse

Establishments in the Manufacturing sector are often described as plants, factories, or mills and characteristically use power-driven machines and materials-handling equipment. However, establishments that transform materials or substances into new products by hand or in the worker's home and those engaged in selling to the general public products made on the same premises from which they are sold, such as bakeries, candy stores, and custom tailors, may also be included in this sector. Manufacturing establishments may process materials or may contract with other establishments to process their materials for them. Both types of establishments are included in manufacturing.

In the US, manufacturers account for 11.39% of the total output in the economy, employing 8.51% of the workforce. The sector's total output was $2,335 billion in 2018.

What is Manufacturers Insurance & Who Needs It?

Property and liability insurance are basic coverages every manufacturer will need. However, since manufacturers' risk management is different for each insured, their needs will vary. In this Guide to Manufacturers Insurance, you'll get an overview of industry categories with details on the wide range of risks manufacturers face and insurance policies that protect them.

This list of Target Classifications from the Jimcor Agencies listing for manufacturers liability insurance found in the Program Business Market Directory offers valuable insights into the scope of the market. Jimcor has coverages for more than 20 different markets, including hard-to-place manufacturing risks. 

Target Classifications Include:

  • Electronics

  • Appliances

  • Food & Beverages

  • Nutraceuticals & Pharmaceuticals

  • Toys

  • Games

  • Furniture

  • Clothing

  • Exercise Equipment

  • Playground Equipment

  • Cosmetics

  • Pet Products

  • Infant & Children's Products

Industrial Products

  • Conveyors

  • Metal Goods

  • Components

  • Heating & Air Conditioning

  • Appliances

  • Trailers

  • Paper Goods

  • Rubber

  • Chemicals

Other Hard to Place Products

  • Online Distribution of Variety of Products for Large Storefronts

  • Security Systems Including Installation

  • Communication Equipment

  • Auto Parts: Critical & Non-Including motorcycle, trucks, and passenger vehicles

  • Medical Products: Invasive & Nonsporting & Athletic Equipment

  • Amusement Devices

  • Elevator & Lift Equipment

  • Firearms & Ammunition

  • Marijuana Process, Growing & Manufacturing

A general list of the types of manufacturers includes:

  • Metal Products

  • Wood Products

  • Plastics

  • Marble & Granite

  • Electronics

  • Food Processors

  • Clay And Glass Products

  • Printing Products

  • Apparel And Other Textile Products

  • Food Processors 

  • Bakery Products 

  • Candy And Confectionery 

  • Craft Breweries 

  • Dairies

  • Frozen Specialties 

  • Fruit, Vegetable, Meat, Fish Or Seafood Processors 

  • Processed Foods

  • Construction Or Farm Equipment

  • Motor Vehicle Upfitting 

  • Fabricated Structural Metal

  • Perfumes And Cosmetics 

  • Sports And Athletic Goods

  • Auto Parts 

  • Industrial Machinery 

  • Metal Forgers, Casters, Extruders, Rollers, And Stampers

What Does Manufacturers Insurance Cover?

Manufacturing insurance provides protection designed to reduce or eliminate the losses manufacturers face due to liability and property damage claims against the business and injuries sustained by their employees while on the job. 

 

Types of Manufacturers Insurance Coverages 

Deciding what insurance coverage a manufacturer should have is dependent on the function of the business. For example, diverse companies such as a bakery versus a heavy-duty equipment manufacturer need solutions specific to their industry and the products they make.

Here is a list of coverages nearly all require.  

BOP

A Business Owners Policy (BOP) is a convenient, cost-saving bundle of coverages for smaller manufacturing businesses, usually 100 or fewer employees. A BOP bundles liability and commercial property insurance into a single plan with lower costs than individual policies. Additional policy endorsements to a BOP include protection for business interruption, food spoilage, contract liability, and more.

Other conditions besides the number of employees for BOP eligibility are:

  • Earnings of less than $1 million in annual revenue

  • Low-risk operations and industry

  • Requires less than 12 months of Business Interruption insurance

  • Small facilities or office

General Liability

General Liability insurance will help pay costs for legal defense and settlements when the business faces a claim its operations caused an injury to customers, vendors, or visitors to the premises. Coverage includes property damage to non-employees. The policy provides protection against advertising injuries, copyright infringement, slander, and libel claims except for professional services, which require separate professional liability coverage.

Commercial Property

Commercial property insurance helps pay for losses and damage to owned or rented property used by a business. The coverage protects a business's physical assets, including owned or rented buildings and equipment used in its operations. Besides buildings and facilities, coverage extends to tools, electronic devices, equipment, inventory, furniture, supplies, and personal property. The types of hazards a commercial building policy insures against include fire, lightning, vandalism, theft, and more. 

Workers Comp

Workers Compensation is required in nearly every state. It covers the costs of medical treatment, hospitalization, rehabilitation, lost income, disability, and death benefits for injured employees while on the job. 

Commercial Auto

Commercial auto insurance covers the business if the owner or an employee causes an accident while operating a vehicle used for work. Personal auto policies exclude coverage for business-owned vehicles. It helps pay costs for damage to the property of others and the medical expenses of others injured or killed in accidents caused by a car driven on company business.

Product Liability

Product liability is necessary since most General Liability policies exclude product liability from their coverage. Product liability pays for bodily injury claims and property damage losses arising from the insured’s defective products sold, manufactured, or distributed. Product liability insurance helps pay for losses from suits where the claimant suffered damages because of failure to provide warning labels or inadequate product use instruction.

Cyber Insurance

Cyber liability insurance is necessary more than ever today with the ongoing increases in cyber-attacks on businesses of all sizes. General liability policies exclude covering losses due to cybercrime. Cyber insurance protects first-party losses from ransomware, hacker attacks, data destruction, theft, and denial of service attacks. It also provides coverage to third-parties injuries that help pay for security audits, post-incident public relations, and other insurable expenses incurred by a breach or attack.

International Coverage

International insurance is like Manufacturers Insurance Programs in that it is more than a single policy. Global coverage includes a range of insurance policies that often mirror coverages a company has for its domestic operations. Typical coverages will consist of international general liability,  product liability, professional liability, aka errors and omissions insurance, and more. 

E&O

Errors and Omissions are sometimes called professional liability. It covers losses due to mistakes and negligence in the manufacturing process that cause harm to a third party. Manufacturers E&O insurance helps pay the insured's legal costs and settlement fees to customers or end-users. A typical E&O policy is issued as "claims-made," meaning the faulty work done and the claim against the policy must both be made during the policy period.

EPLI

Employment Practices Liability insurance (EPLI) protects the manufacturer for claims made by a worker with employment-related issues. The coverage helps with legal defense and settlement costs when the company is at fault in a lawsuit brought by a single employee or a group of employees. Specifically, EPLI protects against claims of discrimination, sexual harassment, benefit mismanagement, wrongful termination, improper discipline or demotion, privacy invasion, and breach of an employment contract. 

Best Manufacturers Insurance Programs

When you seek markets for Manufacturers Insurance Programs, the best place to start is the Program Business Market Directory. It is a platform set up expressly to help independent insurance agents find and access the needed markets for hard-to-place, unusual risks in the Excess & Surplus Lines and program business space. When you search there, you'll find top-shelf providers such as Jimcor Agencies. It is an independent MGA & wholesale brokerage with family values. Founded in 1986 by Frank Mastowski and his wife Ellen, we have grown to represent a portfolio of over 150 admitted and non-admitted markets between our in-house binding authority and brokerage capabilities.

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