Key Takeaways
- General liability protects against lawsuits from injuries on your premises or defects in products
- Property insurance covers losses from fires, flooding and other disasters
- Workers’ comp covers medical costs and lost wages if employees get hurt on the job
- Business interruption pays ongoing costs if the business must close temporarily
- Equipment breakdown repairs and replaces machinery if it malfunctions
- Product liability defends against claims of injuries from defective products
- Cyber liability insurance covers risks from data breaches and cyber attacks
Introduction
As a manufacturer of cutting tools and utensils, purchasing the proper insurance protections is essential to safeguard your business from unexpected costs and risks inherent in producing these types of products. This guide examines the top 6 types of business insurance coverage cutlery and handtool producers should have in place. Manufacturers should work with an insurance broker familiar with their industry to ensure they have the appropriate coverage.
General Liability Insurance
General liability insurance provides essential coverage for businesses involved in manufacturing cutlery and handtools. It helps protect the company from risks inherent in producing sharp instruments that could potentially cause injuries.
As a manufacturer of cutting tools, general liability insurance is important to protect against risks of injuries during product use or on business premises. It covers costs of accidents, defects, recalls and lawsuits that could severely impact finances without insurance. The top benefits of coverage include protecting assets, maintaining operations and cash flow when claims arise.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data and risk factors, the estimated average annual pricing for general liability insurance for cutlery and handtool manufacturing businesses (NAICS 3322) is around $5,000. This pricing was derived considering factors like the hazardous nature of the manufacturing process involving sharp tools and metals, potential risks of injuries to workers as well as customers, and history of liability claims in this industry.
Estimated Pricing: $5,000
Property Insurance
Property insurance is a critical risk management tool for businesses in the cutlery and handtool manufacturing industry. NAICS 3322 businesses face risks from equipment damage, inventory losses, and property destruction from disasters. This reference outlines the key benefits, use cases, and estimated pricing of property insurance for cutlery and handtool manufacturers.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on average property insurance rates for manufacturing businesses, typical building and equipment values for the cutlery and handtool manufacturing industry, and accounting for above average risk factors like working with sharp tools and metals, the estimated average annual property insurance premium for a business in NAICS 3322 Cutlery and Handtool Manufacturing would be around $8,000. This factors in a building valued at $2 million and equipment valued at $1 million with a $1 million liability limit.
Estimated Pricing: $8,000
Workers’ Compensation Insurance
“Workers’ compensation insurance provides critical protections for both employees and employers in the cutlery and handtool manufacturing industry. It ensures employees receive medical care and lost wages if injured on the job while protecting businesses from liability. This reference outlines the key benefits, use cases, and estimated pricing for workers’ compensation insurance in this high-risk manufacturing sector. Common injuries in this industry include cuts, repetitive stress injuries, hearing loss, and eye injuries from operating machinery and handling equipment and materials. The average estimated annual premium rate for a business in this sector with a $1 million payroll is $25,000.”
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data, the average workers’ compensation insurance rate for businesses in the cutlery and handtool manufacturing industry (NAICS 3322) is approximately $2.50 per $100 of payroll. This rate is derived from considering factors like industry accident rates, average claims costs, insurance company expenses and profits. At this rate, for a business with a $1,000,000 annual payroll, their estimated annual workers’ compensation insurance premium would be $25,000.
Estimated Pricing: $2.50 per $100 of payroll
Business Interruption Insurance
Business interruption insurance protects manufacturers from financial losses when unexpected events disrupt business operations. It covers costs like lost income and extra expenses required to continue business activities during downtime.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data, the average annual revenue for businesses in NAICS 3322 Cutlery and Handtool Manufacturing is about $3 million. Business interruption insurance typically costs between 0.5-1.5% of annual revenue. For a $3 million revenue business, business interruption insurance would cost between $15,000-45,000 per year.
Estimated Pricing: $15,000-$45,000
Equipment Breakdown Insurance
Equipment breakdown is a risk for all businesses relying on machinery, but it poses particular challenges for manufacturing industries like cutlery and handtool production. An unexpected failure in a key piece of equipment can halt operations, resulting in costly repairs and lost income during downtime. Manufacturers in this industry commonly use various industrial machines, furnaces, compressed air systems and other equipment crucial for production. A breakdown of any of these could be very disruptive and expensive to repair without insurance coverage. Equipment breakdown insurance can help protect these businesses from the financial impacts of equipment malfunctions, which are not uncommon in manufacturing environments utilizing complex machinery.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on the equipment and machinery used in cutlery and handtool manufacturing businesses, which includes machines like forging presses, heat treating equipment, metalworking lathes and mills, grinders, buffing and sharpening equipment, the estimated average annual premium for equipment breakdown insurance would be around $3,500. This price was derived using industry data on average equipment values and claims in this industry, along with assumptions of deductibles and coverage limits that are typically offered.
Estimated Pricing: $3,500
Product Liability Insurance
Product liability insurance protects cutlery and handtool manufacturers from costly lawsuits and ensures business continuity if incidents occur. It covers legal fees, medical expenses, property damage claims, and other costs if a product is found defective or causes harm. Without this crucial coverage, even one major lawsuit could bankrupt the company.
Product liability insurance is especially important for manufacturers of cutting tools, knives, and other items that could potentially cause injuries. It provides coverage for product recalls, defects discovered years later, and intellectual property claims. Estimated rates are around $2.50 per $100 of gross receipts with a $1000 minimum.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research on average product liability insurance rates for manufacturing businesses, the estimated average annual pricing for cutlery and handtool manufacturers (NAICS 3322) would be around $2.50 per $100 of gross receipts, with a minimum premium of $1,000. This pricing is determined based on the potential risks involved in manufacturing cutting tools and utensils and historical claim losses in this industry. Larger manufacturers may be able to negotiate slightly lower rates due to economies of scale.
Estimated Pricing: $2.50/$100 of gross receipts, minimum $1,000
Conclusion
Proper insurance coverage gives manufacturers in NAICS 3322 peace of mind knowing they are protected financially should accidents occur, equipment break down or lawsuits arise. The right policies also help maintain business continuity and cash flow. Consult with an experienced insurance broker to determine the appropriate liability limits and protection levels needed for your operations.