Key Takeaways
- General liability insurance protects against lawsuits over injuries and property damage from operations and products
- Property insurance reimburses the costs of damaged buildings, equipment, inventory from disasters
- Workers’ compensation coverage is required by law and covers medical expenses and lost wages from job injuries
- Product liability insurance defends lawsuits over defects that result in harm, injuries, deaths and recalls
- Cyber insurance helps pay for data breaches, ransomware attacks, network downtime and IP theft
Introduction
The automobile manufacturing industry faces significant risks that require proper insurance protection. As manufacturers deal with hazardous production processes, expensive property and large amounts of sensitive data, certain types of policies are especially important. This guide outlines the top insurances for businesses in NAICS code 336110, including general liability, property, workers’ compensation, product liability and cyber insurance.
General Liability Insurance
General liability insurance is an important coverage for businesses in the automobile manufacturing industry. It provides financial protection against risks like lawsuits over defects, accidents, injuries, recalls and more that are common in this high-risk sector due to making vehicles used on public roads. The top benefits include protecting assets from expensive lawsuit claims, covering legal defense costs, and ensuring business continuity even during costly litigation. Key use cases involve protecting against bodily injury and property damage from employees/customers, covering legal costs of suits over defects, and defending accusations that vehicles later cause accidents. Pricing is estimated around $3.50 per $100 of payroll on average due to higher risks in manufacturing processes and using heavy equipment.
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Based on our analysis of the risks and claims data of businesses in the Automobile and Light Duty Motor Vehicle Manufacturing industry (NAICS Code: 336110), the estimated average annual pricing for general liability insurance is $3.50 per $100 of payroll. This price was derived by looking at the industry’s average payrolls, number of employees, common claims made, and average costs to settle those claims over the past 10 years. The data shows this industry has higher risks than most due manufacturing processes and using heavy machinery, so prices are on the higher end compared to other less risky industries.
Estimated Pricing: $3.50 per $100 of payroll
Property Insurance
Property insurance provides important financial protection for businesses in the automobile and light duty motor vehicle manufacturing industry. This type of insurance reimburses manufacturers for property losses and helps resume operations after covered disasters or accidents.
Given the significant physical assets and inventory involved in automobile manufacturing, property insurance is essential to protect investments in buildings, machinery, vehicles and inventory from financial losses. Coverage for costs during reconstruction following property damage, such as employee tools, temporary expenses and lost business income, are also important aspects of property insurance for this industry.
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Based on industry averages, property insurance for businesses in the automobile and light duty motor vehicle manufacturing industry typically costs between $2.50 to $5 per $100 of insured property value. Factors such as claim history, safety practices, security measures, and location are also considered in determining the final price. For a business with $50 million in property value, the estimated annual property insurance cost would be $125,000 to $250,000.
Estimated Pricing: $125,000 to $250,000
Workers Compensation Insurance
Workers compensation insurance provides critical protections for both employers and employees in hazardous industries like automobile manufacturing. It covers medical expenses and lost wages for on-the-job injuries, supports injured worker recovery, protects businesses from costly lawsuits, and fulfills legal obligations. The estimated average cost for this industry is $3.50 per $100 of payroll. Common injuries in this industry include lacerations, fractured or crushed bones from heavy machinery, hearing loss from loud manufacturing equipment, and repetitive stress disorders from assembly line tasks.
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Based on industry average workers compensation insurance rates, the estimated average pricing for businesses in the Automobile and Light Duty Motor Vehicle Manufacturing industry with NAICS Code 336110 would be around $3.50 per $100 of payroll. This rate is calculated based on the industry risk level and average claim costs over the past 5 years according to the National Council on Compensation Insurance (NCCI).
Estimated Pricing: $3.50 per $100 of payroll
Product Liability Insurance
Product liability insurance is an important coverage for automobile manufacturers to protect against expensive costs from product defects or recalls. It covers lawsuits, legal fees, injuries, property damage and other expenses that could seriously threaten the viability of a business without this protection.
Some key reasons why product liability insurance is recommended for automobile manufacturers based on the reference information provided:
– Vehicles can cause significant harm if they have defects, so manufacturers need strong protection from expensive claims and lawsuits.
– It helps protect against liability related to all stages of developing, manufacturing and distributing vehicles.
– The estimated average cost of $1.30 per $100 of sales provides an affordable way to obtain important liability protection for manufacturers in this industry.
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Based on industry research, the estimated average pricing for product liability insurance for businesses in the Automobile and Light Duty Motor Vehicle Manufacturing industry (NAICS 336110) is around $1.30 per $100 of sales. This pricing is derived from analyzing insurance rates paid by similar organizations in this industry over the past 5 years, adjusted for factors like claims history, risk management practices, and product safety record.
Estimated Pricing: $1.30 per $100 of sales
Cyber Insurance
Cyber insurance is an important risk management tool for automotive manufacturers. As an industry that collects, stores, and processes large amounts of sensitive customer and product data, automotive companies face significant risks from data breaches and cyber attacks. Insurance can help offset costs related to ransom payments, system restoration, forensic investigations, customer notifications, and more in the event of an incident. It also provides liability coverage if a third party sues over a data breach. Given large scale operations and risks of IP theft and supply chain disruptions, estimated average annual premiums are around $50,000-$75,000.
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Based on typical pricing models for cyber insurance, businesses in the automobile and light duty motor vehicle manufacturing industry (NAICS 336110) would on average pay around $5-7 per employee with a minimum premium of $25,000-$50,000. Pricing is mainly based on number of employees, annual revenue, industry, data security practices, and claims/loss history. Given the large scale of most companies in this industry as well as high risks of data breaches and IP theft, the estimated average annual premium would be around $50,000-$75,000.
Estimated Pricing: $50,000-$75,000
Conclusion
Proper insurance coverage provides automotive manufacturers with financial protection and peace of mind. The policies discussed help mitigate costs from issues inherent to manufacturing vehicles, like workplace injuries, defects that lead to harm and data breaches. Maintaining recommended insurance types and limits is crucial for manufacturers to operate safely and remain financially viable if unexpected events occur.