How Insurance For Manufacturing Is Different
Insurance for manufacturing businesses is a different ballgame compared to what you'll see even in any other commercial operations. While insurance for manufacturing still has to cover many common issues, such as worker injuries and general liability, it also has to cover these 6 other different scenarios.
Damage to or loss of raw materials can leave a manufacturer in a tough spot. Similarly, quality issues can trigger issues. Consequently, a company needs to consider the risk to its inputs. Insurance for manufacturing may need to cover raw materials if the goods are hard to come by, take long to ship, or are expensive.
Many manufacturing operations create negative outputs for the environment. While there are mitigation measures in place at most companies, what happens if these systems fail? For example, a company might maintain an artificial pond to contain wastewater until someone can collect it for treatment. What happens if the pond bursts and sends polluted water into a nearby river? Insurance for manufacturing businesses should account for these kinds of potential disasters.
Even if a company only makes components for another organization's products, there may be liability risk. For example, a seatbelt manufacturer could be on the wrong end of a lawsuit if its products are linked to an unusual number of injuries. Make sure your policy is appropriately sized to the number of units your company has out in the world at any given time.
While other companies carry property damage insurance, manufacturers are especially sensitive to potential equipment breakdowns. Particularly if your company depends on a relatively uncommon type of machine, you'll need a policy that accounts for its potential loss. Consider how long a production line might be out of service if specific pieces of equipment fail.
Manufacturers are often more likely than other businesses to send products to foreign countries. This creates a new form of liability exposure because your practices and products may be subject to different rules. This is especially true if your company doesn't maintain separate corporate entities in those nations. Also, depending on the countries in question, there could be unusual risks such as civil unrest, natural disasters, or adverse government actions.
Intellectual Property Violations
A manufacturer often depends on intellectual property rights like patents and trademarks to protect its interests. However, outside parties may violate those rights, and you could struggle for years to recover compensation.
For more info, contact a local company like Fullsteam Insurance.