Commercial property insurance is a crucial safeguard for manufacturers, shielding them from financial setbacks caused by equipment repairs, work disruptions, and damage to physical assets. This coverage extends to vital components such as equipment and buildings, providing a safety net against accidents, mechanical failures, vandalism, and covered perils like fires. While the future remains unpredictable, a well-suited insurance policy empowers your manufacturing clients to prepare for unforeseen events.
Manufacturing Industry Risks
Owning and operating any type of business comes with risks. However, those in the manufacturing business face unique challenges requiring advanced preparation to mitigate potential fallout. No matter the size of the company, every manufacturer must consider:
- Property loss or damage: Damaged or lost equipment heavily impacts your client’s bottom line.
- Workplace safety: The labor-intensive manufacturing industry has safety hazards that could cause injury through contact with hazardous materials or operating heavy machinery.
- Employment issues: All businesses that hire employees must consider the risks of wrongful termination, discrimination claims, sexual harassment, and more.
- Legal and regulatory compliance: Manufacturers must stay alert for defective products that could cause consumer harm by following quality control procedures. Businesses in this industry must also abide by all state and federal laws to avoid fines or other consequences.
- Supply chain disruptions: Delays in shipping and raw material deliveries can disrupt business operations.
- Cybersecurity: Technological advancements make cybersecurity a critical issue to protect sensitive data.
The nature of the manufacturing industry involves machinery and equipment as part of everyday operations. If these vital assets get damaged or break down due to equipment or electrical failure, your clients face steep repair costs to get everything back up and running and miss out on revenue during production downtime. Depending on the type of business, equipment failure can come with accompanying financial losses like the cost of spoiled food.
Damage to essential equipment isn’t the only risk manufacturers face. Other types of possible damages include everything from a commercial auto accident to property damage to the costs associated with bodily injuries if someone has an accident and files a lawsuit. Theft, vandalism, and natural disasters, including storm damage, flooding, and fires, also pose a hazard to normal business operations.
A good insurance policy should be tailored to each client’s industry and needs. It’s important to review all covered perils and exclusions in your client’s policy to ensure they receive the best protection.
Property Insurance for Manufacturing Facilities
Insuring machinery, equipment, and real estate is critical for all manufacturing facilities. Damage and breakdown can bring operations to a halt, resulting in significant financial and productivity losses for your client.
Property insurance includes various policies that cover physical assets or liability. Possible coverages include:
Commercial property insurance
This is the most basic type of property insurance and covers your manufacturing facility’s physical structures, including your buildings, machinery, equipment, and inventory. It also covers your business’s personal property, such as furniture, computers, and tools.
Equipment Breakdown Insurance
This insurance covers your manufacturing facility’s machinery and equipment from damage caused by mechanical or electrical failures. It can also cover the cost of repairing or replacing damaged equipment.
Business Interruption Insurance
This insurance reimburses your manufacturing facility for lost income if it is forced to shut down due to a covered loss, such as a fire or natural disaster. It can also cover the cost of continuing operating expenses, such as payroll and rent, while your facility is being repaired or replaced.
Other Types of Manufacturing Insurance
Property and casualty insurance isn’t the only type of policy that can benefit your manufacturing clients. Cochrane & Company offers a full range of insurance products and services:
- Casualty
- Excess or umbrella coverage
- Food-borne illness
- International coverage
- Products recall
- Pollution and environmental
Discuss your client’s needs to discover what types of coverage will benefit their business so you can make helpful recommendations. Together, you can address evolving needs and ensure they have the most up-to-date policy available to mitigate their financial risks. Keeping the impact of threats as low as possible ensures your client’s business can thrive.
What’s Covered and What’s Not?
The right insurance policy protects the business’s structure and contents. Each policy varies regarding covered perils, which typically include extreme weather events like wind, hail, ice and snow damage, lightning, fire, and smoke damage.
All policies come with exclusions that aren’t covered. Common exclusions are floods, tsunamis, earthquakes, standing water, seeping groundwater, mold damage, and drain and sewer backups. Terrorism, acts of war, and other extreme events are also typically excluded. If the client lives in an area prone to floods or another excluded peril, they may require additional add-ons or a separate policy to get the required protection.
Factors such as the client’s industry, risk assessment, location, and environment all contribute to the most common types of risks they face and the coverage they need. Help your clients mitigate risk with personalized policies crafted by an experienced underwriting team. A tailored policy offers the most value, as your clients pay for what they need without wasting money on unnecessary coverages.
Insurance Policy Types
Aside from coverages, clients must understand the type of insurance policy they purchase. Property insurance types include:
- Actual cash value pays out the replacement cost of the item’s current worth. It accounts for depreciation, so an older item typically gets assigned less value than a new one.
- Replacement costs cover repairing or replacing property at equal value to the damaged asset.
- Extended replacement cost pays up to an additional 25% of the maximum benefit to cover increased construction costs.
It’s essential to explain to your client the differences between the types of insurance payouts and help them choose the right coverage for their needs and budget.
Talk to Experts to Provide Customizable Property Insurance
As an insurance broker, you must work with an experienced insurance carrier like Cochrane & Company to provide your clients with the value and quality they need to keep their businesses safe. We can help you identify your client’s areas of risk to build a property insurance policy that meets their needs.
Remember that every business constantly evolves and changes, so your client’s insurance needs will likely change, too. A thorough understanding of how to evaluate and track relevant risks allows you to provide expert advice. Talk to your manufacturing clients about the importance of carrying property insurance and the peace of mind the right policy can provide, and contact us to find out more about how property insurance can benefit your clients.
About Cochrane & Company
For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.
