Manufacturing Industry Insurance
As you might expect, insurance for manufacturers can differ hugely from commercial insurance and business insurance, and can be found to be extremely specialist.
There is every chance your manufacturing process will be unique, and careful consideration should be given to the risks associated with your business, such as running a production line, the efficacy of your products, what happens after they leave your factory, or the risk of theft both from your premises and while in transit.
In fact, with so many things to consider in addition to the health and safety exposure associated with the manufacturing industry, making sure you receive expert advice would appear to be more important than ever – especially in the increasingly-litigious society in which we all now seemingly live.
The covers available include:
- Property Insurance – buildings and contents of factories can be insured against all perils including fire, lightning, explosion of gas and boilers used for domestic purposes, and also “special perils” such as explosion, riot, malicious damage, storm, flood, impact by aircraft, road and rail vehicles, escape of water from tanks or pipes and sprinkler leakage. “All risks” insurance gives wider cover including any accidental damage or loss not specifically excluded, however it will not cover wear and tear, electrical or mechanical breakdown and gradual deterioration, which will be specifically stated in the policy document.
- Business Interruption for Factories – damage to your factory property or machinery, or loss of stock that are either part of raw materials or output from production, could seriously disrupt your business, leading to loss of income and extra expenses. You must also consider how similar loss or damage at the premises of your suppliers or customers may impact your own business and consider taking out cover for such eventualities. Business interruption insurance will compensate for the shortfall in gross profit, together with paying any increased working costs and extra accountants fees incurred. When arranging this insurance, you’ll need to estimate the maximum time needed to get your business working normally following the most serious damage. The factory underwriters or insurers will ask for an estimate of your anticipated gross profit.
- Engineering Cover for Factories – this insurance provides cover against electrical or mechanical breakdown for most machinery, including computers found in your factory. By law, many items, such as boilers, lifts and lifting machinery, must be inspected regularly by a qualified person. Our insurers can arrange to provide this service.
- Theft from factory premises – contents are usually covered against theft, providing there has been forcible and violent entry to or exit from the premises. Damage to the factory building, resulting from theft or attempted theft, will also normally be covered. Theft by employees is usually not covered – cover against employee dishonesty can be arranged by what is known as a fidelity guarantee policy.
- Money on Factory Premises – money insurance is on an “all risks” basis and covers cash, cheques, postage stamps and certain other negotiable documents. Different limits will apply to money on the premises in and out of business hours, in safes, at the homes of directors or employees, and in transit. There may be requirements in the policy relating to safe keys and the method of transit. Personal assault cover may be included, which will provide compensation for you or your employees following injury during theft or attempted theft of money. Fidelity Insurance covers your business for fraud or dishonesty by employees; it can be taken out for specific employees handling cash or for the whole staff.
- Public Liability – this provides your factory with cover and protection against claims for which you would be legally liable and brought to you by anyone (other than your employees) or bodily injury or loss or damage to public property, arising in the course of your business.
- Product Liability – this protects you against legal liability you may incur as a result of a product that you manufacture or supply is found to be faulty or defective and causes loss or injury to a person or a business. For example, manufacture of an article is not finished properly, leaving sharp edge which causes injury to a purchaser.
- Employers Liability – this is legally required if you have employees in your factory (including directors in a limited company).The insurance is to protect employers against claims for bodily harm or death brought to employees in the course of employment (this also includes injury by other employees, for whom the employer is liable). A certificate of employers has to be displayed in a place on the factory shop floor for all employees to see.
- Goods in Transit – this insurance covers goods against loss or damage while in your vehicle or when sent by carrier. The sum insured may be a limit for each vehicle or any one consignment.
- Credit Insurance – this protects you against customers who fail to pay their invoices for the products your factory supplies. Because the risk of bad debt can be high, you would probably find it hard to get cover for this unless your business has been successfully up and running for some time.
- Legal Expenses Insurance – this helps to cover the majority of your costs in the event of a legal dispute. It usually covers legal costs for employment tribunals, prosecutions under acts such as Health and Safety at Work (etc) 1974, contract disputes and costs caused by in-depth Internal Revenue or Custom and Excise investigation. Some legal expenses policies also provide free legal advice as well as cover for employees’ time lost during jury service or as a witness in a case.
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