20 Risks Facing the Manufacturing Industry and How to Help Protect Your Business [Tool]
See how Travelers can help manufacturers manage the many risks facing the industry, from cyber threats to product recalls. Having broad coverage in place from a trusted carrier can help firms anticipate and minimize exposures, including these critical ones:
- Supply chain interruptions
- Workplace safety
- Product liabilities
- Errors and omissions
- Foreign exposures
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In an evolving business landscape, manufacturers face varied exposures with customers, employees, and operations. Innovation, from new technologies to expanding markets, can introduce opportunity but also potential vulnerabilities. A manufacturer’s brand and reputation can be at stake, as well as its bottom line.
Consider these 20 risks to manufacturing businesses and the specialized insurance solutions you can use to help protect your company.
1. Cargo in Transit
Trucking companies that transport equipment or products are subject to increasingly sophisticated cargo theft methods. Rogue individuals posing as legitimate motor carriers can hack into computer systems to pilfer location information and steal valuable loads. You can broaden the scope of your commercial property coverage with Travelers Inland Marine insurance. This program can offer coverage for goods or equipment transported on roads or rail. Our industry experts understand the latest scams and can also help prevent theft against cargo transporters.
2. Cyber Risks
Even highly secure networks are vulnerable to malware and ransomware attacks. Despite efforts to protect proprietary information and client data, hackers can still find ways inside your systems, disrupting operations and triggering financial consequences.
Cyber coverage from Travelers can be a crucial safeguard with customized insurance solutions depending on your business’s level of risk. Cyber coverage can protect your company before, during and after a breach.
3. Directors and Officers Exposures
Privately held companies and their directors and officers can be the target of lawsuits initiated from many different directions. Whether actual or alleged, wrongful acts can be time-consuming and costly to defend.
Travelers Directors and Officers Liability (D&O) can help cover defense costs and damages (awards and settlements) when claims are asserted.
4. Employee Fraud
Theft from within can happen in any organization and can include property theft as well as stealing funds. To protect against the cost of employee theft, Travelers offers Fidelity and Crime Coverage.
5. Employee Injuries
Manufacturers can experience workplace accidents and injuries even as formal safety protocols and programs are developed, implemented and improved. Helping reduce the negative impact on both employees and your business is paramount.
Travelers Workers Compensation insurance can cover medical expenses that result from an employee injury. Working with a ConciergeCLAIM® Nurse can help injured employees navigate the claim process, understand next steps and lead to better claim outcomes.
6. Employment Practices
It is not always easy to anticipate what can trigger an employment claim. If an employee feels harassed or discriminated against, those perceptions could present your company with an employment practices liability claim.
Employment Practices Liability coverage from Travelers can help cover the cost of defending such suits and provide a dedicated claim professional and a local outside attorney.
7. Environmental Accidents
The handling of fuel or disposal of hazardous waste in facilities presents manufacturers with unique challenges. Sudden leaks or spills can result in significant cleanup costs and lead to fines from state and federal regulators.
Environmental Liability insurance from Travelers can help cover exposures that your general liability policy may not address. These programs help mitigate financial damages if pollutants are accidentally discharged on the premises or in transit.
8. Equipment Failures
Essential machinery along the production line can stop working at any time, posing considerable cost to repair or replace it. It’s important to understand that mechanical breakdowns may not be covered by commercial property insurance.
Travelers Equipment Breakdown coverage meshes with traditional Liability and Property policies to add protection for equipment failures that would hinder normal business operations. Manufacturers can also add additional coverage for lost income suffered because of downtime.
9. Evolving Workforce Dynamics
Employees are the lifeblood of your organization. Ensuring the safety of new and existing personnel in production environments is critical to continued recruitment success and the well-being of your established workforce.
Enhancing the traditional approach to Workers Compensation Insurance, the Travelers Workforce Advantage® program helps employers adopt a safety-first mindset at time of hire and through the onboarding and training phases.
10. Global Exposures
An employee involved in an auto accident could encounter different procedural requirements in a foreign country than they would domestically. You may want to provide employees, and your business, similar benefits and coverages both abroad and in the U.S.
The Travelers Global Companion℠ Plus+ program can extend to Property, General Liability, Commercial Auto and Workers Compensation policies, and more – helping your organization align foreign risks with domestic coverages.
11. Large Losses
Catastrophic losses can mount quickly, especially when litigation leads to substantial jury awards. These judicial decisions can be handed down in product liability or personal injury cases, and can exceed manufacturers’ expectations, as well as their coverage limits.
Excess liability coverage helps protect against the possibility of extraordinary financial damage. To help insulate your manufacturing business from large losses, Travelers Umbrella and Excess Casualty coverage offers limits of liability that extend above those of your primary liability policies.
12. Motor Vehicle Accidents
If you own a fleet that delivers products to distribution centers or retailers, auto accidents causing property damage or injury to others could occur despite your best efforts to implement safe driving programs.
Travelers Commercial Automobile insurance policies can cover your owned autos, as well as your leased or rented vehicles. Coverage can be extended beyond company-owned vehicles to include other autos driven by your employees for business.
13. Ocean Cargo
Having global distribution capabilities introduces the possibility of physical damage to products en route to their overseas destination. Fire, water and weather hazards can cause significant damage to finished goods or materials.
Whether it’s implementing loss prevention measures or addressing claims globally, Ocean Marine insurance from Travelers can help protect your valuable merchandise. Through the Custom Cargo coverage program, manufacturers with specific shipping needs can tailor coverages to their unique situation.
14. Products Liability
Overlooked design flaws, manufacturing defects and gaps in warnings and instructions could pose a threat to end users. Bodily injuries resulting from substandard safety features in manufactured goods can lead to considerable financial losses.
With Travelers General Liability insurance, coverage can protect you for claims of bodily injury or property damage caused by your faulty product.
15. Product Recalls
Issuing a recall for defective or contaminated products released into the marketplace can be an expensive and time-consuming endeavor. Recalls can help prevent lawsuits by adversely affected consumers, which can be costly to defend and can affect a manufacturer’s brand and reputation.
Designed to cover certain costs triggered by a recall, Travelers Product Recall Expense protection can be added to a General Liability policy. This additional protection can help to cover costs you incur to pull products from the market and to transport, store, inspect and dispose of them.
16. Property Damage
Manufacturers that operate specialized equipment and machinery might find it expensive to repair or replace business property in the event of fire or electrical damage. Without an expedient return to normal operations, a competitive advantage can be diminished.
Travelers Commercial Property insurance includes protection for unique business equipment such as molds, patterns and die sets. Travelers can also assist with the valuation of partially or fully completed products to help ensure that work in progress is adequately covered.
17. Supply Chain Interruption
Dependence on your supply chain can bring on unwanted circumstances beyond your control. If you suffer downtime on the production line due to a supplier’s inability to provide materials or parts, that stoppage could result in lost revenue and profits.
If the disruption to your supply chain presents a risk, a Travelers Commercial Property Package can be customized to help you manage business expenses until continuity is restored, and operations can return to previous capacities.
18. Suspended Operations
A catastrophic weather event could impart severe damage to a facility or even result in a total loss. While extensive repairs or rebuilds are underway, replacing lost revenues can be critical to the continued viability of the business.
A Business Income and Extra Expense policy from Travelers can help your business cover overhead expenses such as rent, payroll or tax obligations during the time operations are suspended due to a covered loss. The policy can also help with cash flow until your company is back up and running.
19. Third-Party Financial Loss
If you supply parts for another manufacturer, an error committed by your shop that causes a part to not function properly could cause a loss of revenue for that third party. Your business may be held liable for your customer’s lost sales and profits.
Travelers Manufacturers Errors and Omissions (E&O) coverage can cover financial loss to a third party because of an error in product design or specifications. This policy supplements General Liability coverage if a customer seeks financial loss damages such as lost income.
20. Third-Party Financial Loss - Tech Companies
Unique exposures are created for technology companies that design components for sellers of finished electronic devices. For example, a malfunctioning resistor for a smart device may not be discovered until the product hits the market, and that could cause financial loss because the electronic devices can no longer be sold. Travelers Technology E&O insurance helps cover the financial loss to your customers should you supply a defective or incompatible part.
Contact an independent agent today to find out more about how Travelers can help strengthen your manufacturing business against the variety of risks it faces
More Prepare and Prevent
The Travelers Supply Chain Pressure Test surveyed more than 4,000 manufacturers and found in-plant processes were the weakest links of the supply chain.
If disaster strikes, are you prepared to replace your vital equipment at today’s costs? Take this quiz to test your knowledge. The results may surprise you.