Manufacturing insurance can give you all the cover you need for your manufacturing business on a single policy. This means you will only have one premium to pay, and you will have a single point of contact should you ever need to make a claim.
Though insurance is essential for all manufacturing businesses, you do not have a legal obligation to get a dedicated manufacturing insurance policy. So, in this post, we will outline what might happen if you do not have manufacturing insurance.
What is Manufacturing Insurance?
Manufacturing insurance is tailored cover for your manufacturing business. A single manufacturing insurance policy can cover every aspect of your manufacturing business, including your buildings, your equipment, your stock, your products, and your employees.
Core areas of cover in a manufacturing insurance policy include:
- Buildings insurance
- Vehicles insurance
- Product liability insurance
- Public liability insurance
- Employer’s liability insurance
- Goods-in-transit cover
- Business interruption insurance
- Stock cover (including cover for both raw materials and finished products you keep in storage)
Is There a Legal Requirement to Get Manufacturer’s Insurance?
If you employ any staff, then you have a legal requirement to have employer’s liability insurance. This provides cover for any legal fees or compensation should your employees make a claim for accidents or injuries they sustain while on the job.
Suppliers and contractors might require you to have certain cover in place before they agree to work with you. For example, if a company appoints you to manufacture their products, they may require you to have product and public liability insurance as part of their contract.
Beyond this, there is no legal requirement to get any form of manufacturing insurance. However, there are very good reasons why no manufacturing business should go without this specialist form of cover.
What Happens If I Do Not Have Manufacturing Insurance?
A manufacturing business is a complicated operation with many moving parts. If there is a problem with any aspect of the operation, it can cause a chain reaction that could bring your entire business to a halt.
With manufacturing insurance, you will have cover for every part of your business. So, if anything goes wrong with any aspect of your business, you can quickly get the means and the support to fix any issues before they get any worse. This means your business can continue to operate with minimal disruption.
On the other hand, if you do not have manufacturing insurance, even a small issue could cause a domino effect that could ultimately bring down your whole business.
Example: What Happens If I Do Not Have Product Liability Insurance?
Product liability insurance is a particularly important form of cover for manufacturing businesses.
If any of your products are ever found to be faulty or hazardous, you may need to issue a product recall. This alone will carry significant costs. But beyond the costs of the product recall, you may also face legal action and compensation payments should any customers or stockists make a claim against you.
Without manufacturing insurance, you would be liable for covering all of these costs yourself. Product recalls are themselves highly costly. Add to this the potential costs of legal fees and compensation, and it is easy to see how even a minor issue with a single product could potentially sink your business.
For an example of how much a product recall can cost a manufacturing business, take a look at the 10 biggest product recalls of all time. Most of the companies involved are major multinationals. But also consider the small, privately held food manufacturing company that faced costs of around $1bn due to a salmonella outbreak.
Get The Manufacturing Insurance You Need, Today
No matter how long it takes you to get a policy, you should never start manufacturing any products or materials until you have all the cover you need. Read our guide to how long it can take to get manufacturing insurance.
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance brokers. We are committed to protecting your manufacturing business. We can tailor niche insurance packages for manufacturing businesses to ensure you are covered for all risks.
Find out how we can help you get a bespoke and cost-effective manufacturing insurance policy today.