Manufacturer insurance is a combination of policies that protects your business financially from lawsuits and unforeseen risks. Start with these policies:
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General liability insurance. General liability helps pay for injury and property damage claims from people outside your business.
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Commercial property insurance. This covers your building and things attached to or inside it, like equipment, inventory and other business property.
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Workers’ compensation. This pays for injuries that happen on the job. Most states require it if you have employees.
Larger operations will likely need more coverage, like insurance for if your manufacturing equipment or machinery breaks down.
Best insurance companies for manufacturers
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Relative number of complaints to state regulators.
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How financially strong companies are, meaning how well they can pay claims.
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How easy it is to get a quote and buy a policy online.
Here are some of our good options that serve manufacturers. We recommend getting multiple quotes to find the best coverage at the best price.
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Best for smaller manufacturers
Best for working with an agent
Travelers has specialty coverage for multiple types of manufacturers, including textiles, metals and hazardous materials. It has risk specialists and can tailor policies to your specific product and manufacturing facility too.
Best for risk management services
Many of CNA’s risk professionals hold Manufacturing Risk and Insurance Specialists (MRIS) certifications. This offers additional peace of mind that you’re working with an expert.
CNA also offers pretty much any insurance a manufacturer would need, including those that ship or sell internationally. Its property and liability complaints are relatively low, but workers’ comp complaints are slightly higher than we’d expect for a company this size. (Our editorial team has not written a full review of CNA.)
Best for customized business owner’s policies
What is manufacturer insurance?
Manufacturer insurance provides financial protection for any business that makes, assembles or processes goods. It can help with common risks:
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Employees getting injured on the job.
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Electrical fires or equipment failure.
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Defects in your products, prompting a recall or lawsuit.
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Inventory losses during shipping.
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Data breaches or cyberattacks that expose customer information.
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Claims of contamination or pollution from your business.
Many of these risks apply to larger plants or mills. But even small shops like a custom tailor or home bakery manufacture items.
What types of insurance do manufacturers need?
General liability insurance
If your business causes injuries, illness or property damage to non-employees, general liability helps pay legal fees and other costs. It also covers libel, slander and advertising injury claims, such as a false statement about a competitor.
General liability coverage doesn’t pay for your own damaged property, employee injuries or recall expenses.
Commercial property insurance
For example, say someone breaks into your textile mill and steals your fine fabrics. Commercial property would pay to replace the product, and it would pay for any damage to the building.
Workers’ compensation insurance
Even if it isn’t required, workers’ comp is worth a close look if your team works around heavy equipment, chemicals or heat. Health insurance won’t cover injuries or illness from work, and it never covers lost wages.
Say your employee gets their hand caught in a machine gear and breaks a bone. Workers’ comp will pay for their medical bills, any occupational therapy they need and a portion of lost wages.
Business owner’s policy
This combination policy includes general liability and commercial property coverage. It can be a more affordable option for small businesses. Because commercial property coverage typically includes business interruption insurance, most BOPs also include it.
Other types of manufacturing insurance
Depending on the size and nature of your manufacturing business, you could need any of the following coverages.
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Policy type |
Coverage details |
|---|---|
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Buy this if you own or operate trucks, vans or delivery vehicles. It covers accidents, injuries to others and damage to property caused while driving on business. It also typically covers damage to your own vehicles. So if your delivery driver rear-ends someone mid-trip, commercial auto pays for the damage to both vehicles and the other driver’s injuries. |
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Equipment breakdown coverage |
This helps pay for repairs or replacement when machinery or electrical systems fail. If your business owns complex computers or heavy equipment, it’s a good idea. Say your industrial 3-D printer goes on the fritz and you can’t make a critical component of your product. This coverage helps pay to repair or replace the equipment. |
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This covers materials and products in transit or at off-site storage that are damaged or destroyed. If another company delivers your product to stores and their driver crashes, destroying everything inside, inland marine would cover the costs. |
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Product liability and completed operations |
Pays for injury or property damage from your product after it leaves your facility. A business owner’s policy or general liability policy often includes this coverage. If not, it’s a smart add-on for manufacturers. Say a toy you make breaks easily and causes a choking hazard for kids. This insurance would cover your lawsuit defense and any damages. |
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If a disaster damages or destroys your facility, business interruption covers the costs associated with closing down or relocating. It’s typically included in commercial property insurance, so the event must be covered by that policy. For instance, say a tornado tears the roof off your plant, damaging the equipment inside. Since your commercial property insurance covers that, business interruption will kick in to cover the lost income, costs to relocate and payrolls. |
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Pays costs due to data breaches, ransomware and other cyber attacks or leaks. If you have trade secrets, collect customer data or have connected systems in multiple locations, cyber insurance is a good idea. For example, someone could hack your database and steal your next product blueprint or your customers’ personal information. Cyber insurance would help with the investigation in both cases and identity monitoring for your customers. |
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Product recall coverage |
Pays for expenses like retrieval, disposal, replacement, crisis response and related costs to a recall of your product. General liability usually does not include this, so ensure you buy this extra coverage if your products could be recalled. For example, say one of your products is a motorized scooter. You discover a defect that causes the front wheels to come loose after some mileage. Recall coverage would help pay to get the scooters back, fix or replace them and manage your reputation. |
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Pollution and environmental liability |
This insurance can help with cleanup and damages from pollution or contamination events. Get it if your business uses chemicals, metals or high heat in manufacturing, or if you may produce toxins. General liability may have limited pollution coverage that won’t be enough for some larger operations. Say the residential neighbors to your glassblowing shop claim that your fumes and dust are making them sick, and sue. This coverage would pay for your legal defense and any judgments against you. |
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Contingent business interruption |
Pays if your business can’t operate due to another business shutting down, such as a supplier or warehouse. Say you make high-end custom suits and a critical fabric supplier’s inventory is destroyed, causing a weeklong delivery delay. This coverage pays for the lost income due to the event. |
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Pays for additional liability costs above your limits. General and other liability policies cap how much they’ll pay out, and umbrella coverage extends that limit. Say there’s an off-hours explosion at your mill that destroys it and multiple surrounding properties. There are injuries and damage to your neighbors that cost well beyond your $2 million general liability limit. Umbrella would pay the rest, up to its limits, and commercial property would pay for your own damage. |
What to watch out for in manufacturing insurance
It’s important to check the fine details of any policy to ensure it fully covers your business risks. Manufacturers should pay particular attention to:
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Liability limitations. General liability and business owner’s policies may exclude or limit coverage for pollution, recalls and supply chain delays. Insurers that specialize in manufacturing may have fewer gaps, but it’s up to you to check.
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Incorrect manufacturing classifications. Insurers may deny claims if something you make is not in the policy. For example, if an insurer lists your business as food manufacturing only but you also make beverages, it could deny claims related to the drinks.
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International and supply chain risks. If you ship or procure supplies internationally, or if you have multiple manufacturing facilities, your risks are higher. Consider speaking with a broker or insurer that specializes in manufacturing and has risk specialists available.
Should manufacturers get risk management services?
Risk management services can make sense for manufacturers whose operations pose significant threats to employees or others. These services can reduce the likelihood of injuries, equipment failures or costly shutdowns.
Examples of risk management services include:
If your manufacturing business is large, complex or dangerous, consider a company like Chubb or CNA that offers risk management.
How much does manufacturer insurance cost?
Manufacturers with annual revenue over $10 million may pay $1,900 per year on the low end for general liability insurance, according to data provided to NerdWallet by Coverdash. For riskier businesses like aircraft conversion and modification, general liability costs much more — a median of $25,000 per year.
Workers compensation costs a median of $1,400 to $8,000 per year, depending on the manufacturing industry. Here are median general liability and workers’ comp costs for different types of manufacturers:
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Business type |
General liability |
Workers’ comp |
|---|---|---|
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Aircraft Conversions & Modifications |
$25,000 |
$8,000 |
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Battery Manufacturing |
$3,200 |
$3,000 |
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Bottled Water Manufacturing (Carbonated) |
$3,200 |
$2,500 |
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Canned Food Manufacturing |
$3,200 |
$2,000 |
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Cosmetics Manufacturing |
$3,750 |
$1,800 |
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Food Manufacturing |
$15,000 |
$6,000 |
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Medical Device Manufacturing |
$6,000 |
$2,500 |
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Metal Fabrication |
$3,500 |
$2,900 |
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Metal Manufacturing |
$5,300 |
$4,500 |
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Pharmaceutical Manufacturing |
$6,500 |
$1,400 |
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Prefabricated Metal Manufacturing |
$4,700 |
$7,800 |
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Specialty Furniture Manufacturing |
$1,900 |
$2,200 |
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Textile Goods Manufacturing |
$8,900 |
$3,000 |
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Textile Manufacturing |
$4,000 |
$1,500 |
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Welding Equipment Manufacturing |
$12,000 |
$4,500 |
Commercial property insurance cost depend on your facility, equipment and business. Median prices range from $2,000 to $8,000 per year.
How to shop for manufacturer insurance
1. Identify the coverages you need
Based on your company’s risks, list the policies you think you need. If you know of a risk, but not the policy that would cover it, write that down too.
2. Gather your key details
Be ready to answer questions about your production processes, annual revenue, payroll, storage locations and shipping patterns. For equipment and vehicles, you’ll need information including their identifying numbers, values, models and years.
If you’re a sole proprietor, you’ll need your Social Security Number handy. If not, you’ll need your Federal Employer Identification Number (FEIN) handy.
3. Get quotes from multiple insurers
There are three common ways to compare policies and ensure you get a good price for the coverage you need.
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Work with an agent or broker. This may offer the most peace of mind if you own a complex manufacturing business or have a high risk profile. A licensed expert can help walk you through policy options, exclusions and endorsements. An agent or broker can only get quotes from their network of carriers, though, and brokers often charge a fee.
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Contact providers directly. If you want to shop only with manufacturing specialists or other specific companies, this is a good option. It can take more time to get quotes individually, but this approach gives you the most control over who you see quotes from.
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Use an online marketplace. This option is best for smaller businesses that want to get coverage quickly. Sites like Coverdash and Simply Business let you compare quotes for policies, and typically buy the same day. However, you could end up with multiple insurers. You also may not be able to call and ask policy questions before buying.
4. Compare limits, exclusions and companies
Once you have quotes, take a look at their exclusions and liability limits, or the max a policy will pay for something. These give you a snapshot of what’s not covered, and indicate you may need to ask for an endorsement or more policies. For example, some general liability policies include product liability coverage while others don’t (you probably need that).
5. Buy the policies and review them annually
Once you’ve found your policies and have confidence in the insurer, you’re ready to buy. You’ll want to review coverage, limits and exclusions each year, at minimum. However, if you make a big change, such as moving, adding facilities or buying more delivery vehicles, revisit and add coverage.