Electrical manufacturers are facing a challenging environment that requires careful risk management and the right insurance coverage. These businesses deal with high-value materials and complex supply chains, all while adhering to strict safety regulations. To explore the unique risks they encounter and the insurance solutions available, we spoke with Rachel Pinsonneault, a commercial underwriter at Central Insurance.
Electrical manufacturers often work with expensive metals like copper, gold, and palladium, which are essential for creating electronic components. These materials can be targets for theft or may face sourcing delays that can halt production. Additionally, the risk of product liability is significant. If a faulty component leads to equipment failure or safety issues, manufacturers could face costly lawsuits, even if the product met specifications.
Equipment breakdown is another major concern. Precision tools used in production are often custom-made and difficult to replace. If one of these machines fails, it can lead to production delays and lost contracts. Cyber threats are also on the rise, as manufacturers handle sensitive data and large financial transactions. A cyberattack could compromise this information and disrupt operations.
Worker safety is paramount in this industry, where employees face risks associated with electricity, heat, and heavy machinery. To address these challenges, manufacturers need a solid insurance strategy.
Pinsonneault emphasizes the importance of several key insurance coverages. General liability insurance protects against claims of bodily injury or property damage caused by business operations. Product liability coverage is also crucial, as it safeguards manufacturers from lawsuits related to defective components.
Property insurance is essential for protecting valuable equipment and inventory against theft or damage. For example, if a fire damages machinery, property insurance can cover repairs and lost income during downtime.
Workers’ compensation is vital for covering medical expenses and lost wages for employees injured on the job. Cyber liability insurance is increasingly important, as it helps manufacturers respond to data breaches and financial fraud.
Manufacturers also need product recall coverage. If a defect is found in a mass-produced component, the costs of recalling and replacing those products can be substantial. Errors and omissions insurance protects against claims arising from financial losses due to design or production errors.
For manufacturers involved in installation, Manufacturer’s Plus coverage is beneficial. It protects materials in transit and equipment used during installation, as well as potential income loss if tools are damaged or stolen.
Central Insurance offers loss control services to help manufacturers proactively manage risks and maintain a safe working environment. By working closely with experienced insurance agents, electrical manufacturers can ensure they have the right coverage to protect their operations and employees.
In summary, the electrical manufacturing sector faces unique challenges that require tailored insurance solutions. With the right coverage and a proactive risk management approach, manufacturers can safeguard their businesses against the financial consequences of potential losses.