Manufacturers Insurance

Manufacturing Insurance Ontario

It's something of an understatement to say that manufacturing businesses are not all the same—there are so many products that can be manufactured, from food and beverages to electronic components, furniture and beyond, and there are so many different ways to go about the manufacturing process. 

The manufacturing industry is known for its complexity, requiring comprehensive business insurance and risk management strategies to properly protect manufactures from the risks they face. Morison Insurance brokers have the expertise to work with you to recognize the risk, and put together a cost-effective plan for manufacturing insurance in Ontario to protect your manufacturing operation from the effects of unexpected expenses such as liability costs or property damage restoration.

What is Manufacturing Insurance?

Manufacturing insurance is a type of business insurance that is both designed to address the needs of manufacturers in general, and tailored to address the needs of your one-of-a-kind manufacturing business in particular. Manufacturers are exposed to a broad range of risks, starting with the possibility of damage to their commercial property, stock and inventory. A robust package of the right property insurance coverages is of critical importance when it comes to manufacturing insurance, as commercial property insurance gives manufacturers the necessary financial support to deal with costs such as building restoration, equipment repair and stock replacement following a disaster like a fire.

Responsibility for the product does not stop after the product has safely left the premises. A manufacturer is ultimately responsible for liability arising from the use of their product. The need for broad liability coverage is required not only for injury and resulting damage from its intended use, but in the design of the product. Liability insurance comes in a variety of types and there are some more specialized coverages such as product liability insurance that are especially important additions to manufacturing insurance packages. 

Who Needs Manufacturing Insurance in Ontario?

Any business that manufactures or fabricates products, whether they're components or a finished item that is ready to go to the end user, needs the financial protection of the right manufacturing insurance in Ontario. That encompasses a very wide range of potential products, materials or parts, including food, clothing, electronics, building materials, chemicals, cosmetics and beyond. Some of the types of businesses that need manufacturing insurance are:

• Food and beverage producers
• Metal and plastic fabricators
• Chemical fabricators
• Machine shops
• Wood shops
• Electronics factories
• Clothing manufacturers
• Toy manufacturers
• Cosmetics producers
• And many more

Keep in mind that manufacturing insurance isn't just for massive fabrication plants or assembly-line manufacturers with huge operations. Craft manufacturers who focus on producing small batches of artisan goods or even individual items need manufacturing insurance in Ontario as well.

What Does Manufacturing Insurance Cover?

Your business is unique, and your insurance coverage should be too. There's no one-size-fits-all option when it comes to manufacturing insurance in Ontario. There are some types of coverage, such as commercial property insurance and commercial general liability insurance that are necessary for most businesses, including manufacturers, but there are also optional coverages that may or may not be a good fit for your particular company based on factors such as how you operate your business. 

Commercial Property Insurance

As a manufacturer, you don't have the luxury of just taking your laptop to a coffee shop or working from home when you feel like it. You need access to your commercial property and equipment that is set up to accommodate your specific workflow and manufacturing process—and without it, production quickly grinds to a halt. That's why it's so concerning to think about what would happen if your commercial property was damaged or destroyed entirely by fire, natural disasters, theft, vandalism and other potential perils. The cost of dealing with that type of damage and getting your commercial property in a usable condition again is typically a lot more than most business owners can afford to pay out of pocket, which is why it's so critical to have commercial property coverage as part of your manufacturing insurance in Ontario.

There are actually several types of coverages that fall under the category of commercial property insurance. Basic property insurance typically provides coverage for the building itself and the contents within, but depending on the type of equipment you use, the volume of materials you keep on-site and other considerations, you will likely need endorsements such as tools and equipment coverage to round out your coverage and ensure you can get the compensation necessary to take care of all restoration, repair and replacement costs in the event of property damage or destruction.

Commercial General Liability Insurance

Commercial general liability is a key addition to most types of business insurance policies, and that absolutely includes manufacturing insurance. It provides coverage for legal fees, attorney fees, settlement costs and other expenses related to litigation if you are sued because you or your employee allegedly caused third-party bodily injury or third-party property damage that is not related to your product—liability issues for harm caused by your products are covered by product liability insurance. The classic example of a commercial general liability claim is that someone such as a supplier or client comes into your office and slips on a freshly-mopped floor or icy walkway, injuring themselves. They could then choose to sue you for causing bodily injury, and you would receive insurance compensation from your manufacturing insurance provider to handle the costs of that litigation, up to the coverage limits on your policy.

Professional Liability Insurance

Professional liability insurance is also referred to as errors and omissions insurance, and it provides coverage for litigation costs that arise if you are sued for causing third-party financial losses due to alleged negligence, misconduct, bad advice, breach of contract or failure to deliver products or services under deadline. Manufacturers errors and omissions liability coverage is now available either as a separate policy or an added extension. We have partnered with several insurance companies that offer multi-coverage package policies with unique enhancements specifically for the manufacturing industry.

Product Liability Coverage

Once your product is out of your hands and has been passed along to either the next party in the supply chain or the end user, it can still cause liability issues for you and that's what product liability coverage is for. This is a more specialized version of commercial general liability that applies to injury, harm or damage caused by your product. It provides you with the funds to handle litigation costs if you are sued for product issues such as releasing a defective product, defects in the design, manufacturing or marketing processes, contamination, errors in labelling and more.

Product Recall Insurance

As careful as you may be and as hard as you work to make sure your products are perfect, there's always the possibility of an error or oversight that could lead to your product being recalled, whether the recall is voluntary or not. While product liability insurance gives you coverage for litigation expenses related to those errors and oversights, you need product recall insurance to help you handle the expenses associated with the recall itself. That includes the cost of retrieving the products and rehabilitating them if possible, the lost revenue from the recall and other expenses such as reputation management and government or regulatory fines. 

Additional Types of Manufacturing Insurance Coverage

• Environmental/Pollution Liability Insurance
• Cyber Insurance
• Umbrella Liability Insurance
• Equipment Breakdown Insurance
• Business Interruption Insurance
• Commercial Auto Insurance
• Inland Marine Insurance
• Legal Expenses Coverage

Is It Mandatory to Have Manufacturing Insurance in Ontario?

When it comes to manufacturing insurance, Ontario business owners are not required by the government to have it and that's the case with most types of business insurance. Commercial auto insurance is an example of an exception to that rule, because commercial vehicles do need to be insured to be driven legally in Canada. But while it may not be required by the government, you likely will need to provide proof of manufacturing insurance to parties such as your commercial landlord, suppliers, receivers and other parties, so in that sense, it is mandatory for the continued success of your manufacturing business.

Why Is It Necessary to Have More Than Basic Commercial Property Insurance?

It's not uncommon for manufacturing business owners to ask our brokers this question. The truth is, basic commercial property insurance is simply not going to be adequate to cover a manufacturing business of any size or description. It doesn't offer any liability insurance coverage, for one, but even if you are talking specifically about property insurance, the basics aren't going to give you all the insurance protection you need against major financial setbacks. Here are a couple of examples of situations in which you need property insurance that goes beyond a basic commercial property policy:

• A production machine breaks down from an insured peril and cannot be repaired. A new machine will take six months to be assembled and purchased from overseas. Your business is interrupted, you've lost a major customer and income for their large orders. Basic contents and equipment coverage will not cover this loss. Adequate equipment breakdown insurance with production equipment coverage, as well as business interruption coverage, is needed.
• You or a government agency may order that your product be recalled due to a suspected defect or deficiency that could possibly cause injury. The costs of notification by media, extra expense for temporary staff, inspection and shipping, storage and the return of the product alone may be exorbitant. We have insurance packages available to include limited coverage for such expenses.

There is so much more at risk! Get the best manufacturing insurance coverage for your unique business needs by speaking to the business insurance experts at Morison Insurance.

How Much Liability Coverage is Needed for Manufacturing Insurance?

The recommended baseline for liability coverage is generally $2 million, and some business owners find that surprising. But the fact is that when you are sued, and especially if you are found liable for damages by the court, the costs of that litigation can easily surpass $1 million and continue to go up from there. That's why the experienced brokers at Morison Insurance recommend at least $2 million so there's less chance that you'll have to pay a large deductible out of your own pocket. That being said, you may need more than $2 million in liability coverage depending on your business operation and level of risk exposure. Our brokers will take the time to consult with you and learn everything they can about how you run your business so they can find the right types of coverages in the right amounts for your unique manufacturing insurance needs.

Where Can I Find Out More About Manufacturing Insurance in Ontario?

If you're ready to get started on quotes for manufacturing insurance in Ontario, the best course of action is to pick up the phone and call a reliable commercial insurance broker at Morison Insurance. Contact Morison Insurance at 1-800-463-8074 and speak with a manufacturing insurance specialist today.