Manufacturing Insurance: Your Top Questions Answered

4/4/2025

Two men smiling while working on assembling metal parts in a metal manufacturing factory.

Whether you make precision metal components, complex electrical products, or tasty baked goods, your manufacturing business faces unique risks every day. Having the right insurance coverage is essential to safeguarding your operations, employees, and bottom line.

To keep things running smoothly, it’s important to understand your potential exposures and coverage options. In this article, we’ll answer common questions about manufacturing insurance, the risks involved, and the policies that can help protect your business.

What Key Risks Do Manufacturers Face?

Manufacturing businesses operate in a fast-paced, complex environment where even minor disruptions can lead to significant financial losses. From supply chain interruptions to equipment breakdowns, manufacturers must navigate a range of potential threats. Here are some of the most common manufacturing risks:

Supply Chain Disruptions: Manufacturers depend on a steady flow of raw materials and efficient distribution to keep production on track. Delays due to supplier shortages, severe weather events, transportation issues, or global disruptions like a pandemic can lead to downtime and lost revenue. Business interruption and other coverages may help mitigate financial losses, depending on the circumstances.
Property Loss or Damage: Natural disasters, fire, theft, and vandalism can negatively impact your facilities and operations. Property insurance helps protect your buildings, machinery, inventory, and other physical assets.
Equipment Breakdowns: Manufacturers rely on costly machinery, and when it malfunctions, it can cause major disruptions. Equipment breakdown coverage helps cover repair or replacement costs when equipment fails due to mechanical or electrical issues like motor burnouts or power surges.
Product Defects or Recalls: Manufacturing defects, design flaws, or contamination can lead to costly product recalls, reputational damage, and legal expenses. Product withdrawal expense coverage can help cover recall costs while product liability insurance can help cover legal fees and certain claims related to product failures that result in bodily or property damages.
Regulatory Violations: Manufacturers must comply with industry regulations, such as OSHA and EPA standards. By following these regulations, you can avoid penalties, fines, and shutdowns.
Workplace Injuries: Manufacturing environments often involve heavy machinery and hazardous materials, increasing the risk of employees getting injured on the job. Manufacturing workers’ compensation insurance can help cover medical expenses, lost wages, and other financial benefits, while also supporting employees in returning to work safely.
Cybersecurity Threats: With the rise of robotics, automation, and connected devices, manufacturers face an increasing risk of cyberattacks. Manufacturing cybersecurity insurance can help protect against data breaches, ransomware, and other cyber threats.
Transportation Issues: Whether your products or materials are shipped locally or across the country, there are always risks, including theft, vandalism, and severe weather. Inland marine insurance provides financial protection for covered losses while they’re in transit over land or stored off-site.

What Types of Insurance Do Manufacturers Need?

From machinery and products to employees and customers, manufacturing involves many moving parts. That’s why we work with you to customize a policy that fits the specific needs of your business. Depending on your operations, a well-rounded policy should address key manufacturing risks and may include:

What Is Manufacturing Liability Insurance?

Manufacturing liability insurance helps cover financial losses related to lawsuits and claims arising from bodily injuries or property damage caused by your business operations. General liability claims can range from a customer slipping and falling on your premises to someone at your company unknowingly using copyrighted material in your advertising. General liability insurance may cover legal fees, settlements, and other related expenses.

How Are General Liability Insurance and Product Liability Insurance Different?

General liability insurance covers risks related to your operations, such as property damage or bodily injury caused by your business activities. In contrast, product liability insurance specifically covers claims related to a product you made, sold, or contributed to that caused bodily harm or property damage. For example, if a part you manufactured for an appliance malfunctioned and caused a fire, product liability insurance may help cover the resulting claims, including legal fees, medical costs, and compensatory damages.

Does My Manufacturing Business Need Business Interruption Insurance?

We highly recommend business interruption insurance for manufacturers. Also known as business income coverage, it helps offset lost income and ongoing expenses if a covered event, such as fire, wind, or hail damage forces a temporary closure. This coverage can help keep your business financially stable until you can resume operations.

What Is the Difference Between Commercial Property Insurance and Inland Marine Insurance?

Commercial property insurance protects your business’s physical assets, including buildings, equipment, and inventory, within your facility. On the other hand, inland marine insurance covers goods, equipment, and inventory while they are in transit over land or temporarily stored off-site, such as at a warehouse or distribution center. Both typically cover damage caused by fire, theft, vandalism, and weather events.

How Can Manufacturers Mitigate Risks Associated With Equipment Breakdowns?

Regular maintenance and routine care are essential to minimizing the risk of equipment breakdowns. By conducting scheduled inspections, performing preventive maintenance, and addressing minor issues immediately, manufacturers can extend the life of their machinery and prevent unexpected failures. Additionally, having equipment breakdown coverage can provide added peace of mind.

What Are the Insurance Considerations for Manufacturers Using Automation and Robotics?

While robotic technology can improve workplace safety and efficiency, it also introduces new risks, such as potential malfunctions. It’s important to keep your insurance provider informed about any equipment updates or changes, as they may impact your coverage and premiums. In some cases, upgrades that enhance safety features could even help lower your insurance costs.

What Factors Influence Manufacturing Insurance Cost?

Manufacturing insurance companies consider many factors when determining the cost of your coverage, including:

Claims history
Equipment used
Location(s)
Materials handled
Number of employees
Employee training and safety protocols

The easiest way to determine what your insurance premium will be is to get a quote an agent.

How Can Manufacturers Reduce Their Insurance Cost?

Manufacturers may be able to lower their insurance premiums by implementing safety training, risk control programs, and loss prevention devices. Insurance providers and underwriters are also attracted to businesses with a stable financial history, favorable loss history, well-maintained facilities, and sound regulatory compliance.

How Do I Choose the Right Manufacturing Insurance?

When selecting a manufacturing insurance company, it’s important to consider their industry expertise, financial stability, risk control programs, and ability to customize coverage.

At Westfield, we don’t take a one-size-fits-all approach to manufacturing insurance. Instead, we work with you to understand the specific challenges of your business, allowing us to tailor our coverage to fit your unique needs. Contact an agent today to get started with a customized manufacturing insurance quote.