Archive for Manufacturing
Aircraft Products Liability
Products liability coverage for aircraft manufacturers, aircraft products dealers, and fixed base operators that repair and maintain aircraft is difficult to place. Loss potential is significant because of the catastrophic consequences when a product used in an aircraft fails in flight.
Aircraft Spare Parts
Aircraft hull policies exclude aircraft spare parts. If a part, such as an engine, is removed from the aircraft to be repaired, and in order for the aircraft to be used, a “loaner” is attached to the aircraft, the part removed is not covered. Coverage for that spare part must be purchased separately from the aircraft hull policy. Insurance purchased covers aircraft engines, spare parts, and equipment that are on the ground, or that are being carried as cargo by air, land, or water conveyances. Coverage ends when the equipment is fitted to the aircraft. It excludes engine loss or damage while the part is running or being tested. It also excludes mechanical or electrical failure loss, or damage to detached property once it is refitted to the aircraft or property carried on the aircraft as a spare parts kit. Each loss that results from one event is adjusted separately.
Bicycle and bicycle parts manufacturers have significant product liability exposures which most standard markets will not write. In addition, bicycle wholesale and retail operations that import bicycles directly from foreign manufacturers are usually underwritten as manufacturers when that foreign manufacturer does not have a U.S. insurance policy.
The most commonly recognized biofuel is ethanol but it is not the only biofuel. A biofuel is any fuel that is made using plant-based/renewable material. Many of the same underwriting concerns related to any type of fuel manufacturing are present with biofuels except that the plants tend to be on a smaller scale. A major concern has been the economic viability of the biofuel due to the availability of lower-priced natural gas and crude oil.
Boat manufacturers’ most difficult exposure is products liability. This coverage is usually written on a claims-made basis and in a specialty market. The property exposure is also significant because of the types of materials used and the flammable adhesives and paints that are required in the manufacturing process. Coverage for the stock may need to cover boats while on sale at dealerships.
Chemical manufacturers require significant liability insurance limits to protect them from lawsuits related to the hazardous nature of some of their products. In addition, there are significant environmental impairment exposures. Property and business income exposures are also challenging because of the caustic nature of various base elements and the explosive potential when they are combined. The workers compensation exposure can be very high and require extensive loss prevention activities and programs. Auto and Inland marine exposures vary based on the way the chemical and base elements are transported.
Clothing & Apparel
Coatings and Adhesives Manufacturers
Paints, coatings, and adhesives manufacturers are classes of business in the chemical industry that specialize in producing paints, inks, plastics, adhesives, aerosol containers, lubricants, and resins. Coverages available include general, products, and professional liability, pollution and remediation liability, auto liability, umbrella liability, and workers compensation. Distributors that handle these commodities are also eligible.
Insurance coverage for general liability, including products and broad form vendors liability, is available for cosmetics manufacturers. The products liability exposure is particularly hazardous due to the potential harmful effects of cosmetics on the skin and in the eyes. There is a significant property and business income exposure based on the types of cosmetics manufactured. Many of the base chemicals used in manufacturing are caustic and explosive.
Durable Medical Equipment Manufacturing
Durable Medical Equipment (DME) is equipment to aid a medical condition that patients can use multiple times. Examples are wheelchairs, walkers, crutches, oxygen equipment, canes, patient lifts and CPACs. The products exposure is extremely high because of the potential harm to any equipment-dependent patient if the product should fail.
Explosion potential is the catastrophic hazard for fertilizer manufacturers. Property, general liability, and workers compensation are the mandatory coverages. Excess/umbrella limits must be high enough to respond to property damage and bodily injury to the surrounding community in the event there is a major explosion. Automobile liability with high limits is also necessary if the manufacturer transports product. Coverage for these risks is extremely limited, specialized.
Tight market conditions occasionally create a need for a special market for foundries. The intense heat used in the casting process creates hazards that many standard insurers find unacceptable. In addition, many underwriters see relatively few risks in this class and conclude that they are more hazardous than they actually are. Other than the fire hazard, workers compensation has a high frequency of losses due to exposure to silicosis and other occupational diseases. There is a products liability exposure due to the products cast in a foundry being used in automobiles, locomotives, aircraft, or heavy machinery and equipment.
Leather and Leather Products
Marijuana Manufacturers/Infusion Centers
Manufacturers obtain raw cannabis product from cultivators and processors. They turn the plant or raw material into consumable products and often perform extractions converting plant material into concentrated form to be mixed with other consumable products. Extracts have many applications including topicals, tinctures, smokables and edibles.
Property and business income exposures are challenging because of fluctuations in supply chain. The workers compensation exposure can be very high and require extensive and ongoing loss prevention effort. Employee dishonesty and theft are concerns as well.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Processors are businesses that prepare marijuana after it has been harvested. Processing may occur either for, or at, a cultivation site. Processing includes activities associated with compounding, drying, curing, grading, trimming, rolling, storing, packaging, and labeling of cannabis or non-manufactured cannabis products. They face similar general liability and other risks found in other agricultural and manufacturing businesses face such as damage to property, fire, workplace accidents, product contamination.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Medical Device Manufacturing
A medical device is any type of item that is used to aid patients that are not pharmaceutical. Many of the devices require FDA approval but others are over the counter items with sometimes questionable claims of efficacy. A tongue depressor is a medical device as is a pacemaker. Items can be external or inserted inside the body. Durable Medical Equipment (DME) is a defined subset of this category.
Medical Equipment Manufacturers
Medical Marijuana Crop Insurance
A medical marijuana dispensary must have a marijuana crop to sell. This unique crop is subject to the same hazards as any other crop in the specific area where it grows. This crop’s potential value adds a significant theft exposure. The crops’ value varies because some growers provide a generic crop while others use research and development techniques to produce disease- or symptom-specific crops.
Medical Technology & Life Science Manufacturers & Distributors
Companies that manufacture, test, distribute, and sell medical, biological, pharmaceutical, and other products approved by the Food and Drug Administration (FDA) or other regulatory bodies around the world are vulnerable to a variety of products liability risks. These risks are unique to their industries and require specialized insurance coverage. These companies also recruit human test participants for trials across the globe. The coverage requires specialized knowledge in order to adequately underwrite and price the exposures.
Motorcycle Custom Manufacturing and Fabricating
Many motorcycle purchasers want a unique product. As a result many businesses cater to those clients who want custom paint schemes, special detailing, and even frame and engine modifications. Custom motorcycle designers, manufacturers, fabricators, service and repair shops, and parts dealers are some of the classes of business affected. Coverages provided include general liability, products and completed operations, garagekeepers legal liability, and business personal property coverage, including theft.
Nanomaterials are extremely small units of material. They are used in various industries including health-related and many other industries. One benefit of such very small units is that they can be directed and designed for specific purposes. One of the safety issues is that due to the very small size units can escape labs resulting in potential environmental issues. The other issues deal with it being a new type of product with a limited track record in which to access side effects and other potential problems.
It can be difficult to place commercial general liability and products liability coverage for paint, coatings, inks, and adhesive manufacturers. Like chemical manufacturers, these risks are more hazardous than most manufacturing operations due to exposures to toxic substances, the potential of accidental emissions and fire/explosion hazard. Loss control is a very important service that should be provided.
Printing & Publishers
Product Warranty Insurance
Warranties often specify a productâ€™s expected life and offer to replace, repair, or reimburse the consumer for defective parts or workmanship. The business that makes the product or provides the service can then use the written warranty to promote customer acceptance and increase sales. The warranties can be insured as an alternative to covering future warranty claims. Customers are often more willing to purchase a product or service that has a warranty backed by insurance. Common examples of products or services that have written warranties include household appliances, solar heating equipment, auto rust-proofing services, auto accessories, auto muffler and transmission services, burglar alarms, and camera equipment. The insured’s liability for the warranty can be covered through guaranty bonds, contractual liability coverage, or commercial inland marine coverage forms.
Rubber & Plastics Products
Sporting Goods and Equipment Manufacturers
Liability coverage for sporting goods and equipment manufacturers is difficult to place. Lawsuits are high-valued and high profile because children and athletes are injured when equipment such as helmets, padding, exercise equipment, or bicycles fail. Coverage may be written on a combined commercial general liability and products/completed operations liability package or with products liability written separately.
There are many types of toy manufacturers, but all share the desire to produce a product that is engaging to their target audience. The underwriting of the exposure depends on the selected market segment. Every segment has its own difficult aspect mainly because what is the intended use of the product and method of play can be radically altered by the user. Underwriting must be very risk specific.
Trailer Manufacturers Product Liability
Many insurance markets avoid writing trailers, particularly semi-trailers, because of their long-tail products liability. Insurers that offer coverage for these risks must clearly understand the products liability exposure and the controls and procedures necessary to reduce or minimize potential losses.
Woodworking and Lumber Operations
Property coverage on woodworking and lumber risks is a problem because of the high potential for fire due to the extreme flammability of wood, wood scraps, and sawdust. The danger of explosion and total conflagration is correspondingly high. Adequate safeguards such as dust collection systems, fire cut-offs, and restrictions on the use of highly volatile lacquers and paints by some operations make such risks much more appealing. Even with these and other protective safeguards, many woodworking and lumber risks are still written in specialty markets. The broad classification of lumber risks encompasses all activities connected with this industry, from logging trees in the forest to operations that process crude logs into finished boards, paneling, or pulp.