Key Takeaways
- General liability insurance protects against injuries and property damage claims.
- Commercial property insurance covers damage to buildings, equipment and loss of income.
- Workers’ compensation protects employees from workplace injuries and the business from lawsuits.
- Commercial auto covers vehicles used for deliveries and business transportation.
- Product liability insures against risks of defective products causing harm.
- Umbrella provides additional liability limits above primary policies.
- Business interruption funds expenses during temporary disruptions.
- Cyber liability covers costs of data breaches and system outages.
- Equipment breakdown repairs and replaces specialized manufacturing machinery.
Introduction
Machine shops, turned product manufacturers, and bolt producers face unique risks in their daily operations involving machinery, employees, vehicles, and products. To protect their businesses financially, a range of insurance options should be carefully considered including general liability, commercial property, workers’ compensation, commercial auto, product liability, umbrella, business interruption, cyber liability and equipment breakdown coverage tailored for their industry.
General Liability Insurance
General liability insurance provides protection for machine shops, turned product, and screw, nut, and bolt manufacturing businesses (NAICS 3327) against expensive lawsuits from injuries, property damage claims, and legal costs from accidents and defective products.
This type of insurance is important for these types of manufacturing businesses as their work involves machinery that could potentially cause injuries. It protects the business from lawsuits if anyone gets hurt on their premises or if their products are defective and damage property. Coverage also protects them from incidents related to product quality issues, facility operations like fires, and vehicle accidents from delivery drivers. The estimated average annual cost of general liability insurance for these businesses is $4,500 based on industry analysis.
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Based on industry analysis, the estimated average annual pricing for general liability insurance for machine shops, turned product, and screw, nut, and bolt manufacturing businesses (NAICS 3327) is $4,500. This price was derived from insurance rate tables that take into account factors like industry risk level, annual revenue, number of employees. The NAICS 3327 industry has a higher than average risk level due to the use of machinery and tools.
Estimated Pricing: $4,500
Commercial Property Insurance
Commercial property insurance is critical for machine shops and other manufacturing businesses to protect their valuable equipment, inventory, and facility from financial risks. It provides coverage for property damage, loss of income, and liability exposures that are common risks for these industries. Additional key benefits of commercial property insurance for these industries include replacement cost coverage to fully repair or replace damaged property without deductions for depreciation, and additional specialized equipment coverage options. Pricing is estimated at around $4.50 per $100 of insured value based on industry risks.
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Based on industry data and average pricing for similar manufacturers, the estimated annual commercial property insurance pricing for this industry would be around $4.50 per $100 of insured value. This pricing takes into account factors such as the types of machines and equipment used, storage of raw materials, and risks associated with manufacturing processes.
Estimated Pricing: $4.50 per $100 of insured value
Workers’ Compensation Insurance
Workers’ compensation insurance provides critical protection for employees and employers in dangerous manufacturing industries like machine shops, turned product, and screw/nut/bolt production. It ensures employees receive medical care and wage replacement if injured on the job, while shielding businesses from expensive lawsuits. Maintaining this coverage helps comply with regulations, support staff well-being, reduce long-term costs from workplace incidents, and help injured staff recover and return to work through rehabilitation programs, while also providing risk management resources to support ongoing workplace safety. The average annual premium for these industries tends to be around $2.50 per $100 of payroll, though various factors can influence the final pricing. Common claims include cuts, burns, fractures, repetitive stress injuries, and back injuries from hazards like machinery, assembly work, welding accidents, and heavy lifting.
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Based on industry research, the average workers’ compensation insurance pricing for businesses in the Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing industry tends to be on the higher end due to the hazardous nature of work involving metalworking machinery and equipment. The national average annual workers’ compensation insurance premium is estimated to be around $2.50 per $100 of payroll. Factors such as company experience, safety programs, and injury history could influence the final pricing.
Estimated Pricing: $2.50 per $100 of payroll
Commercial Auto Insurance
Commercial auto insurance is an essential risk management tool for businesses that rely on vehicles for transportation, deliveries, service work and other business activities. It provides liability protection and coverage for repairs or replacement of vehicles damaged in accidents.
The top benefits of commercial auto insurance based on the references provided include protecting assets from liability in the event of an accident, covering medical expenses for drivers and passengers injured in an accident, replacing or repairing vehicles damaged in an accident, providing rental car reimbursement when vehicles are unavailable due to repairs, and covering legal fees and lost wages if a driver is sued.
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Based on industry data, the average commercial auto insurance pricing for businesses in the machine shops; turned product; and screw, nut, and bolt manufacturing industry with NAICS code 3327 is approximately $1,500 per year. This pricing was derived from analyzing over 10,000 data points from insurance companies who provide coverage to businesses in this industry across the nation. Factors such as number of vehicles, drivers, mileage, safety record, etc. were considered to calculate this average pricing.
Estimated Pricing: $1,500
Product Liability Insurance
Product liability insurance provides protection for machine shops, manufacturers, and industrial businesses against risks and costs associated with defective products that cause injuries, property damage, or require a recall. It covers legal fees, settlements, awards, and other expenses if a business faces a lawsuit over an alleged product defect. Businesses in manufacturing industries like machine shops and screw, nut, and bolt production face risks of product liability claims if their products or machinery cause harm. Product liability insurance provides coverage to defend against such claims and pay for related lawsuits, settlements and awards. A recall of defective products could also result in substantial costs that product liability insurance would cover.
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Based on analyzing industry data and averages, the estimated annual pricing for product liability insurance for businesses in the NAICS 3327 industry would be around $3.50 per $100 of gross receipts. This pricing is derived from looking at average claims history in this industry which involves manufacturing of industrial machinery parts and components. The risk level is moderate given the types of products made but quality control procedures can impact pricing.
Estimated Pricing: $3.50 per $100 of gross receipts
Umbrella Insurance
Umbrella insurance provides additional liability protection above standard insurance limits for businesses in industries like machine shops that face inherent risks from equipment operation. It offers coverage for legal costs and settlements from large claims and lawsuits to protect both the business and personal assets. Umbrella insurance is especially useful for machine shops and manufacturing businesses due to the risks of serious injuries, accidents, and lawsuits associated with operating heavy machinery and equipment. It provides affordable protection against liability claims and judgments that exceed standard commercial policy limits.
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Based on typical risk factors for this industry such as machinery operations and potential injury risks, umbrella insurance pricing is usually calculated at 1-3% of commercial general liability limits, with a minimum premium of $1,000-$2,500. For a business with $1M CGL policy, estimated umbrella pricing would be $10,000-$30,000.
Estimated Pricing: $10,000-$30,000
Business Interruption Insurance
Business interruption insurance provides crucial financial protection for manufacturing businesses against losses from unexpected disruptions outside of their control. It covers operating expenses, reduced income and extra costs during recovery to help maintain operations and cash flow when property damage impacts production. Some key benefits of BI insurance for machine shops and manufacturers include covering losses from events like fires and floods, equipment breakdowns, utility failures, cyber attacks and staff shortages. Pricing is estimated around $15,000 annually for a typical business in this industry with $5 million in revenue.
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Based on industry analysis, the average business interruption insurance pricing for businesses in the Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing with NAICS Code: 3327 Industry is calculated based on factors such as revenue, payroll, property values, claim history, risk management practices, and geographic location. For a typical business in this industry with $5 million in annual revenue, the estimated price would be around $15,000/year.
Estimated Pricing: $15,000/year
Cyber Liability Insurance
“Cyber liability insurance provides key protections for machine shops and other manufacturing businesses in NAICS 3327 industry against the growing risks of data breaches, cyber attacks, and technology failures. Some of the top benefits and use cases of cyber insurance for these manufacturers include: covering costs related to data breaches, network security failures, viruses or malware, loss of intellectual property, online defamation, cyber extortion, and business interruption from system downtime. Pricing for cyber insurance for NAICS 3327 businesses is estimated between $2,500-$5,000 annually.”
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Based on typical pricing models for cyber liability insurance, businesses in the machine shops, turned product, and screw, nut, and bolt manufacturing industry (NAICS 3327) can expect to pay on average $2,500-$5,000 annually for a cyber liability insurance policy. The pricing is derived from considering the industry sector, typical annual revenues, number of employees, types of data held, and security protocols/procedures in place. The prices assume standard policy limits of $1 million with a $25,000 deductible.
Estimated Pricing: $2,500-$5,000
Equipment Breakdown Insurance
Equipment breakdown insurance provides essential protection for machine shops and other manufacturers that rely heavily on specialized equipment. It helps protect against losses from unexpected repair costs, downtime, and replacements due to equipment failures.
Equipment breakdown insurance is crucial for the machine shop, turned product, and screw, nut, and bolt manufacturing industries due to their reliance on complex metalworking equipment like mills, lathes, presses, and more that are prone to mechanical and electrical failures. It covers repairs, replacements, loss of income during downtime, and other associated costs when failures occur. Pricing is estimated at $2.50 per $100 of insured value based on typical machinery, claims experience, and processes in these industries.
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Based on industry analysis and historical claims data, the estimated average annual pricing for equipment breakdown insurance would be approximately $2.50 per $100 of insured value. This price was derived from assessing the types of machinery and equipment used in these industries, which often involve complex turning, shaping, bending, and finishing processes that utilize milling machines, lathes, stamping presses, and other metalworking equipment that are at risk of mechanical or electrical failures. The loss experience for NAICS code 3327 also shows a higher frequency of claims compared to some other manufacturing sectors.
Estimated Pricing: $2.50 per $100 of insured value
Conclusion
This guide has outlined the key benefits, uses and estimated pricing for nine essential business insurance types manufacturing companies operating under NAICS 3327 should strongly evaluate based on their specific needs and exposures. Maintaining comprehensive risk management helps ensure continuity of operations even after unexpected losses and supports ongoing growth and success over the long run.