Learn how chemical manufacturers insurance helps the chemicals 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.
Chemical Manufacturers Insurance
Chemical Manufacturers Insurance. Chemical manufacturers use a variety of raw materials and processes to produce a large assortment of consumer and industrial products, including some that are reactive, radioactive, or toxic. Raw materials may come from animals (bone or tallow), minerals (metals or salts), petrochemicals (oils or solvents), or plants (alcohol, resins, or waxes). While some manufacturers' processes simply involve mixing and blending, such as producing cleaners with different fragrances, other processes are more involved.
Processes can include aeration, crushing, distillation, filtering, freezing, heating, mixing, pressurizing, or washing. The end product may take a variety of forms such as aerosols, gases, liquid concentrates, powder, or solids. Cleanliness, purity, and the proper mix of ingredients are critical. Chemical manufacturers have laboratories engaged in product development, testing, and quality control.
Chemical manufacturers are responsible for the production of a wide variety of chemical products. These products can include chlorine nitric acid, sulfuric acid, hydrogen peroxide, and caustic soda, just to name a few. Chemical manufacturers also work with a range of clients, from individual companies to large whole distributors. There are also employees that need to be cared for, the equipment and machinery that have to be tended to, and the property that has to be maintained. In other words, those who own chemical manufacturing companies have a lot of responsibilities on their shoulders.
While you do your best to ensure that you are providing the best possible services, are following procedures, and are attending to the needs of your clients and employees, there's always a chance that something could go wrong. As the owner of a chemical manufacturing company, you are responsible for any of the issues that may arise. In order to protect yourself from the monetary losses that can be associated with the number of issues that may occur, it's essential that you invest in the right type of chemical manufacturers insurance coverage.
Why Chemical Manufacturing Insurance Is Important
When it comes to operating a business, you try your best to avoid mishaps; however, there is always the possibility that something could go awry. Since the nature of your business involves working with dangerous chemicals, there's a serious risk that your employees could sustain injuries or illnesses while performing their job duties. If that happens, you will be held responsible for paying their medical bills and lost wages.
Furthermore, you are also liable for any legal claims that may be filed against your business as a result of third-party injuries or property damage, as well as any losses to the property that the building that you operate your business out of and the machinery that you use. These are just some of the liabilities that are associated with owning and operating a chemical manufacturing business.
In the event that a problem does occur, you will be stuck footing the bill; but, if you have the right type of insurance coverage, instead of paying those expenses out of your own pocket, your insurance provider will cover them. In short, having insurance protects you from serious financial risks that would lead to upheaval if you had to pay such astronomical costs on your own. In the business world, chemical manufacturers insurance is one of the best investments that you can make.
Types Of Insurance Policies For Chemical Manufacturers
The specific types of policies you should carry depend on several factors; the size of your company, the clients that you serve, where your business is located, and so on. However, the following forms of coverage are an absolute must for chemical manufacturing companies:
- General Liability - In the event that any non-employee third-party claims are filed against your business, such as a property damage claim or a bodily injury claim, general liability insurance will protect you. For instance, if a third-party is injured on your commercial property, your insurance carrier will cover the cost of the individual's medical bills, as well as court fees and any damages that the court finds you liable for.
- Commercial Property - With this type of policy, the physical assets of your chemical manufacturing business will be protected. Commercial property insurance covers damages to your building - whether you own or lease - as well as the contents within it; your equipment, machinery, inventory, and so on.
- Workers Compensation - With workers' comp, your employees' medical bills and lost wages will be covered if they sustain work-related injuries or illnesses. This type of coverage is a requirement for business owners that employ a staff in most states.
- Pollution Liability - The process of manufacturing chemicals could result in pollution; a chemical spill could damage the land and water surrounding your plant, for example. Pollution liability coverage will help to pay for the cost of cleanup procedures. It will also cover legal fees if any lawsuits that may be filed against you.
These are just some of the examples of chemical manufacturers insurance coverage that chemical manufacturing businesses should invest in.
Chemical Products Manufacturing's Perils And Risks
Property exposure consists of an office, plant, and warehouse or yard for storage of raw materials and finished goods. There may be a laboratory for product development and testing. Ignition sources include electrical wiring, production machinery, and buildup of static electricity and sparks which could trigger a destructive chain reaction. While some chemicals may be inert, others are reactive (flammable, corrosive or explosive) and require special handling as improper storage may result in explosions.
If used to create new products, there will be a reaction and creation of energy in the form of heat. Large storage tanks for raw materials and vats for mixing and blending may contain substances with high potential for fire and explosion. Some chemicals may be spoiled by temperature change, humidity, dust or other changes. Hazards increase without fire suppression devices or other controls designed for the particular chemical processes. Poor housekeeping is a serious fire hazard.
Unless disposed of properly, greasy, oily rags (such as those used to clean the machinery) can cause a fire without a separate ignition source. As some ingredients are targets for theft, 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.
Equipment breakdown exposures include malfunctioning production equipment, ventilation systems, electrical control panels and other apparatus. A lengthy breakdown to production machinery could result in a severe loss, both direct and under time element.
Crime exposures are chiefly from theft either by third parties or employees, particularly for precious metals or explosives. 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.
Inland marine exposures include accounts receivable if the manufacturer offers credit, computers (which may include testing applications and computer-run production equipment), goods in transit, and valuable papers and records for customers' and suppliers' information, quality control testing results, and proprietary formulas. The main causes of loss are fire, theft, and loss by spill or contamination, especially during a collision.
Premises liability exposure is high due to the potential for explosion and release of chemicals which may be reactive (flammable, corrosive or explosive) or toxic - or both. Dust from processing, toxins released in a fire, or fumes, spills or leaks from chemical tanks may cause serious bodily injuries or property damage. There should be a distance barrier between the applicant and the closest neighbor. An evacuation procedure must be in place.
The fire department must be aware of the chemicals in use so that they can have appropriate gear on hand to control any fire or vapor release. If the manufacturer conducts tours, visitors may be injured by slips, trips, or falls. Fences should surround the facility with warnings posted to discourage trespassers.
Products liability exposure may be very high depending on the chemicals used in production and final use. Quality control at all phases of the operation from initial receipt of raw materials to packaging is critical to reducing the exposure to injury. Poor quality control, improper storage, transport or inappropriate packaging and labeling may result in bodily injury or property damage. If chemicals are made to customer specifications, there must be a contract in place specifically detailing the product needs and the quality control process for each party.
Environmental impairment exposure is very high. Sudden or cumulative discharges may contaminate air, surface or ground water, or soil. Processes may cause thermal or noise pollution. Disposal of wastes must adhere to all federal and state guidelines. Exposure is increased significantly if underground or outdoor tanks are used due to the potential for leakage or spillage.
Commercial auto exposure is very high if the manufacturer has its own tanker trucks and transports raw materials or finished products. Transportation of volatile chemicals can result in an explosion in the event of a collision. Drivers should be trained in spill containment, have an appropriate license with a Hazardous Materials endorsement, and an acceptable MVR. It is also important that the tankers have a standard maintenance routine that is well documented.
All vehicles must be well maintained with appropriate documentation kept in a central location. Manufacturers generally have private passenger fleets used by sales representatives. There should be written procedures regarding the private use of these vehicles by others.
Workers compensation exposures may be very high. Injuries from production machinery are common, as are burns from chemicals, slips, trips, falls, foreign objects in the eye, hearing impairment from noise, and back injuries from lifting and other material handling. With some compounds, there is the possibility of explosion. Chemicals may be toxic or caustic, with a high potential for injury to eyes, lungs, or skin.
Employees must be fully informed as to the potential effects of the chemicals, including long-term occupational disease hazards so that they can be aware of warning symptoms and obtain treatment as early as possible. Eyes must be protected and eye wash areas should be close to all vats. Drivers of forklifts and vehicles may be injured in accidents.
Chemical Manufacturers Insurance - The Bottom Line
We hope this article on chemical manufacturers insurance has been informative. To find out if there are any additional policies you should have and how much coverage you should carry, contact a knowledgeable insurance broker.
Further Reading On Manufacturing & Product Liability Insurance
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