Insurance requirements for your manufacturing business
The term “manufacturing business” can mean different things to different people.
It might conjure up images of a vast site producing enormous quantities of goods and/or materials but in practice, significant numbers of manufacturers are relatively small-scale operations. In some instances, it might even be a sole-trader manufacturing specialist antique machine parts from a unit in their own garden.
Whatever the size of your business though, it might benefit from manufacturers’ insurance.
Some risks might be self-evident, such as damage to your premises through natural events such as storms, floods, subsidence and fire etc.
In other cases, the risks might be less obvious, possibly including things such as:
- product liability. If you’re selling something you’ve manufactured then potentially you may be held accountable under law should it subsequently be proven to have been faulty and have led to problems as a result;
- Your ongoing existence is put at risk by a customer who has failed to pay your bills when due;
- professional liability. This might be an issue if you’re offering advice and guidance as part of your manufacturing business and such advice is subsequently shown to have been incorrect leading to material losses for the customer concerned;
- cyber liability. If you accidentally infect or unintentionally provide an unauthorised gateway into another company’s IT systems, you may be sued for compensation. Cyber-attacks are a growing risk, as this BBC report published 23rd January 2017 indicates;
- employers’ liability. This might, in most situations, typically be a legal requirement.
- errors and omissions. The reality of life is that some of your customers and perhaps even suppliers, might not simply be prepared to forgive and forget errors or omissions on your part that have caused them negative consequences;
- loss in transit. That might happen when your finished products outbound or raw materials inbound, are lost or damaged in transit.
This is by no means a comprehensive list of the risks faced by a manufacturing business. The list might illustrate though why it could be important to have appropriate manufacturing business insurance in place.
Customise your cover
Of course, not all of the above risks apply equally to all manufacturing businesses.
For example, if your business is operating as a sole trader, you typically won’t need employers’ liability insurance. If you only ship your finished product based on payment in advance, then credit risk insurance perhaps won’t be necessary either.
That’s why it’s important to think carefully about the exact operational nature of your business and the risks it faces. From that, you’ll be able to consider what sort of cover you need and what sort you find to be either inapplicable or not really necessary in your situation.
That sort of analysis isn’t always easy and it will need to be matched against an understanding of what policies are available and how they can be adjusted to accurately reflect your requirements.
Should that be the case, it might be advisable to discuss your situation with an experienced provider of manufacturers’ insurance. They should be able to outline the cover that’s available and your options for finding suitable cover at a cost-effective price.