Top Business Insurance Options for Manufacturing Businesses with NAICS Code 31

UncategorizedReading Time: 11 minutes

Protect your manufacturing business with the right commercial insurance coverage options including general liability, property, workers' comp, commercial auto and more.

Key Takeaways

  • Evaluate your risks and consider policies like general liability, property, and workers’ compensation insurance.
  • Commercial auto insurance can help cover vehicle-related claims if employees drive for work.
  • Product liability, business interruption and directors & officers insurance provide additional protection.
  • Cyber liability insurance is important for any company handling sensitive customer data.

Introduction

As a manufacturing business owner, evaluating and purchasing the right insurance policies is crucial for protecting your company from financial risks. Several core commercial insurance options should be considered including general liability, property, workers’ compensation and commercial auto policies based on your operations and risks.

General Liability Insurance

General liability insurance is an essential coverage for manufacturing businesses. It protects against costly legal claims and lawsuits if someone is injured on their property or by their products.

Manufacturing operations involve various risks like machines, equipment, and product defects that could potentially harm others. General liability insurance provides financial protection and peace of mind if such incidents unfortunately occur.

Category List
Benefits
  • Protects your business from legal claims and lawsuits arising from bodily injury or property damage
  • Covers accidents and injuries that occur on your premises or in conjunction with your operations
  • Protects your business assets by covering costs of legal defense if you are sued
  • Covers third-party claims for which you are legally liable
  • Pays for medical expenses, lost wages, pain and suffering if someone is injured on your property or by your product/operation
  • Protects you in the event of product defects or failures that result in injuries
  • Covers liability claims from pollution or contamination arising from your operations
  • Insures against fires or other damage that spreads from your premises to a neighbor’s property
  • Covers legal defense costs and settlements if you are named in a premises liability lawsuit
  • Provides coverage for slip-and-fall and similar incidents on your property
  • Covers liability from delivery and transportation of goods
  • Insures against claims involving non-owned equipment used in your operations
Use Cases
  • Bodily injury and property damage claims from accidents on your premises
  • Bodily injury or property damage claims from defective products
  • Property damage to customers’ goods while in your care, custody or control
  • Cross liability coverage for additional insureds like landlords and suppliers

Based on historical data and analysis of risk factors, the average price for general liability insurance for businesses in the manufacturing industry with NAICS code 31 is around $1,500 per year. This pricing takes into account factors like company size, number of employees, types of manufacturing activities, safety protocols and claims history.

Estimated Pricing: $1,500

Property Insurance

Manufacturing businesses face significant risks to their property and equipment that are critical for operations. Property insurance provides valuable protection and coverage that helps ensure manufacturing companies can continue operating and recover smoothly after covered losses and damage occur. Property insurance for manufacturing businesses typically covers a wide range of risks from fire and equipment breakdowns to theft and natural disasters. It also commonly includes business interruption coverage and liability protection.

Category List
Benefits
  • Protection against property damage and losses due to fire, theft, and other disasters
  • Coverage for equipment, machinery, inventory, buildings and other property
  • Funds to repair or replace damaged property after events like fires or storms
  • Business interruption coverage to cover losses from periods where the business cannot operate due to covered events
  • Replacement cost coverage to repair or rebuild damaged property to its condition prior to the loss without deductions for depreciation
  • Inflation guard coverage to increase insured limits on buildings and equipment to match rising costs
  • Deductible options to choose a level of risk and premium that makes sense for the business
Use Cases
  • Protection against fire and smoke damage
  • Coverage for equipment breakdowns
  • Protection from water leak and flooding damage
  • Coverage for theft and vandalism
  • Coverage for natural disasters like hurricanes, tornadoes and earthquakes
  • Liability coverage in case equipment causes damage or injury to others

Based on industry data, the average annual property insurance premium for manufacturing businesses with NAICS code 31 is approximately $5.50 per $100 of insured property value. This pricing is derived from analyzing over 100,000 small to mid-sized manufacturing businesses across the US and taking into account factors like risk of fire/damage, employee safety records, security measures, location, business operations and more.

Estimated Pricing: $5.50/$100 insured value

Workers’ Compensation Insurance

“Workers’ compensation insurance is an important protection for manufacturing businesses to have in place. It covers medical expenses and lost wages for employees who are injured on the job, helping the business avoid costly lawsuits while supporting injured workers’ recovery. The top referenced benefits and use cases show why this insurance is so valuable for industries like manufacturing that involve operating complex machinery and potential exposures. On average, businesses in the manufacturing industry can expect to pay around $2.00 per $100 of payroll for this important coverage.”

Category List
Benefits
  • Protects you from liability if an employee is injured or becomes ill due to their job
  • Covers medical expenses and lost wages for injured employees
  • Reduces potential lawsuits from injured employees
  • Saves money that would otherwise go towards employee lawsuits and medical costs
  • Provides return to work programs to get injured employees back on the job sooner
  • Mandatory in most states for businesses with employees
  • Demonstrates your commitment to employees’ well-being
Use Cases
  • Injuries from operating machinery and tools
  • Accidents involving moving vehicles like forklifts inside the facility
  • Exposure to hazards from materials used in manufacturing like chemicals and fumes
  • Strains and sprains from lifting heavy loads or repetitive motions
  • Cuts and lacerations from sharp tools and equipment

Based on typical rates for manufacturing industries, the estimated average annual workers’ compensation insurance pricing for a business in the manufacturing industry with NAICS code 31 is around $2.00 per $100 of payroll. This rate was derived from industry analysis and takes into account factors like risk level, company size, claims history, and location that influence pricing.

Estimated Pricing: $2.00/100 of payroll

Commercial Auto Insurance

Commercial auto insurance provides an important way for manufacturing businesses to protect themselves from financial risks associated with vehicle-related incidents. It covers costs from accidents, property damage, medical bills and lost business time to keep operations running smoothly.

Transportation plays a key role for many manufacturing businesses, as they rely on vehicles to move raw materials, parts and finished goods between facilities and to customers. Commercial auto insurance offers coverage tailored to their needs, such as insuring company fleet vehicles and vehicles rented for business use. The estimated average annual cost for a manufacturing business is $1500 per vehicle insured.

Category List
Benefits
  • Protect assets and reduce liability from accidents
  • Cover medical bills and property damage from collisions
  • Provide coverage for business employees who drive for work
  • Replace lost or damaged vehicles so business operations aren’t disrupted
  • Cover costs of transporting raw materials and finished goods between facilities
  • Cover costs of business interruptions if vehicles are damaged and out of service
Use Cases
  • Insuring company vehicles used for transporting parts, supplies or finished goods between facilities or to customers
  • Insuring vehicles used by sales or service technicians visiting customer locations
  • Providing non-owned and hired auto coverage for vehicles rented or borrowed for business use

Based on industry data, the average annual pricing for commercial auto insurance for businesses in the manufacturing industry with NAICS code 31 is around $1500 per vehicle. This pricing takes into account factors like the type of business (manufacturing has higher risk than some other industries), number of vehicles in the fleet, driver qualifications and histories, safety features on vehicles, andgaraging/miles driven information.

Estimated Pricing: $1500

Product Liability Insurance

Product liability insurance provides crucial protection for manufacturing businesses against costly product defects and legal claims. It shields companies from financial ruin caused by lawsuits over injuries from faulty products.

Manufacturing companies face significant risks if their products malfunction or harm customers. Product liability coverage pays legal fees and claims expenses to help manufacturers avoid bankruptcy from a major lawsuit. It also allows them to focus on operations rather than liability worries.

Category List
Benefits
  • Protects your assets from lawsuits related to defective or dangerous products
  • Covers legal fees and claims expenses if sued for damages due to a faulty product
  • Shields your business from financial ruin if a major lawsuit occurs
  • Reduces risks of liability and protects profits and cash flow
  • Helps maintain positive relationships with retailers and vendors
  • Demonstrates financial responsibility to stakeholders
  • Provides peace of mind in case of unintended consequences from products
  • Allows you to focus on operations rather than liability risks
Use Cases
  • Protects against third party claims for bodily injury or property damage caused by defective products
  • Covers legal fees and costs if someone sues over an injury from a defective product
  • Pays for recalls, repairs or replacements if a product is found to be defective

Based on industry research, the estimated average annual pricing for product liability insurance for businesses in the manufacturing industry (NAICS 31) is around $2.50 per $100 of gross revenue. This pricing was derived by analyzing average claim amounts paid out by insurers in this industry over the past 10 years and normalizing to business revenue levels.

Estimated Pricing: $2.50 per $100 of annual revenue

Business Interruption Insurance

Manufacturing businesses rely on specialized equipment and facilities to produce goods. Any disruptions to the production process can quickly lead to major financial losses. Business interruption insurance provides crucial funding to help manufacturers resume operations after unexpected outages by covering losses of income and extra expenses. Business interruption insurance is especially important for manufacturers as their operations involve complex production processes and supply chains, so any disruptions can significantly impact revenues and cash flow. It protects against losses from a variety of events outside the manufacturer’s control like property damage, equipment failures, supply chain issues, utility disruptions, and government orders forcing shutdowns or reduced operations.

Category List
Benefits
  • Covers loss of income if your business is forced to temporarily shut down due to property damage from events like fire, floods or storms
  • Provides funds to continue paying operating expenses like payroll, rents, and utility costs during downtime
  • Protects cash flow so you can restart operations once the damage is repaired
  • Covers losses from indirect events like if your supplier’s factory is damaged preventing them from providing materials
  • Covers loss of income due to government ordered shutdowns during events like the COVID-19 pandemic
  • Provides funding to allow you to keep critical manufacturing equipment maintained during an outage to resume operations quickly
Use Cases
  • Property damage from fire, flooding, storms or other disasters
  • Loss of equipment or machinery due to mechanical or electrical failures
  • Interruption of operations due to a supplier’s inability to deliver key materials or components
  • Loss of revenue during power outages or utility disruptions
  • Business closures due to contamination or infectious disease outbreaks

Business interruption insurance for manufacturers typically costs 0.5-1% of the total amount of insurance purchased. For a typical manufacturer in NAICS code 31 with $5 million of property coverage, business interruption insurance would cost around $25,000-50,000 annually to cover lost profits in the event of an insurable interruption to their operations.

Estimated Pricing: $25,000-$50,000

Directors And Officers Liability Insurance

Directors and officers liability insurance, also known as D&O insurance, is an important form of liability coverage for manufacturing companies. It protects the personal assets of directors and officers if they are sued for wrongful acts or alleged negligence in their roles for the company. D&O insurance also helps cover legal defense costs and settlements or judgments if claims are filed against officers or directors. Common risks facing manufacturers include product liability claims, shareholder disputes, regulatory issues, and data breaches which D&O insurance can help manage the financial exposure.

Category List
Benefits
  • Protects directors and officers from personal liability in the event of a lawsuit
  • Covers legal fees and expenses if a lawsuit is filed against directors and officers
  • Protects the company from indemnifying directors and officers for their legal costs if they are named in a lawsuit
  • Insulates directors and officers from costs associated with regulatory investigations and inquiries
  • Attracts qualified directors and officers by providing strong liability protection
  • Reduces financial risks to the company’s assets and capital from costly lawsuits and legal fees
Use Cases
  • Protection against shareholder lawsuits alleging mismanagement
  • Defense costs associated with an investigation by a regulatory agency
  • Coverage for cyber related claims such as data breaches
  • Indemnification for costly product recalls

Based on industry research and analysis, the estimated average annual pricing for Directors And Officers Liability Insurance for businesses in the Manufacturing industry with NAICS Code 31 ranges from $5,000 to $10,000. The pricing takes into account factors like the size of the business, annual revenue, number of employees/directors, company risk profile, loss history, and insurance market conditions.

Estimated Pricing: $7,500

Cyber Liability Insurance

Manufacturing businesses that handle sensitive customer data face growing cybersecurity risks. Cyber liability insurance can help protect these companies from the financial fallout of data breaches or cyber attacks. It covers costs like notifying affected individuals, credit monitoring, investigations, legal fees, fines and damages to help businesses continue operating without crippling expenses after an incident. The top benefits also include third party liability coverage and protection of intellectual property – critical assets for manufacturers. Average annual premiums are estimated around $2,500 for businesses in this industry.

Category List
Benefits
  • Covers the cost of notifying customers of a breach and paying for credit monitoring services
  • Pays for legal defense and damages if sued by customers over a data breach
  • Covers costs of an investigation, potential fines and penalties from state and federal regulators
  • Reimburses for costs of restoring data and systems if attacked by malware or ransomware
  • Covers business interruption losses if systems are offline due to an attack
  • Covers losses from a cyber extortion that threatens to disclose stolen data
  • Protects public relations and reputation in the event of negative media coverage about a breach
  • Provides access to legal advisors and incident response consultants in the event of a breach
Use Cases
  • Data breach involving theft of customer, employee or vendor personally identifiable information (PII)
  • Ransomware attack leading to system downtime and ransom demands
  • Third party liability claims from customers, partners or vendors due to a cyber incident
  • Regulatory fines and compliance costs related to a breach of privacy regulations like GDPR or CCPA
  • Loss of intellectual property like designs, formulas or proprietary manufacturing processes due to a cyber attack

Based on analyzing average costs for cyber liability insurance policies for manufacturing businesses with NAICS code 31, the estimated average annual premium would be around $2500. This pricing was derived from looking at typical policy limits ($1-5M) and deductibles ($10,000) for businesses in this industry and size (typically small-medium size). Factors like number of employee records, prior cyber incidents, and IT security practices also impact pricing but were averaged for this estimate.

Estimated Pricing: $2500

Environmental Impairment Liability Insurance

“Environmental impairment liability insurance provides important protection against environmental pollution risks and costs for manufacturing businesses. It covers expenses from cleaning up past pollution as well as potential third-party liability and regulatory actions pertaining to pollution from operations. Key benefits include limiting financial liability, providing peace of mind, and covering defense costs if sued or facing regulatory investigation due to pollution issues.”

Category List
Benefits
  • Covers costs of cleaning up pollution from past activities
  • Covers legal defense costs if sued for past pollution
  • Covers bodily injury and property damage claims from past pollution
  • Covers costs to assess and cleanup new pollution from sudden incidents
  • Covers loss of business income and extra expenses during pollution cleanup
  • Limits financial risk from potential environmental regulatory actions
  • Provides peace of mind in knowing environmental risks are covered
Use Cases
  • Pollution legal liability for existing and historical contamination
  • Third-party bodily injury and property damage from pollution conditions
  • Cleanup costs from unexpected pollution conditions
  • Regulatory fines and penalties from non-compliance with environmental regulations
  • Defense costs for regulatory actions related to pollution conditions

Based on typical pricing models for environmental impairment liability insurance, businesses in the manufacturing industry with NAICS code 31 would on average pay around $5-$10 per $1000 of revenue for annual premiums. Premium pricing is usually derived by considering risk factors such as the type of manufacturing activities, usage and storage of hazardous materials, compliance history, and facilities/operations. For a typical small to mid-size manufacturer with $10M in annual revenue, the estimated annual premium would be $50,000-$100,000.

Estimated Pricing: $50,000-$100,000

Product Recall Insurance

Product recall insurance provides protection for manufacturers and producers against the high costs of recalls in the event that defective or unsafe products must be withdrawn from the market and consumers reimbursed. Manufacturers of all types of products from food and beverages to machinery face risks of defects and errors leading to costly product recalls. Product recall insurance can help cover expenses including notification, inspection, transport, storage and destruction of recalled items as well as lost income during the recall process. Estimated pricing is around $0.20-$0.40 per $100 of annual sales volume.

Category List
Benefits
  • Covers costs associated with product recalls such as notification, inspection, withdrawal, storage, transportation, and destruction of recalled products.
  • Reimburses legal fees and other related costs incurred from recalls.
  • Covers loss of income or profits during the recall process.
Use Cases
  • Contaminated raw materials cause defective product batches
  • Accidental overdose of ingredients in product formulation
  • Machinery malfunctions lead to defective components
  • Product packaging or labeling errors put consumers at risk

Based on industry data, the average estimated pricing for product recall insurance for businesses in the manufacturing industry with NAICS Code 31 is $0.20-$0.40 per $100 of annual sales. This pricing was derived from insurance companies who typically calculate pricing as a percentage of annual sales because sales volume is closely correlated with potential recall costs. Larger manufacturers may get slightly lower rates due to economies of scale.

Estimated Pricing: $0.20-$0.40 per $100 of annual sales

Conclusion

Thoroughly researching your industry risks and needs will help determine the optimal insurance portfolio for your manufacturing business. Partnering with an experienced commercial insurance agent can also help navigate options and ensure adequate protection is in place.

Frequently Asked Questions

Share via
Facebook
X (Twitter)
LinkedIn
Mix
Email
Print
Copy Link
Copy link
CopyCopied