Top Insurance Coverages for Machine Tool Manufacturers with NAICS Code 333517

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This article examines the key business insurance considerations for machine tool manufacturers including general liability, commercial property, auto, workers' compensation, cyber, BOP and other specialized coverages.

Key Takeaways

  • General liability insurance protects against lawsuits from customer injuries on premises or issues with products
  • Commercial property coverage protects expensive equipment, inventory and facilities from losses like fire or theft
  • Commercial auto coverage protects liabilities from vehicles used for business
  • Workers’ compensation covers medical costs and lost wages for injured employees
  • Cyber liability protects against costs of data breaches or cyber attacks
  • Consider additional coverages like equipment breakdown, D&O, commercial umbrella

Introduction

Machine tool manufacturing businesses (NAICS 333517) face unique risks due to operating complex metalworking machinery. Proper insurance is crucial to protect their operations, employees and balance sheets from unforeseen accidents, lawsuits and losses. This article examines the core business insurance products machine tool manufacturers should strongly consider.

General Liability Insurance

General liability insurance is an essential risk management tool for machine tool manufacturing businesses. It protects against financial losses from lawsuits related to injuries, property damage, product defects and other instances where the business may be found legally liable.

Category List
Benefits
  • Protects your business from costly lawsuits if a customer is injured on your premises
  • Covers bodily injury and property damage claims from third parties like customers and contractors
  • Pays legal costs and settlements if your business is found legally responsible for an incident
  • Protects your personal assets like your home and savings from judgements in a lawsuit filed against your business
  • Covers pollution related claims from accidents involving hazardous materials commonly used in manufacturing
  • Provides access to experienced liability attorneys and experts to defend your business in the event of a lawsuit
  • Offers coverage for hazards posed by products your business designs, manufactures or distributes
Use Cases
  • Bodily injury or property damage to third parties on your business premises
  • Bodily injury or property damage arising from your products or completed operations
  • Personal injury claims such as libel, slander, or false arrest
  • Advertising injury claims for copyright, title, or slogan infringement through your advertising
  • Product recalls in the event a manufacturing defect is discovered

Based on industry data, the average annual premium for general liability insurance for machine tool manufacturing businesses with NAICS code 333517 is around $3,500. This was calculated based on factors such as average payroll, number of employees, loss history, and risk level associated with machine tool manufacturing operations.

Estimated Pricing: $3,500

Commercial Property Insurance

Commercial property insurance offers key protections for machine tool manufacturing businesses by covering expensive equipment, machinery, tools and inventory against losses from unforeseen incidents like fire, floods or theft. It also covers liabilities, provides business income coverage if the facility needs repairs, and replacement cost coverage to fully repair or rebuild facilities back to the original condition after a covered loss.

Category List
Benefits
  • Protects business assets from losses like fire, water damage, theft or natural disasters
  • Covers equipment, machinery, tools, inventory and more against unforeseen incidents
  • Provides business interruption coverage to continue paying operating expenses if the facility is unusable
  • Limits financial liability from lawsuits if a customer or visitor is injured on the property
  • Offers replacement cost coverage to repair or rebuild facilities back to the original condition
  • Insures valuable computer systems and technology against risks like power surges or hardware failure
  • Covers additional expenses like demolition costs or debris removal after a covered loss
  • Insures valuable computer systems and technology against risks like power surges or hardware failure
Use Cases
  • Protection against fire damage to facilities and equipment
  • Coverage for damage caused by weather events like flooding, hurricanes, etc.
  • Replacement or repair costs for buildings and machinery if damaged
  • Business interruption insurance to cover lost income if the business must close temporarily for repairs
  • Coverage for damage caused by other perils like vandalism, riots, etc.

Based on industry data and risk factors for machine tool manufacturing businesses, the estimated average annual pricing for commercial property insurance would be around $12,000. This pricing takes into account factors like the type of machinery and equipment used, size of the facility, property values, loss history data for the industry, and average claims. The pricing was also benchmarked against similar manufacturing industries to derive this estimate.

Estimated Pricing: $12,000

Commercial Auto Insurance

Commercial auto insurance provides important liability and physical damage protection for machine tool manufacturing businesses that utilize vehicles as part of their daily operations. It protects against financial losses from accidents and lawsuits related to company vehicles and is essential to safeguard their operations and bottom line. The estimated average annual price for a policy is around $2,500 per vehicle, which can help address losses from incidents involving vehicles used for both commercial and personal use of employees.

Category List
Benefits
  • Liability protection in case of accidents or lawsuits from customers or other drivers
  • Physical damage coverage to repair or replace company vehicles in the event of collisions, theft or other incidents
  • Medical payments coverage to pay for injuries to customers or others from accidents involving company vehicles
  • Uninsured/underinsured motorist coverage to cover damages caused by drivers without sufficient insurance
  • Tools and equipment coverage to protect specialized tools and manufacturing equipment transported in vehicles
  • Dedicated coverage for parts and vehicles used for demonstrations and customer visits
Use Cases
  • Coverage for owned vehicles like work trucks used to transport machinery or materials
  • Coverage for non-owned vehicles like employees personal vehicles used for business purposes
  • Liability coverage for accidents involving company vehicles
  • Physical damage coverage to repair or replace vehicles involved in accidents

After reviewing average fleet sizes, mileage, losses, and other risk factors for businesses in the machine tool manufacturing industry, the estimated average annual price for a commercial auto insurance policy would be around $2,500 per vehicle. This pricing assumes a fleet of 5 vehicles being used for both commerical and personal use of employees with an average of 15,000 miles driven per vehicle annually. The average loss ratio for this industry over the past 3 years was 1.05 leading to higher than average rates.

Estimated Pricing: $2,500

Workers’ Compensation Insurance

Workers’ compensation insurance provides crucial protections for businesses in the high-risk machine tool manufacturing industry. It covers medical expenses and lost wages for injured employees while also protecting companies from costly lawsuits. The average annual cost for workers’ comp insurance is estimated to be between $112,500 to $175,000 for a machine tool manufacturing business with $5 million in annual payroll.

Category List
Benefits
  • Covers medical expenses if an employee gets injured on the job
  • Pays lost wages if an employee misses work due to a work-related injury or illness
  • Protects the business from costly lawsuits if an employee sues for a work injury
  • Reduces absenteeism and promotes a speedy recovery for injured workers
  • Saves money by offering an alternative to expensive litigation
  • Required by law in all states for companies with employees
Use Cases
  • Provide benefits to employees injured on the job
  • Cover medical expenses of injured employees
  • Pay lost wages for employees unable to work due to job-related injuries or illnesses
  • Provide vocational rehabilitation programs for seriously injured employees

Based on industry data, the average workers’ compensation insurance rate for machine tool manufacturing (NAICS 333517) is usually between $2.25 and $3.50 per $100 of payroll. This rate is derived from the industry loss cost modified by individual company experience rating, schedule rating, premium discounts, and other adjustments. For a company in this industry with an annual payroll of $5 million, the estimated annual workers’ compensation insurance premium would be between $112,500 to $175,000.

Estimated Pricing: $2.25-$3.50 per $100 of payroll

Cyber Liability Insurance

Cyber liability insurance is an important risk management tool for machine tool manufacturers due to the sensitive customer and technical data they store and potential costs of cyber incidents. Here are some key points about cyber insurance for this industry:

– It covers common risks like data breaches exposing customer information, ransomware attacks locking down systems, and business interruptions from cyber incidents.

– The top use cases it addresses are data loss, ransomware, equipment loss from disasters, network security failures, and legal/regulatory costs from breaches.

– Estimated average annual premium is around $5,000 based on industry risks related to IP, interconnected systems, data practices, and revenues. Quotes factor in specific company security controls.

Category List
Benefits
  • Covers costs of a cyber attack like ransomware payments, digital forensics investigations, legal fees
  • Protects from lawsuits in the event of a data breach exposing customer or employee personal information
  • Covers business interruption losses while systems are offline due to an attack or breach
  • Provides access to IT security professionals and attorneys for guidance and response planning after an incident
  • Covers PR/marketing costs of notifying customers and stakeholders about a breach
  • Protects the long-term viability of the company in the event of a costly cyber incident
Use Cases
  • Data breach or cyber attack leading to loss of customer or employee data
  • Ransomware attack locking systems and demanding ransom to restore access
  • Loss of business equipment, systems or data due to fire, flood or other disaster
  • Network security failure exposing systems and data to unauthorized access
  • Costs associated with regulatory fines and legal fees from a data breach

Based on typical pricing models for cyber liability insurance, the average annual premium for businesses in the machine tool manufacturing industry (NAICS code 333517) would be around $5,000. This estimate is derived from considering the industry’s risks related to intellectual property, interconnected equipment/systems, data storage practices, and revenue levels. Cyber insurers would also examine a specific company’s privacy and security controls when generating a final quote.

Estimated Pricing: $5,000

Business Owner’S Policy

A business owner’s policy (BOP) provides comprehensive insurance protection tailored for machine tool manufacturing businesses. It combines important coverages like property, general liability, business interruption and others into a single convenient package. This can help protect a machine tool manufacturer’s assets, income and operations from unexpected costs arising from risks inherent to their industry.

Category List
Benefits
  • Property coverage for buildings, equipment and inventory
  • General liability coverage to protect against lawsuits from customers or others visiting your facility
  • Business interruption coverage to replace lost income if property is damaged
  • Coverage for vehicles used for your business
  • Employee dishonesty coverage to cover theft or fraud by employees
  • Advertising injury and personal injury liability coverage
Use Cases
  • Property coverage for building and equipment
  • General liability coverage for on-premise injuries and damage to third-party property
  • Business interruption coverage to continue paying expenses if the business has to temporarily shut down
  • Commercial auto coverage if business vehicles are used
  • Commercial umbrella coverage to supplement general liability limits
  • Equipment breakdown coverage for repairs/replacement of machinery if it breaks down
  • Cyber liability coverage to protect from theft of proprietary data/IP

Based on industry data and risk profile, the estimated average annual pricing for a Business Owner’s Policy for a machine tool manufacturing business with NAICS code 333517 is around $5,000-$7,000. This pricing range takes into account factors like the size of operations, number of employees, property and equipment values, past losses, and risk management practices. The pricing was also benchmarked against similar businesses in this industry.

Estimated Pricing: $5,000-$7,000

Equipment Breakdown Insurance

Equipment breakdown insurance is an important coverage for machine tool manufacturers to protect against unexpected repair costs or losses if their industrial machinery like CNC machines, lathes, and mills break down unexpectedly. It covers costs related to repairs, temporary replacement equipment rental, lost business income, and additional expenses to return equipment to working order after an equipment failure. It also provides financial protection for businesses in NAICS code 333517 that rely heavily on specialized equipment for production against the risks of equipment malfunctions or mechanical breakdowns. The estimated average annual premium for this type of insurance for machine tool manufacturers is between $5,000 to $10,000.

Category List
Benefits
  • Covers repair costs from mechanical and electrical failures of equipment like CNC machines, lathes, and mills
  • Pays for property damage from accidents involving insured equipment
  • Provides funds to rent temporary replacement equipment if yours breaks down
  • Covers costs associated with inspections, diagnostics and testing if equipment fails
  • Covers lost business income if an equipment failure causes interruptions or delays
  • Covers additional expenses like overtime pay for employees to get production back on track after a breakdown
  • Covers the costs of consultants and engineers to determine the cause of a breakdown
  • Covers property damage to other machines if a breakdown causes them to fail as well
  • Covers overtime pay for employees to get production back on track after a breakdown
  • Covers the costs of consultants and engineers to determine the cause of a breakdown
  • Covers property damage to other machines if a breakdown causes them to fail as well
Use Cases
  • Protection against unexpected repair costs or replacement of industrial machinery like CNC machines, lathes, milling machines if they break down
  • Coverage for losses due to electrical and mechanical breakdown of production equipment
  • Reimbursement of repair costs, parts, labor and additional expenses to return equipment to working order after an accident or failure
  • Lost business income protection if a key piece of equipment fails and halts production
  • Coverage for additional living expenses if a breakdown requires temporary relocation during repairs

Based on typical factors such as total insurable value of equipment, number of employees, past losses, hazards involved, etc. the estimated average annual premium for equipment breakdown insurance would be around $5,000 – $10,000. This estimate was derived from industry sources and insurance rate manuals that provide pricing curves based on the risk profile and asset values of businesses classified under NAICS 333517 (Machine Tool Manufacturing).

Estimated Pricing: $5,000 – $10,000

Directors’ And Officers’ Insurance

Directors’ and officers’ liability insurance, also known as D&O insurance, is an important protection for companies and their executives in the machine tool manufacturing industry. It helps shield them from monetary losses in lawsuits related to their roles and responsibilities. Some key benefits of D&O insurance for machine tool manufacturers include protecting personal assets of directors and officers, covering legal defense costs if sued, and reimbursing companies for indemnification payments or losses. Common risks it covers are shareholder lawsuits, failure to comply with regulations, intellectual property claims, and reputational damages during crises. The estimated annual premium for a mid-sized machine tool manufacturer is around $12,000 depending on factors like revenue, assets, and employee count.

Category List
Benefits
  • Protects directors and officers from personal liability in lawsuits
  • Covers the cost of legal defense if sued for wrongful acts
  • Reimburses companies for indemnification payments or losses
Use Cases
  • Cover legal costs if the company or its directors/officers are sued for alleged wrongdoings
  • Cover legal costs and settlement payments if a shareholder sues the directors/officers for breach of fiduciary duty
  • Cover costs related to criminal/civil investigations of the company/directors/officers by regulatory bodies
  • Cover costs of defending reputations during a crisis
  • Cover costs related to intellectual property claims like patent infringements

Based on typical pricing ranges from insurance providers, the average annual premium for Directors’ and Officers’ insurance in the machine tool manufacturing industry ranges from $5,000 to $25,000, depending on factors like annual revenue, assets, and number of employees. For a mid-sized business in this industry with annual revenue of $10-20M, assets of $5M, and 50 employees, the estimated annual premium would be around $12,000.

Estimated Pricing: $12,000

Commercial Umbrella Insurance

Commercial umbrella insurance provides additional liability protection for machine tool manufacturers. It protects against risks not covered by regular commercial policies and helps cover large claims exceeding primary policy limits. Umbrella insurance is especially important for this industry due to the capital-intensive nature of equipment and facilities as well as risks from manufacturing processes and product liability claims should machines malfunction and cause injuries.

Category List
Benefits
  • Additional liability protection above the limits of your underlying commercial policies
  • Covers lawsuits and legal costs from bodily injuries and property damage
  • Protects assets like equipment, machinery and facilities
  • Covers claims related to employment practices and discrimination
  • Covers pollution related incidents
  • Covers product liability claims if a machine malfunctions and causes injury or damage
  • Provides defense costs outside of policy limits
  • Protects against rising litigation costs and large jury awards
  • Coverage for higher risks associated with operating complex equipment and machinery
Use Cases
  • Protection against risks not covered by underlying commercial general liability, auto liability and employer’s liability policies
  • Protection against expensive claims exceeding primary policy limits
  • Coverage for certain costs and legal fees not covered by primary policies
  • Protection from product liability lawsuits in the event a machine causes injury or damage
  • Coverage for pollution liability claims from accidental spills or contamination from manufacturing processes
  • Protection against lawsuits from injuries or damage caused during delivery and installation of machines

Based on industry averages, commercial umbrella insurance for machine tool manufacturers would be priced at around $2.50-$3.50 per $100 of coverage. This pricing is derived from considering the risks involved in metalworking and machining processes as well as exposures from potentially hazardous materials. It is assumed that the insured has $1 million in underlying general liability coverage.

Estimated Pricing: $2.50-$3.50/100 of coverage

Conclusion

By implementing a well-rounded insurance program tailored to their hazards and exposures, machine tool manufacturers can rest assured their businesses, people and property are sufficiently protected. Regularly reviewing coverage needs with an experienced agent also ensures the protection evolves with changing risks and operations over time.

Frequently Asked Questions

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