Learn how apparel and clothing manufacturers insurance helps textile 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.
Apparel And Clothing Manufacturers Insurance
Apparel And Clothing Manufacturers Insurance. Clothing manufacturers produce a wide range of apparel items for men, women, infants and children. Also produced are athletic wear, awnings, backpacks, draperies, linens, and tarps. Clothing may be produced from natural or synthetic fibers. Natural fibers come from animal, plant, and insect sources, and include cotton, hair, linen, silk and wool. Common synthetic fibers include acrylic and nylon. Natural and synthetic fibers are commonly blended to produce desired qualities such as absorbency, comfort, durability, or water resistance.
The process consists of designing the item, developing patterns, cutting the individual pieces, sewing the parts together, applying trims or clasps, applying finishing, and then packaging for shipment. Although some automation may be possible in the cutting process, sewing of individual items is a labor-intensive process. Because of the varieties of materials and processes involved in production, the different phases of manufacture may be carried out in different locations or different countries.
Working in the apparel and clothing manufacturing industry is so rewarding. You are providing your companies with clothing lines that meet the needs of their clients. However, despite the benefits of your business, it is also an extremely demanding industry. You likely employ several - or even hundreds - of employees, you need to ensure that you are meeting the needs of all of your clients, and you are relying on expensive machinery to get the job done.
Should the unforeseen arise - an accident, an injury, damage to your property - you could be held liable. These types of liabilities can end up costing a fortune if you have to pay them out of your own pocket. However, if you have the right type of apparel and clothing manufacturers insurance coverage, you can avoid these liabilities and the potentially devastating financial liabilities that come along with them.
Why Commercial Insurance Is A Must Clothing Manufacturing Businesses
Despite your best efforts to ensure that your business is running as smoothly as possible and that all of your clients and employees' needs are being met, there is always a chance that an error could occur. Machinery could malfunction, an employee could make a mistake, someone could be injured. In these types of situations, you would be held liable for any damages.
You could also be looking at legal problems. That's why it's so important to carry insurance coverage. Without it, you would have to pay for damages, medical bills, and legal expenses out of your own pocket. The cost could be crippling, and could end up putting you in financial ruin. You run the risk of going bankrupt, and you could potentially lose your business.
If, however, you have the right insurance coverage, your carrier will help to cover the cost of these liabilities. For instance, if an employee is injured on the job, workers' compensation insurance would cover the cost of any medical fees, lost wages, and any legal action that the employee might take. In other words, having apparel and clothing manufacturers insurance can save you from financial peril, which is why insurance is one of the best investments that you can make.
Types Of Insurance For Apparel & Clothing Manufacturers
There are several types of commercial insurance policies that apparel and clothing manufacturing businesses should carry. Some of the most highly recommended coverages include:
- Products Liability: With products liability insurance, you will be protected from any negligence claims that clients may make. For instance, if a client files a lawsuit against you stating that you didn't properly fulfill an order, this form of insurance would cover the legal fees, as well as any damages that may be awarded.
- Commercial Property: If your property is damaged - the physical building you work out of or your equipment - commercial property insurance would help to cover the cost. For instance, if a fire breaks out in your building, your insurance carrier will help to cover the cost of damages to your building and equipment.
- Commercial General Liability: This form of coverage protects you from any third-party injuries or damages that may arise. For example, if a client visits your facility and slips and falls, your insurance carrier would cover the cost of the individual's medical care, as well as any damages that he or she may sue for.
- Workers' Compensation: f you employ a staff, you will also need to invest in workers comp insurance. Should an employee sustain an injury while on the job, your coverage would pay for the damages that he or she sustained, as well as any lost wages, and even help to cover the cost of medical bills.
These are just a few of the different forms of apparel and clothing manufacturers insurance coverages that are recommended.
Apparel And Clothing Products Manufacturing's Perils And Risks
Property exposures consist of an office, production plant, and warehouse for raw materials and finished goods. Ignition sources include electrical wiring, heating systems, and production machinery. Chemicals used in fabric dyeing or coating are often flammable and should be properly labeled, separated, and stored in approved containers. Dust from textile processing operations can explode if ignited. This hazard increases in the absence of well-maintained dust collection systems attached to the knitting and cutting stations.
Fabrics (raw materials, supplies, scrap and finished goods) and foam fillers are often highly combustible, especially if poorly stored without adequate aisle space and shelving. Fabric is susceptible to damage by fire or smoke, water and moisture, or temperature. Minor fires may result in major inventory losses. Poor housekeeping, such as failure to collect and dispose of scraps 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. Appropriate security controls must be taken including 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.
Equipment breakdown exposures include malfunctioning production equipment, dust collection and ventilation systems, electrical control panels and other apparatus. These should be properly maintained and records kept in a central location.
Crime exposure comes from employee dishonesty and theft. 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), exhibitions, 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. Goods in transit may be damaged by fire, collision, overturn, and theft or water damage.
Premises liability exposure is normally low due to limited access by visitors. If the manufacturer has a showroom or offers tours, visitors may be injured by slips, trips, or falls. Chemicals used in the coating and finishing may be corrosive and/or toxic. Fumes, spills or leaks may cause serious injury or property damage to neighboring premises.
Products liability exposure is normally light unless infants', children's wear or sleepwear is manufactured or if there are other special conditioning or fabric treatment processes. Infants' and children's clothing must meet all federal flammability guidelines.
Environmental impairment exposure is light unless the manufacturer performs any fabric dyeing or chemical treating. Fumes and improper disposal of scrap can result in air, ground, or water contamination. Disposal procedures must adhere to all EPA and other regulatory standards.
Business auto exposure may be high if the manufacturer transports raw materials or finished products. 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 exposures can be moderate to high. Injuries from production machinery are common, as are burns, cuts, slips, trips, falls, foreign objects in the eye, hearing loss from machinery noise, and back injuries from lifting. 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.
Flammable liquids and chemicals used to treat fabrics can cause skin irritation, eye irritation and possible long-term occupational disease. The high volume required for production schedules may lead workers to remove guards on the machinery, or to postpone maintenance and repair. Repetitive motion injuries can result from ongoing use of machinery. Workstations should be ergonomically designed.
Safety consciousness and commitment of management, especially in the form of ongoing enforcement and awareness programs, are important considerations. A large amount of the piece work may be done by individuals whose status (employee or independent contractor) must be clear. Production incentives can be a disincentive to safety if the only consideration is by piece production.
Apparel And Clothing Manufacturers Insurance - The Bottom Line
We hope this article on apparel and clothing manufacturers insurance has been informative. To find out exactly what type of coverage you should carry, or to learn if there are all-encompassing plans available for your industry, speak to a professional insurance broker. Together, you can discuss exactly what type of protection you need, how much coverage you should purchase, and how much it will cost you.
Further Reading On Manufacturing & Product Liability Insurance
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