Learn how auto parts manufacturers insurance helps automobile parts industry manufacturing businesses protect themselves against the many complex risks they face every day. Whether your business is large or small, or you make one or many products – you need the right commercial insurance program to protect you.
Auto Parts Manufacturers Insurance
Auto Parts Manufacturers Insurance. Automobile parts manufacturers produce a wide variety of components used to manufacture, maintain or repair automobiles, buses, motorcycles, trucks, or other vehicles. Goods can range from the production of various parts and components to finishing or assembling parts manufactured by others. Operations may include metal casting, electroplating, heat-treating or deburring, sheet metal work (rolled metal stamping), molding and extrusion of plastics, welding, spray-painting, and fabric upholstering.
As an auto parts manufacturer, you provide an invaluable service. You are responsible for making high-quality, reliable products that your clients can depend on to ensure the safety, performance and appearance of their vehicles. However, while your services are, indeed, important, it doesn’t come without risks.
You work with other people, employ a team of professionals, and are using heavy machinery on a constant basis; these are just some of the factors that can affect the safety of your business. Despite your best efforts to ensure you, your employees, and your clients are as safe as possible, accidents can happen. That’s why it’s so important to carry the right type of auto parts manufacturers insurance coverage.
Why Is Business Insurance Coverage Important For Auto Parts Manufacturing?
What would you do if a machine malfunctioned and one of your employee’s was seriously injured? What would happen if your shop was broken into, vandalized, or damaged during a storm? How would you cope if a client sued you, alleging that you damaged his or her property or that you are negligent?
These types of issues can come with serious financial repercussions. In the event that your property is damaged, for example, you would have to pay for the repairs. Should a client or employee sue you, you would be liable for the legal fees and any compensation that a court might award. Would you be able to handle these types of financial obligations? If you answered ‘no’ to this question, then you can easily see why it’s so important to carry the right type of auto parts manufacturers insurance coverage.
Without coverage, you would be responsible for paying repair bills, medical bills, court fees, and more, out of your own pocket. The cost can quickly add up and put you in financial ruin. You might be forced to close your business and possibly even file for bankruptcy. You could stand to lose everything.
If you have the right type of auto parts manufacturers insurance coverage, however, the financial burden associated with these types of incidents would be taken off of your shoulders. Your insurance provider would assist you with repairs, replacements, legal fees, medical bills, and more. That is why insurance is one of the best investments you will ever make for your business.
What Types Of Insurance Do Auto Parts Manufacturers Need?
So, what type of insurance coverage should you carry as an auto parts manufacturing business? There are actually several policies that are highly recommended, which include:
- Commercial General Liability: This type of insurance coverage will protect you in the event that a third party is injured on your premises or claims that you damaged their property. For example, if a delivery person slips and falls at your facility, your commercial general liability insurance coverage would help to cover the cost of any medical bills, as well as the legal fees, should the individual file a lawsuit against you.
- Errors and Omissions insurance: This is also a form of liability insurance, except it protect you and your employees from any claims that may be made by clients for negligence or unsatisfactory work. For instance, if a client claims that you do not complete the job as promised and files a suit against you, this form of insurance would cover you.
- Commercial Property: In the event that your commercial space or the supplies within it are damaged, whether by theft, vandalism, or an act of nature, commercial property insurance would cover you. This form of insurance covers your commercial space, as well as the contents inside of it; in other words, it will cover the cost of repairing or replacing lost or damaged property.
- Workers Compensation: If you employ a crew, then you must carry workers’ comp insurance. In the event that an employee is injured on the job or suffers a work-related illness, your coverage would pay for his or her medical care, as well as any lost wages. It would also help to cover the cost of any legal action the employee might take.
These are just some of the examples of the types of auto parts manufacturers insurance policies you should carry.
Auto Parts Products Manufacturing’s Perils And Risks
Property exposure consists of an office, production plant, and warehouse for storage of raw materials and finished goods. Ignition sources include electrical wiring, heating systems, production machinery, welding and spray-painting. Wear and tear and overheating of machinery are potential fire hazards. There may be fuel tanks on premises. Hazards may include woodworking, sheet metal work, casting, heat-treating, electroplating, and plastic, fiberglass work, and upholstery operations.
In the absence of well maintained dust collection systems, cutting and buffing operations can generate dust which can catch on fire. Welding should be done in a separate area away from combustibles. Spray painting should be conducted in an area with explosion-proof wiring that meets all UL standards. Poor housekeeping, such as failure to collect and dispose of trash on a regular basis, could contribute significantly to a loss. Unless disposed of properly, greasy, oily rags (such as those used to clean machinery) can cause a fire without a separate ignition source.
Property stored in the open may be subject to loss by wind or hail or a target for vandalism. Appropriate security controls must be taken including lighting and physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Bottlenecks in the assembly process may result in a high concentration of values of partially completed units, affecting both property valuation and business income. There may be a substantial exposure to loss of income resulting from damage to dependent properties such as key suppliers or customers.
Equipment breakdown exposures include malfunctioning production equipment, electrical control panels and other apparatus. These should be properly maintained and records kept in a central location. A lengthy breakdown to production machinery could result in severe loss, both direct and under time element.
Crime exposures are chiefly from employee dishonesty and theft as auto parts can have a high street value. Employees may act alone or in collusion with outsiders in stealing money, raw materials or finished stock. Background checks should be conducted on all employees. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements. There should be security methods in place to prevent theft.
Inland marine exposures include accounts receivable if the manufacturer offers credit, computers (which may include computer-run production equipment), goods in transit, and valuable papers and records for customers’ and suppliers’ information. Backup copies of all records should be made and stored off premises. There may be contractors’ equipment such as forklifts, or an installation exposure if the manufacturer offers installation service. Stock in transit may be susceptible to damage from collision, overturn, fire and theft.
Premises liability exposure is normally low due to limited access by visitors. If tours are given, visitors may be injured by slips, trips or falls. Fumes, dust, and noise from processing could affect neighbors, resulting in nuisance claims.
Products liability exposure can be light for interior or exterior trim or upholstery or a non-operative part such as air conditioning or sound systems. The exposure increases substantially if the manufacturer produces a critical operating part or system (such as parts for engine, transmission and power train, steering and suspension, axels, braking, fuel control) or a critical safety component such as passenger restraining devices.
Warning labels regarding dangers of personal injury are important, but provide only limited defense as courts commonly apply strict liability standards to inherently dangerous products. Malfunction in the wiring could present a fire or an electrocution hazard. A defect in the fuel lines or gas tank could result in an explosion. Well-maintained vehicles may have a long life span and include older equipment made before improved safety features were introduced.
Environmental impairment exposure can range from moderate to high due to the potential for air, land and water pollution from dust and fuel storage tanks. Raw plastic materials may be toxic and are flammable, the catalysts may be caustic, and the final product is usually not biodegradable. Metal contaminants may come from the chemicals, paints, and solvents used. Vapors, fumes and air pollutants as well as wastewater and disposal of by-products must be evaluated and controlled.
Disposal of plastics, chemicals and flammable liquids must adhere to all EPA and other regulatory standards. There may be fuel tanks on premises with the potential for spillage and contamination. If there are underground tanks, a UST policy may be required.
Commercial auto exposure is high if the manufacturer picks up raw materials or components or delivers finished goods to customers. Deadlines placed on drivers (such as “just in time” service to customers) increases the hazard. Manufacturers generally have private passenger fleets used by sales representatives. There should be written procedures regarding the private use of these vehicles by others. Drivers should have an appropriate license and an acceptable MVR. All vehicles must be well maintained with documentation kept in a central location.
Workers compensation exposure is moderate to high. Injuries from production machinery are common, as are minor cuts, burns, slips, trips and falls, foreign objects in the eye, back injuries from lifting, hearing loss from noise, and repetitive motion losses. Workstations should be ergonomically designed. Employees should be provided with safety training and protective equipment. Areas that generate dust require respiratory protection devices, as well as eye protection and eye wash stations.
Metalworking can result in injury from cuts, amputations, and burns from welding and heated metal, exposure to dust, and respiratory problems from spray paint and solvents. Plastics have similar exposures, plus a potential for burns from heated machinery and eye and skin irritants from chemicals and resins.
Auto Parts Manufacturers Insurance – The Bottom Line
We hope this article on auto parts manufacturers insurance has been informative. To find out more about exactly what type of policies you should invest in, and how much coverage you should have, speak to a reputable insurance broker.