Manufacturing is complicated, and risks vary from business to business, depending on the nature of the products you’re manufacturing, the scale of production and the type of machinery you’re using. However, whether you’re operating a small single facility, or a huge manufacturing operation over various sites, insurance is always key. Every aspect of your business needs to be covered so it doesn’t flounder financially should something go wrong. It’s essential you have a watertight insurance policy in place to protect your staff, third party liabilities, premises, stock and materials.
So, what are the top tips for manufacturing when it comes to insurance? What considerations do you need in your sights?
Here are our Top 5 manufacturing insurance tips:
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Be comprehensive with your business description
Simply put, if your insurance company doesn’t know about it, it can’t be covered. Often, insurance policies deal in generic terms, but general rather than specific can be catastrophic when it comes to your business description, as every detail of your premises and operations needs to make it onto your schedule for it to be fully insured. If you work with a broker on comprehensively detailing your business description, you can guarantee wide and robust coverage that leaves nothing to chance.
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Help yourself to lower premiums
Do you have fabulous risk management strategies? Are you all about prevention and mitigation? Do you provide regular training, are
ISO9001 accredited, or have
awards or accreditations? If so, tell your insurer! Underwriters love evidence of
risk management - and can reduce premiums if a business is making efforts to reduce their risks across the board and on the factory floor.
One such example is an efficient working alarm system, so make sure your alarms are in full working order and set to your insurer’s specifications in order to reduce those premiums.
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Acquaint yourself with high risk
Are you aware, as a manufacturer, what the highest areas of risk within your business are? Your insurer will want to understand them, too, because what you’re manufacturing, where you source your materials and who you are sending your goods to will all affect your element of risk.
Some high-risk practices include shipping to the US and Canada (where the risk of litigation and weighty compensation settlements are higher); sourcing materials made in Asia due to concerns of lower quality; and supplying perishable or
temperature-controlled food, dangerous and inflammatory substances, or safety-critical goods. You’ll need to be on close terms with the higher risks for your business, so your insurer accounts for them too, and adequately covers them in your policy.
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Tick off your own insurance checklist
Consider the various types of insurance available to you as a manufacturer. Which of the following does your business need?
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Employers’ liability insurance
A legal requirement for all UK businesses, employers’ liability will cover compensation following employee illness, accident or injury resulting from any working activity within your business.
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Public liability insurance
This covers bodily injury or property damage from or by a member of the public e.g. from a customer visiting your site.
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Product liabilty insurance
Product liability insurance provides coverage to businesses in case their products cause injury or damage to customers or third parties. It helps protect the company from legal claims and financial losses arising from defective products, including design flaws, manufacturing defects or inadequate warnings.
This protects against claims arising from errors or negligence in the professional services a manufacturer provides, such as faulty or incorrect designs. It will cover both legal fees and compensation costs.
This type of insurance covers costs until you are up and running again after a halt in production - while machinery is repaired or replaced, for example. It puts you back on the financial standing you enjoyed before the interruption, and you can select your own indemnity period i.e. how long you would need to get back on your feet.
Product recall insurance provides coverage for the costs involved in withdrawing a product from the market. It covers expenses such as notifying customers, shipping and proper disposal of the recalled product, mitigating any damage to your company's reputation.
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Goods in transit and marine cargo insurance
Goods in transit insurance insures you for when your goods are being carried by your own vehicles or those of a third-party vehicle.
Marine cargo insurance is when your products are being transported by sea.
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Maintain plant health
Finally, your machinery is at the heart of what you do as a manufacturer, so make sure your plant thrives! Ensure all your plant and
equipment is fully covered, carefully considering the cost to replace, install and calibrate machinery, and be wary when setting up an insurance policy of not having your machinery’s depreciation value as your sum insured, as this can lead to a shortfall if it comes to a
claim.
Also, consider the value of engineering inspection insurance. Legal regulations mandate that equipment prone to deterioration over time must be inspected at regular intervals and this type of policy covers the cost of inspections for your plant and machinery, such as mechanical lifting gear, ventilation systems and compression equipment. Inspections can be conducted by qualified engineers from the insurance company, and coverage can be extended to include insurance for sudden and unexpected damage to plant and surrounding
property.
The complexities and challenges of the manufacturing industry require close attention when it comes to your insurance requirements. Knowledge and accountability are crucial to ensuring comprehensive and tailored protection and by staying informed and proactive, manufacturers can safeguard their operations against potential disruptions and liabilities.
We hope our Top 5 manufacturing insurance tips have been useful!
