What Insurance Your Manufacturing Business Needs

What Insurance Your Manufacturing Business Needs

January 25, 2023 / 5 mins read

You manufacture products, anything from metal to grain handler dryers, and you want to control any risks to your business.

If your manufacturing business is in Regina or the surrounding area, your Western business insurance expert will give you the expertise you need for a customized insurance package tailored to your operation’s needs.

Manufacturing is one of Canada’s most important economic sectors. Protect your operation with manufacturing insurance.

What is manufacturing insurance?

Different manufacturers have different kinds of risks. Tell us about your manufacturing operation.

A tailored manufacturing insurance package helps safeguard your operations and should cover the potential risks that could arise in your business.

A manufacturing insurance package can help protect you from these 3 common claims:

1. Your operation produces some parts that are defective, and you get sued by a client for compensation.

  1. You miss a deadline to deliver a product and you get sued.
  2. A piece of equipment overheats and causes damage to your shop, affecting your production schedule and forcing you to close temporarily.

Here’s a quick insurance checklist for you:

  • Do you have the best business insurance rate for your manufacturing business?
  • Do you know what risks you are covered for, or not?
  • Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
  • Is the number of employees up to date?
  • Do you know the value of your equipment and is it properly insured?
  • Have you thought about the consequences of cyberthieves hacking your business?

What’s in a manufacturing insurance package?

Commercial General Liability (CGL) Insurance: This type of insurance is also known as slip-and-fall insurance because it helps protect you from day-to-day risks that can happen when you are dealing with third parties, such as claims of bodily injury or property damage.

If one of your customers slips and falls and gets injured at your business, they could sue for bodily harm.

CGL will typically cover your legal expenses and the customer’s medical fees, regardless of the lawsuit’s outcome.

A CGL policy typically includes product liability coverage, which protects against claims alleging third-party property damage or bodily injury caused by a product you manufacture, distribute, or sell.

Damages covered by product liability may include a defect in the design, manufacturing, or marketing of a product, such as an incorrect label or a lack of safety warnings.

How much CGL insurance do I need?

It depends on what you are manufacturing and the size of your operation.

Speak to your Western business insurance expert about the CGL insurance coverage that you need to protect your manufacturing business.

Manufacturers’ Errors & Omissions Insurance: It’s also known as professional liability insurance.

It protects your manufacturing business from damages due to design, manufacturing, or marketing defects, such as incorrect labelling and safety warnings.

It usually includes coverage for legal defence costs and damages related to your company’s professional services, products, and media and advertising.

E & O insurance can help protect you if fail to deliver a product or service as promised.

Equipment Breakdown Insurance: Your manufacturing business likely has expensive electrical and mechanical equipment specific to what you make. What would the cost to your business be in terms of productivity if a piece of equipment breaks down?

Equipment breakdown insurance provides coverage for property damage from the sudden and accidental breakdown of insured equipment not automatically covered by a standard commercial property policy.

Commercial Property Insurance: If you store the products you make onsite or offsite, you need commercial property insurance.

Commercial property insurance protects your physical location, as well as its contents (including your inventory) from insured risks that occur beyond your control, like a fire, theft, or flood.

Pollution Insurance: This type of insurance covers third-party bodily injury, property damage, and environmental damage due to gradual or sudden pollution that happens on a covered job site. Coverage generally includes cleanup costs, emergency response costs and civil fines.

Business Interruption: This type of insurance supports you when your manufacturing business can’t operate due to a covered loss.

Some examples of coverage include:

  • Damage to your storefront from fire or vandalism
  • Damage to a neighboring business
  • A major reduction in revenue due to a client/supplier facing losses of their own
  • A disruption in your supply chain

Business interruption insurance can help with expenses such as:

  • Payroll
  • Rent
  • Utilities
  • Property taxes
  • Alarm monitoring
  • Relocation of your business

Crime Insurance: It protects you against theft by employees either financial or equipment, credit card fraud, forgery, and counterfeit.

Cyber Insurance: If your manufacturing business processes debit and credit card transactions, you need cyber insurance. Your system could be vulnerable to cyberthieves.

Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your bakery’s system if it’s hacked.

You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform customers affected by a breach.

Commercial Auto: If you have a business car, van, or truck that you use for your manufacturing business, it won’t be covered by your personal car insurance policy. You will need commercial coverage as part of your insurance package.

If you own five or more vehicles and use them exclusively for your bakery’s business purposes, such as deliveries, you will need fleet insurance.

What do I do if my manufacturing business has an insurance claim?

  • Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
  • Know your policy so that when you contact your broker you are familiar with what will be covered or not.
  • Document the damage. Take photos right away and write down what happened.
  • Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
  • Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
  • Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Western Insurance has licensed BUSINESS INSURANCE EXPERTS to get your manufacturing business the right insurance package. Our experts are available now to help you navigate the business insurance journey to protect your manufacturing business.

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