Six manufacturing exposures not covered by general liability insurance
Manufacturers operate across a range of industries and while their risks might vary because of this, they are still susceptible to common exposures.
Product recalls, delays, business interruption and supply chain issues are all very real and regular occurrences to a manufacturer.
General liability (GL) policies will typically cover the insured for claims involving bodily injury and property damage resulting from your products, services, or operations. But this leaves a few obvious holes in the manufacturer’s cover. Here are six critical exposures not covered by GL:
- Financial loss caused by delays
Manufacturers can suffer financial loss if delays occur, especially if these delays have a knock-on effect to their retailer. Errors and omissions (E&O) cover explicitly addresses this gap, covering financial loss directly caused by any product that is manufactured or distributed. E&O cover can also protect against product faults.
- IP protection for products and processes
Manufacturers use advanced materials, 3D printing, augmented reality, and it’s these types of products and processes that need protecting with intellectual property (IP) insurance. IP cover will provide protection for the patents, trademarks and copyrights that make a manufacturer competitive and successful.
- Management liability cover for the directors
Each manufacturer is a business with directors and officers making decisions and taking action within the scope of their duties. Any allegation of potential wrong doing will need to be investigated or defended. A management liability policy can offer more than this through employment practices liability giving the management and company protection for employment related issues from employees.
- Cyber extortion or system failure
Manufacturing is heading towards a digital future. Unfortunately, this does expose those businesses to a new range of cyber risks. A comprehensive policy helps protect manufacturers against the financial loss resulting from cyberattacks, data breach, system failures and much more.
- Product recalls are tough, but that’s just the tip of the iceberg
Recalls can impact cash flow, squeezing a manufacturer’s ability to purchase raw materials, or even continue production. In some cases, they can cause reputational damage and have a lasting financial impact. A recall policy can provide support to investigate a product recall event, rectify the situation, cover errors by contract manufacturers and product tampering, as well as replace the loss of sales to keep the business afloat, focusing on essential first party indemnity when the worst happens.
- Health products bring their own unique risks
The manufacture and sale of medical devices and nutraceuticals is a huge responsibility that comes with a complex set of risks such as injury to a user, or perhaps the potential for patent litigation. A good life science policy provides clear coverage for the wide range of exposures these specialist manufacturers face, all in one comprehensive policy.
A manufacturer’s risk environment is constantly evolving, creating previously unforeseen exposures. It’s imperative they have insurance in place to cover these risks.