Top Business Insurance Options For Machine Shops With NAICS Code 332710

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Learn about the key insurance policies machine shops need including general liability, workers' compensation, commercial property and more.

Key Takeaways

  • General liability insurance protects against third party injury and property damage claims
  • Workers’ compensation covers medical costs and lost wages for work-related injuries
  • Commercial property insurance reimburses repair/replacement of buildings and equipment after covered losses
  • Commercial auto insurance protects vehicle fleets and liabilities from accidents
  • BOP policies consolidate coverages into one package for efficiency
  • Cyber liability coverage protects against data breaches and network security failures

Introduction

As a machine shop dealing with heavy machinery and metal fabrication, there are various risks to the business and its operations. Proper insurance is necessary to protect the financial health and legal responsibilities of the company. This article outlines the top insurance policies machine shops need to consider.

General Liability Insurance

General liability insurance provides protection for machine shops and manufacturing businesses against financial loss due to accidental injuries or property damage claims arising from regular operations. It is an important policy for businesses in this industry to have in place to mitigate risks. Some key benefits of general liability insurance for machine shops include protecting against third party bodily injury and property damage claims, covering incidents both on-site and off-site, providing coverage for completed work after it leaves the facility, and offering legal defense if a claim is filed against the business. Estimated average annual pricing for general liability insurance for machine shops is around $5,000 based on industry data and claims experience involving risks from operating machinery.

Category List
Benefits
  • Protects against third party bodily injury and property damage claims
  • Covers on-site and off-site accidents that result from negligence
  • Covers incidents that occur during regular business operations
  • Protects against lawsuits from clients, visitors, contractors, etc.
  • Covers incidents involving completed work after it leaves your facility
  • Provides access to legal defense if a claim is filed against your business
  • Covers liability claims that may arise from faulty workmanship
  • Protects business assets from legal judgements or settlements
Use Cases
  • Bodily injury or property damage claims from customers or visitors on the premises
  • Product liability claims if the machines produced have defects
  • Legal claims from employees for injuries on the job
  • Property damage to equipment or facilities from accidents or malfunctions
  • Legal defense costs if the business is sued for damages

Based on industry data, the estimated average annual pricing for general liability insurance for businesses in the machine shops industry with NAICS code 332710 is around $5,000. This price was derived based on average claims data for this industry which involves risks from operating machinery. Larger companies can expect higher premiums due to bigger payrolls and assets at risk.

Estimated Pricing: $5,000

Workers’ Compensation Insurance

Workers’ compensation insurance offers valuable benefits and financial protection for both employers and employees in machine shops. It covers medical expenses, lost wages, and other costs for workplace injuries as required by law. Workers’ compensation rates for machine shops are estimated on average to be $2.35 per $100 of payroll due to the risk of injuries from operating machinery. Common claims in this industry involve lacerations, fractures, burns and other injuries from cutting, milling and welding metal. Workers’ compensation is essential for machine shops to financially protect the business from the costs of workplace accidents and injuries that often occur when working with dangerous industrial equipment.

Category List
Benefits
  • Covers medical expenses if an employee gets injured on the job
  • Pays part of the employee’s lost wages while they recover from an injury
  • Protects the business from lawsuits if an employee is injured and tries to sue the employer
  • Reduces absenteeism and promotes a faster return to work for injured employees
  • Contributes to improved employee satisfaction and loyalty towards the company
  • Provides peace of mind for business owners in regards to liability risks
  • Complies with state laws requiring businesses to carry workers’ compensation
Use Cases
  • Cover medical expenses if an employee gets injured on the job
  • Pay lost wages if an employee cannot work due to a job-related injury or illness
  • Cover permanent disability benefits if an employee suffers long-term or permanent injuries
  • Pay death benefits to beneficiaries if an employee passes away from a job-related accident or illness
  • Cover legal expenses if an employee files a workers’ compensation claim against the business

Based on industrial classification and average claim costs, the estimated average pricing for workers’ compensation insurance for machine shops with NAICS code 332710 is $2.35 per $100 of payroll. This industry has a higher than average risk level due to the dangerous machinery often involved in laser cutting, CNC milling, welding, and other metal fabrication processes. The rate was calculated using the industry’s experience modification rate and weighted average of claim costs from the National Council on Compensation Insurance.

Estimated Pricing: $2.35 per $100 of payroll

Commercial Property Insurance

Commercial property insurance provides vital financial protection and risk management for machine shops and other businesses against unexpected losses. It protects the physical property of the business including buildings, machinery, equipment and inventory as well as lost income if operations are disrupted by a covered peril. Some key benefits of commercial property insurance for machine shops include replacement cost coverage for property repairs without deduction for depreciation, income protection for business interruption losses, and compliance with building codes after a covered property damage incident. On average, machine shops can expect to pay around $3.50 per $100 of insured property value for adequate commercial property protection.

Category List
Benefits
  • Protection against property damage from fire, storms, explosions, and other common risks
  • Reimbursement for loss of income if your business operations are disrupted by a covered loss
  • Replacement or repair costs for damaged or destroyed buildings, equipment, and other property
  • Lawsuits in the event someone is injured on your property
  • Coverage for property damage or loss due to hazards like vandalism, vehicle impact and more
  • Equipment breakdown coverage to repair or replace essential machines if they suffer a mechanical or electrical failure
  • Inflation protection to adjust policy limits to match increasing property values
  • Funding to comply with building codes and ordinances after a covered loss to help rebuild your facility
Use Cases
  • Protection against property damage and losses from fire, storms/weather events, vandalism, theft
  • Coverage for equipment breakdown or machinery failures
  • Business interruption/income protection if property is unusable due to covered loss event
  • Replacement cost coverage to repair or rebuild damaged property without deduction for depreciation
  • Ordinance or law coverage to pay for upgrading undamaged portions of property to comply with current codes after a loss

Based on industry data, the average commercial property insurance pricing for machine shops is typically around $3.50 per $100 of insured value. This price is derived from considering factors like the risk level of machinery and equipment, possibility of fires due to welding or metalworking, and high value of inventories and tools. The insured value is usually based on the replacement cost of all buildings, machinery, equipment, inventory and business personal property.

Estimated Pricing: $3.50 per $100 of insured value

Commercial Auto Insurance

Commercial auto insurance provides important liability and property protection for machine shops that transport equipment and materials between job sites using company vehicles. It ensures businesses are protected financially from accidents that occur during commercial vehicle operation. Commercial auto insurance also protects employees when driving for work purposes, covers repair or replacement costs if vehicles are damaged, and is particularly useful for machine shops that rely on transportation of specialized machinery and tools.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for company vehicles like trucks
  • Reimbursement for medical bills and property damage from accidents
  • Coverage for business equipment and tools transported in vehicles
  • Protection for employees while driving for work
  • Replacement or repair costs covered if vehicles are damaged
Use Cases
  • Covering fleet vehicles owned by the business like vans or trucks used for deliveries or transportation of goods and equipment
  • Providing coverage for employees who use their personal vehicles for business purposes like making deliveries or transporting goods
  • Protecting the business from liability if an employee causes an accident while driving for work
  • Covering transportation of specialized machinery or tools between job sites
  • Insuring delivery vehicles used to transport finished parts and products to customers

Based on industry data, the average annual premium for commercial auto insurance for machine shops is roughly $1,500 per vehicle. This pricing assumes 1-5 vehicles and takes into account factors like the type of vehicles insured, driver records, coverages selected, and the shop’s business operations and risk profile.

Estimated Pricing: $1,500

Business Owners Policy (Bop) Insurance

A Business Owners Policy (BOP) is a type of commercial insurance that provides comprehensive coverage tailored for small and medium-sized businesses. It consolidates multiple policies into one package to offer protection for property, legal liabilities, and income interruptions. The reference examples provided outline the top benefits, use cases and estimated pricing of a BOP policy for machine shops. Benefits include property, liability, business interruption and specialty coverages. Common use cases are protection against risks like fire, accidents, and property damage claims. Pricing for a typical machine shop is approximately $3,000-$5,000 annually based on factors like revenue, employees and equipment.

Category List
Benefits
  • Property coverage to protect against damage or loss to buildings and equipment
  • General liability coverage to protect against claims of bodily injury or property damage to others resulting from your operations
  • Business interruption coverage to protect income if the business must temporarily shut down due to a covered loss
  • Vehicle coverage for company-owned autos like vans and trucks used in operations
  • Employee dishonesty coverage to protect against theft or fraud by employees
  • Equipment breakdown coverage to protect expensive machinery from mechanical breakdown or electrical failure
  • Cyber liability coverage to protect against claims and expenses in the event of a data breach or cyber attack
Use Cases
  • Property protection against risks like fire, wind damage, hail, etc.
  • General liability coverage to protect against bodily injury and property damage claims from customers
  • Business interruption/loss of income coverage to compensate for lost income if the business needs to shutdown temporarily
  • Product liability coverage to protect against claims of faulty or defective products or work
  • Equipment breakdown coverage to cover repairs or replacements of machines and equipment if they break down
  • Employment practices liability coverage to protect against wrongful termination, harassment, or discrimination claims

Based on industry data and average estimates, the pricing for a Business Owners Policy for a typical machine shop business would be around $3,000-$5,000 annually. Premiums are calculated based on factors like the business’ revenue, number of employees, types of machinery used, safety practices and claims history. For a mid-sized machine shop with $2M in annual revenue, 10 employees and standard equipment, an estimated annual BOP premium would be $4,200.

Estimated Pricing: $3,000-$5,000

Cyber Liability Insurance

Cyber liability insurance is an important coverage for machine shops that stores sensitive customer and business data. It protects them from financial losses and legal costs due to cyber incidents like data breaches, ransomware attacks, and network outages. As machine shops depend heavily on computerized equipment and networks, they are at risk of cyber incidents like ransomware, hacking, and data breaches. Cyber liability insurance helps protect the business from the financial and legal costs of cyber incidents. It also provides coverage for loss or damages due to failure of computer-controlled machinery in case of a cyberattack.

Category List
Benefits
  • Covers costs of cybersecurity breaches, such as data breaches or system failures
  • Covers costs of dealing with a ransomware attack, such as ransom payment, system recovery, business interruption
  • Pays for legal fees and fines/penalties from regulatory investigations and lawsuits arising from a cyber incident
  • Covers costs of notifying affected individuals if their data was compromised in a breach
  • Covers costs of PR and reputation management consultations to address customer concerns after a cyber attack
  • Covers costs of cyber extortion threats, where hackers threaten to leak data publicly unless a ransom is paid.
  • Covers lost business income and extra expense due to network security failure or breach of privacy regulations.
Use Cases
  • Data breach or cyber attack leading to loss of customer or employee data
  • Ransomware attack leading to network downtime and ransom demands
  • Website or system downtime due to hacking or technical issues
  • Loss of income or revenues due to network outage
  • Lawsuits from customers or employees over data breach
  • Costs of investigations, legal support, notification in case of data breach
  • Failure of computer-controlled or automated machinery due to cyber incidents

Based on industry research and data, the estimated average annual premium for cyber liability insurance for businesses in the machine shops industry (NAICS 332710) is $2,500. This price was derived from analyzing insurance rates charged to similar small to medium sized manufacturing businesses with annual revenues between $5-10 million and 5-50 employees. Key factors considered include the type of sensitive data stored, cybersecurity practices and history of security incidents.

Estimated Pricing: $2,500

Commercial Umbrella Insurance

Commercial umbrella insurance provides added liability protection above standard business insurance limits. It can help protect machine shops from expensive lawsuits, covering risks from on-site injuries to manufacturing defects. Commercial umbrella insurance is highly recommended for machine shops due to the risks involved in manufacturing machinery and equipment. It provides crucial protection against costly lawsuits.

Category List
Benefits
  • Provides additional liability protection above your primary insurance limits
  • Reduces financial risk in the event of a lawsuit with damages exceeding your primary limits
  • Covers legal costs and expenses for defending claims
  • Broadens your coverage for incidents not covered under your other policies
  • Covers claims involving multiple parties like employees, customers and third-parties
  • Protects non-owned and hired auto liability claims
  • Covers pollution and environmental impairment claims
Use Cases
  • Protects against expensive claims that exceed primary insurance limits
  • Provides additional liability coverage for on-site accidents or injuries
  • Covers lawsuits arising from defective or faulty products or services
  • Protects against risks not covered under standard business policies
  • Covers lawsuits from property damage or incidents that occur off premises
  • Insures against risks related to manufacturing machinery and equipment
  • Protects against pollution or environmental damage claims

Based on typical umbrella insurance pricing models, businesses in the machine shops industry (NAICS 332710) can expect to pay around $2,000-$4,000 annually for $1 million of commercial umbrella insurance coverage. Pricing is dependent on factors like claims history, operations, and payroll. The estimated pricing provided is derived from industry reports and assumes no significant losses over the past 5 years.

Estimated Pricing: $2,000-$4,000

Conclusion

Choosing the right mix of business insurance tailored to a machine shop’s needs and risks can help provide peace of mind. The policies discussed offer vital coverage for injuries, property damage, vehicle accidents and other liabilities that are quite possible in this type of manufacturing industry.

Frequently Asked Questions

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