Manufacturing insurance can be a minefield. Knowing what to look out for and what should be insured is often tricky.
There are only 2 insurances which are a legal requirement, Employers Liability and Motor Insurance. Any other insurance is often considered on a balance of cost against risk basis.
Arranging Manufacturing Insurance
Under the Fair Presentation rules that came into play in 2015, the person looking at the insurance on behalf of the business should disclose all information to a broker, or insurer, that they know, or ought to know, after reasonable enquiry.
This enquiry should be conducted with all senior managers across the business to ensure they are aware of anything that could be a material fact they need to make insurers aware of. This can be simple things such as:
- changes to processes,
- where you source your raw materials from,
- new products coming into production, or
- Health and Safety or HR issues.
Top 5 insurance terms to consider
If you are considering a new policy, or reviewing your current cover, there are a few you should take note of. Here are our top 5:
- Business Interruption. Is the time period reasonable and the limit sufficient? This area needs to be reviewed now more than ever with the current delays on materials, labour shortages and increased costs. Do you have cover for customers and suppliers should anything happen which Impacts your supply chain or sales? If you had a total loss at your site, how long would it take for new machinery to be sourced? How long for your site to be rebuilt?
- Product Recall. What if your products fail or there is an issue with a batch or item? Could you afford a full-scale product recall?
- Environmental. Do you use any chemicals in your manufacturing or has your property been involved with any processes in the past that may have discharged liquids and chemicals?
- Product Liability. Should a defective product cause an injury or an allergic reaction to the user this needs to be sufficient to cover not only the legal costs but also damages that may need to be paid following an injury.
- Engineering – this can include machinery movement insurance but importantly helps reduce costs by giving a blanket inspection on all of your eligible plant and machinery. It ensures that they are working to their best and any worn parts, that may stop or delay production or even produce products that do not pass your quality checks, are replaced, and checked as soon as possible.
Business and supply chains are constantly changing due to rising costs and the availability of materials; therefore, it is important to ensure you have the right covers in place and you thoroughly go over what you need at your renewal or mid-term should you make changes to your business.
If you would like a free independent review, then please contact one of the team on 0808 161 7008.