Manufacturing insurance is a type of business insurance designed to address the needs of manufacturers in general and tailored to address the needs of your one-of-a-kind manufacturing business in particular. Manufacturers are exposed to a broad range of risks, starting with the possibility of damage to their commercial property, stock and inventory. A robust package of the right property insurance coverages is critical for manufacturing insurance, as commercial property insurance gives manufacturers the necessary financial support to deal with costs such as building restoration, equipment repair and stock replacement following a disaster like a fire.

Responsibility for the product does not stop after safely leaving the premises. A manufacturer is ultimately responsible for liability arising from using their product. Broad liability coverage is required not only for injury and resulting damage from its intended use but also for the product's design. Liability insurance comes in various types, and some more specialized coverages, such as product liability insurance, are significant additions to manufacturing insurance packages. 

Any business that manufactures or fabricates products, whether components or a finished item ready to go to the end user, needs the financial protection of the right manufacturing insurance in Ontario. That encompasses an extensive range of potential products, materials or parts, including food, clothing, electronics, building materials, chemicals, cosmetics and beyond. Some of the types of businesses that need manufacturing insurance are:

• Food and beverage producers
• Metal and plastic fabricators
• Chemical fabricators
• Machine shops
• Wood shops
• Electronics factories
• Clothing manufacturers
• Toy manufacturers
• Cosmetics producers
• And many more

Remember that manufacturing insurance isn't just for massive fabrication plants or assembly-line manufacturers with huge operations. Craft manufacturers who focus on producing small batches of artisan goods or even individual items need manufacturing insurance in Ontario as well.

CGL covers third-party bodily injury and property damage not related to the product. Product Liability covers harm caused by the product itself. Liability issues for harm caused by your products are covered by product liability insurance.

Product Liability covers litigation costs from product harm. Product Recall covers the operational costs of executing a recall (retrieval, rehabilitation, lost revenue, reputation management, regulatory fines). These are separate coverages addressing separate costs.

When it comes to manufacturing insurance, Ontario business owners are not required by the government to have it, and that's the case with most types of business insurance. Commercial auto insurance is an example of an exception to that rule because commercial vehicles need to be insured to be driven legally in Canada. But while the government may not require it, you likely will need to provide proof of manufacturing insurance to parties such as your commercial landlord, suppliers, receivers and other parties, so in that sense, it is mandatory for the continued success of your manufacturing business.

It's not uncommon for manufacturing business owners to ask our brokers this question. The truth is that basic commercial property insurance is simply not going to be adequate to cover a manufacturing business of any size or description. It doesn't offer any liability insurance coverage, for one, but even if you are talking specifically about property insurance, the basics aren't going to give you all the insurance protection you need against major financial setbacks. Here are a couple of examples of situations in which you need property insurance that goes beyond a basic commercial property policy: 

• A production machine breaks down from an insured peril and cannot be repaired. A new machine will take six months to be assembled and purchased from overseas. Your business is interrupted, and you've lost a major customer and income for their large orders. Business contents insurance will not cover this loss. Adequate equipment breakdown insurance with production equipment coverage, as well as business interruption coverage, is needed. 

• You or a government agency may order that your product be recalled due to a suspected defect or deficiency that could possibly cause injury. The costs of notification by media, extra expense for temporary staff, inspection and shipping, storage and the return of the product alone may be exorbitant. We have insurance packages available to include limited coverage for such expenses. 

There is so much more at risk!

The recommended baseline for liability coverage is generally $2 million, which some business owners find surprising. But the fact is that when you are sued, and especially if you are found liable for damages by the court, the costs of that litigation can easily surpass $1 million and continue to go up from there. That's why the experienced brokers at Morison Insurance recommend at least $2 million, so there's less chance that you'll have to pay a large deductible out of your own pocket. That being said, you may need more than $2 million in liability coverage depending on your business operation and level of risk exposure.