Call Us : (630) 325-4000
Call Us : (630) 325-4000
As business owners in the manufacturing industry, we understand how fast-moving operations can expose companies to a wide range of risks. Whether you’re producing metal parts, plastics, packaging, or specialized components, even one incident can lead to major financial consequences. That’s why it’s essential to know where the biggest claims come from, and how to reduce the chance of those losses happening in your facility. Insurance is a safety net, but strong risk management helps us avoid relying on that net in the first place.
Over the years, we’ve worked with manufacturers across Illinois, and certain types of claims show up consistently. The good news is that most of them are preventable. Property damage, employee injuries, equipment breakdown, product liability, and business interruption are at the top of the list. Each of these losses not only affects your bottom line but can also disrupt production schedules and customer contracts. Understanding the cause of these claims and applying practical prevention strategies helps us protect our investment, employees, and operations.
One of the most expensive and frequent claims manufacturers face involves property damage, especially due to fires or water-related incidents. Electrical issues, combustible dust, or flammable materials stored improperly can create major fire hazards. Meanwhile, broken pipes, sprinkler system failures, or roof leaks can lead to water damage and ruined inventory.
Preventing these losses starts with regular inspections of electrical panels, proper storage of flammables, and working fire suppression systems. Maintaining your building envelope and plumbing systems can also help prevent water damage. Many insurance carriers offer discounts for businesses that adopt documented safety procedures and maintenance schedules.
Injury claims are another significant source of insurance payouts in manufacturing. Common injuries include slips, trips, repetitive strain, and contact with machinery. These incidents often lead to costly workers’ compensation claims, lost productivity, and compliance issues with OSHA.
To prevent these claims, we invest in employee safety training, enforce machine guarding policies, and make sure PPE (personal protective equipment) is always accessible and used properly. We also conduct regular safety audits and take corrective action before injuries occur. Prevention doesn’t just protect employees, it keeps insurance premiums stable over time.
Modern manufacturers rely heavily on machinery. When a key piece of equipment fails, production stops, deadlines are missed, and clients may walk away. Claims related to equipment breakdown are not always covered under general property insurance. That’s why equipment breakdown coverage is essential for any operation running expensive or specialized tools.
We prevent these losses through proactive maintenance, operator training, and backup systems when possible. Understanding the limits of your current insurance policy is also critical. At SIA Insurance Group, we regularly review our clients’ policies to identify and close gaps in coverage before something goes wrong.
When a product leaves your facility and causes injury, property damage, or economic loss, your company could be held liable. Product liability claims often stem from design flaws, manufacturing defects, or inadequate warnings.
We reduce this risk by implementing strong quality control programs and recordkeeping practices. Batch tracking, inspection logs, and proper documentation are not just smart, they’re critical when defending against liability claims. Manufacturers should also review their product liability coverage limits to ensure they align with the potential exposure of their goods in the market.
Even when your property is insured, downtime can devastate your operation. Business interruption coverage helps recover lost income while you repair or rebuild after a covered event. Too often, companies discover after a fire or flood that they’re underinsured in this area.
To protect against that risk, we review our actual operating costs and revenue streams each year and update our policies accordingly. It’s important to work with a business insurance provider who understands the unique exposures of manufacturing so you’re not left guessing after a major event.
The most frequent claims include property damage (from fire or water), employee injuries, equipment breakdown, product liability, and business interruption. Each of these risks can be managed with a combination of insurance coverage and proactive safety and maintenance practices.
Focus on employee training, enforcing safety protocols, and maintaining a clean, hazard-free work environment. Routine inspections and prompt correction of hazards go a long way. Also, keeping detailed injury logs and safety records helps identify recurring issues before they lead to new claims.
Not always. Many commercial property policies exclude mechanical or electrical breakdown unless specifically added. Equipment breakdown coverage is a separate policy or endorsement that covers repair or replacement costs and often includes related business interruption coverage.
Product liability insurance covers legal defense costs and damages if one of your products causes injury or damage. Even if you have quality control in place, unforeseen defects or mislabeling can lead to claims. This type of coverage is critical for manufacturers whose products go directly to consumers or are used in larger systems.
It covers lost income and fixed expenses when your business is temporarily shut down due to a covered event, such as a fire, natural disaster, or major equipment failure. It may also cover the cost of relocating operations or paying overtime to meet backlogged orders.
Annually, at minimum. Your coverage should reflect your current operations, revenue, payroll, and equipment. Regular reviews help ensure you’re not underinsured or overpaying for policies that no longer match your business needs.
Cyber risks are not typically included in standard business insurance policies. Manufacturers using automated systems, connected devices, or digital customer data should consider cyber liability insurance. This protects against data breaches, ransomware, and system interruptions.
Manufacturing operations face complex risks, but most of them can be controlled with proactive planning and the right coverage. At SIA Insurance Group, we help businesses across Illinois build insurance programs that protect what they’ve worked hard to grow.
If you’re ready to protect your facility, your employees, and your future, SIA Insurance Group today at 630-325-4000 to receive a quote. We serve manufacturing businesses throughout Illinois and look forward to helping you build a safer, stronger business.
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