
Long Island's manufacturing boom in the 1960s, with companies such as Grumman and Davis Aircraft Products, left an impressive legacy. While industries have evolved, according to The Manufacturing Consortium of Long Island, today there are over 3,000 manufacturing companies that still call Long Island home, contributing to the region's economy with innovation and resilience. As the industry has grown in sophistication, so too have the insurance needs of manufacturers, touching on everything from property and equipment coverage to cybersecurity. Let’s explore the nuances of manufacturing insurance, which address the unique challenges these businesses face.
Safeguarding the Physical Plant and Equipment
Manufacturers rely on specialized equipment and facilities, and this reliance shapes how they’re insured. Property insurance covers the plant and equipment, but the specifics depend on the type of equipment and its integration into the building. For instance, if you're working with heavy stone, like a marble contractor, you may have cranes built into the roof. These built-in features may receive better insurance rates when covered as part of the building rather than as contents, optimizing coverage without overextending costs.
In recent years, technological advancements have reshaped these needs, with computerized equipment becoming the norm. However, certain older, less vulnerable machinery might benefit from scaled-back loss protections, as damage risks—like water exposure—are minimal unless they’re exposed to fire or other catastrophes. Such attention to detail can fine-tune the coverage, ensuring it’s relevant to each unique setup.
Business Interruption and Contingency Planning
A plant shutdown can halt production and lead to significant financial loss, making business income protection essential for manufacturers. In a sector where time is money, business interruption insurance keeps operations steady even during unexpected downtime. If your plant goes down, there are ways to ensure business continuity, whether that involves partnering with a competitor for temporary production space or utilizing a different type of shop. Beyond the physical plant, manufacturers can also consider contingent business income coverage. This addition helps if a critical supplier, like one providing specialized saw blades, experiences a fire or other setback that disrupts your production schedule.
Product Liability and General Liability Coverage
Manufacturers must consider the use and destination of their products, which greatly influence liability coverage. Knowing the product’s end-use is critical, as liability premiums vary based on factors like target consumers (children or medical applications often incur higher rates). If manufacturers work on design and then outsource the actual production, they must ensure their subcontractors are appropriately insured. For instance, a manufacturer producing components for a medical device company must have coverage that aligns with medical standards, as any flaw could have extensive repercussions.
Worker Safety and Compensation
Manufacturing can be labor-intensive, with tasks ranging from intricate design to hands-on production. Workers’ compensation insurance is key, but ensuring the most accurate categorization of each role helps control premiums. If you don’t separate roles by category, they’ll often be put in the most expensive classification. Distinguishing office-based designers from shop-floor workers or high-risk machinery operators can lower costs, providing precise coverage that reflects the actual risk.
Cybersecurity in Modern Manufacturing
Cyber threats are an ever-present risk, and even manufacturers must account for this exposure. With so much equipment computerized, a data breach could halt production or expose sensitive supplier and client information. Everyone has cyber exposure these days. Cyber insurance policies now can include business income coverage if a cyberattack, like a Distributed Denial of Service (DDoS), incapacitates equipment. Additionally, policies can cover data breach incidents, such as wire fraud due to social engineering, which has become increasingly common as companies exchange funds electronically. Comprehensive cyber policies extend to website content, offering coverage if content inadvertently offends or is deemed discriminatory.
Conclusion
Manufacturing insurance is not one-size-fits-all, and as Long Island manufacturers continue evolving, so do their insurance needs. Working with a knowledgeable broker, like Graf Insurance, who understands the industry’s unique demands can ensure that Long Island's manufacturing legacy is protected for years to come.
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