Working with manufacturers and distributors over the past several years, we’ve been able to develop a sense for the primary insurance concerns. Below summarizes the main points and offers some insight:
- Affordable premiums – First on the list for a reason…this is always a key question for the insurance purchaser. What’s the cost? As far as determining the rate, a myriad of factors are considered, and especially for a manufacturer that might have had a loss or produces different types of products, it’s not a simple thing. The best advice I can give a manufacturing company relates to risk control. Think through every aspect of business operation, production operation, safety training, facility maintenance, and ask yourself, “Would this cause the insurance company to be nervous?” If the honest answer is ‘yes’, consider how you can make improvements. As the agent, where we help is regarding relationships with insurance companies. It’s important that your agent 1) has a strong knowledge of the insurance marketplace (major players, which markets are performing well) and 2) strong relationships with those markets (If they trust you, they’ll probably offer more favorable pricing/coverages).
- Products liability coverage – Products liability insurance covers your liability for a product defectively causing bodily injury or property damage. A pharmaceutical company has a lot of risk exposure for their ‘product’ to cause bodily harm. An car company has risk exposure that a product defect could damage property or harm a person. Clearly, products liability is a very important coverage for a company producing an item. When companies come to us for a quote and let us review their current policy, we’ve been surprised to see that many manufacturers do not have products liability coverage. Sometimes cut-rate insurers exclude this coverage from the GL, and inexperienced agents don’t catch it. You need a professional review if you think you may not have products liability coverage.
- Certificate requests – Prompt and accurate delivery (including endorsement forms) – Certificates and verifying coverages is essential for manufacturers to work with their distributors and vendors. It’s pertinent for an agent to respond quickly to those requests, since the contract often depends on these certs. In recent years, companies have started requiring, as evidence of coverage, the specific endorsement forms within the GL policy and even highlighted wording. This kind of detailed analysis is time-consuming and tedious, so make sure you have an agent who’s up to the task of accurately handling these kinds of requests.
- Assistance on audits – An insurance audit can be intimidating. The insurance company sends an auditor to review sales figures, payroll, contracts and many other items. If you don’t have all your items in order or if you accidentally show incorrect information, the insurance company can apply an additional premium or reclassify your risk in a less favorable class code. Needless to say, it’s important to have a smooth audit. Surprisingly, many agents do not accompany their insured during the audit process. If your agent is professionally experienced in this arena, wouldn’t you want that person present?