In a factory, day-to-day operations alone pose many risks. Factor in all the potential hazards that arise the minute a product leaves the floor, and it's no wonder industry pundits urge a heavily-insured operation. The obvious dangers revolve around workers and machinery. But how about those related to the consumer?
Federal laws protect the public from injury and loss due to faulty products - and rightly so. Those in the production business need to carefully choose coverage against the potential catastrophe of lawsuits. Aside from standard coverages such as general liability and worker's compensation, manufacturers need to consider other equally important options.
Product Liability Insurance
These plans safeguard a manufacturer in claims related to the merchandise they produce and sell. It covers liability that stems from injuries and losses caused by a defect in the product or its malfunction. Known sometimes as Products-Completed Operations Coverage, Property Liability Insurance tends to apply whether a consumer, user or bystander files the claim.
Environmental Liability Insurance
So many manufacturing operations handle an array of materials during assembly - some of which could pose an environmental threat if not managed properly. Depending on the end-product; chemicals, combustibles and other highly flammable components might be used during production.
Environmental Liability Insurance protects against claims that could arise if one of these components harms the environment. First and foremost, these policies cover financial losses that result from pollution occurring on the site of the manufacturing operation. In addition, it tends to also cover related liabilities resulting from damages to property or harm to people off site.
Since manufacturers constantly must expand their operation with consumer demand, it's not unusual for businesses in the industry to purchase and sell property. Most Environmental Liability Insurance plans even protect the policy holder against unforeseen environmental issues that may surface down the road. This applies whether the problem occurs on the property they sell or buy.
A number of insurance companies now offer commercial property coverage designed specifically with the manufacturing industry in mind. Inside the plant, everything rides on each piece of equipment functioning perfectly at all times. One down machine could lead to a massive loss in money. Imagine the impact of even more widespread problems. For this reason, certain policy providers have tailored plans to accommodate those in manufacturing. Some available features include:
- Equipment breakdown coverage. Should a piece of machinery stop working, causing a partial or complete stoppage in production, the insurance provider will reimburse the manufacturer for the related loss of income.
- Computer coverage. Under this plan, the insurance provider usually will cover losses to hardware, electronic storage and other computer equipment. This feature not only protects against the basics - fire, windstorm and explosion - but may also guard against hackers, viruses and a number of other computer dangers.
- Off-site power failure. Some policy providers offer an option that covers the loss of income when a power outage forces production to come to a grinding halt. Should the back-up lights come on and the assembly line stop running, no need to worry with this option in place.
- Off-premises property coverage. In certain situations, a manufacturer might send products or product parts to another business for particular services - finishing, painting, detailing, etc. This option covers losses to the policy holder's property that occur at other locations, even if that site is not stated on the policy.
- Transportation coverage / Ocean marine coverage: Transporting the end-product often presents the biggest danger of loss or damage - particularly if it's a long-distance delivery. To this end, most insurance companies offer a range of transportation policies.
One of the more commonly used options is Ocean Marine. This product covers property/cargo damage or loss occurring at any point during the transit process - in storage at an off-site warehouse, traveling with sales agents, at another processing center, etc.
- Personal Property coverage for patterns, dies and molds: It's not uncommon for a manufacturing operation to house patterns, dies or molds that belong to the developing company. These pieces can be covered under most Property Insurance plans to protect the manufacturer if they are damaged or stolen while in the plant.