5 Manufacturing Risks That General Liability Insurance Doesn’t Cover

If you manufacture goods, general liability (GL) insurance can protect your company in the event of bodily injury caused by your products, factory operations, or services to others. However, like other manufacturers, you’ll face a unique set of risks that GL policies don’t usually cover. Exposures like a product recall, logistical bottlenecks, and operational interruptions may remain a problem even if you have a standard liability policy. Here’s a look at critical GL insurance coverage gaps that a manufacturer should beware of:

1. Intellectual Property (IP) Protection

As a manufacturer, your competitive edge and success may come from the unique products and workflows you’ve invented and adopted. From advanced materials to game-changing technology like print-on-demand or virtual/augmented reality–you should protect your innovations with intellectual property insurance. The policy will cover your trademarks, copyrights, and patented products or technology to help you maintain your competitiveness in the market.

2. Liability Protection for Directors and Officers

Usually, the structure of a manufacturing business places directors and officers at the top of key decision-making. Within the scope of their managerial responsibilities, these officials may sometimes make decisions or take actions that attract allegations of wrongdoing or even lawsuits. Your management team may be subjected to a probe after such claims and will need to be defended. Unfortunately, a standard GL policy doesn’t provide employment practices liability protection. For this coverage, you should get management liability insurance. The policy can protect your company and its directors against claims raised by stakeholders like your past or current employees.

3. Data Breach and Cyber Extortion

Manufacturers are increasingly adopting transformative technologies, such as artificial intelligence, the Internet of Things (IoT), and cloud computing. Leveraging such technology comes with a new range of cyber risks. Data breaches, ransomware attacks, or system failure after a malfunction or denial of service attack can cause your manufacturing business massive financial loss. Make sure to get a comprehensive policy that includes cyber liability coverage.

4. Product Recalls

You never see them coming, but product recalls can have a devastating impact on your facility’s production momentum. As more items are returned, your cash flow and the financial muscle to replenish raw materials will suffer. Recalls are that terrible and can even taint your image with a lasting financial effect. With a recall policy, you’ll get the resources you need to probe any product recall and correct the problem. It can cover issues like product tampering, contract manufacturers’ errors, and lost revenue when you’ve had to withdraw your product from the market.

5. Health Product Liability

If you make a health product, you should take the necessary precautions against the unique exposures that come with it. Whether it’s a medical device or nutraceutical, it may introduce a complex set of exposures for your manufacturing business, such as injury to the consumer. You also couldn’t rule out another party filing a patent lawsuit against your company in court. Get a comprehensive life science policy to protect your business against a broad array of risks that are unique to medical product manufacturers.

As a manufacturer, you operate in a dynamic, rapidly-evolving risk environment. You should certainly have general liability insurance, but for the newer unique exposures, consider purchasing extra specialist coverage. Contact us at Knight Insurance if you have any questions about maximizing insurance protection for your manufacturing company. We are happy to help you seal the above-discussed coverage gaps.

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