Manufacturers need tailored coverage: product liability, machinery breakdown insurance, coverage for inventory and raw materials, in-transit goods insurance, business interruption and, depending on the sector, environmental liability. A generic commercial policy is not sufficient for manufacturing-specific risks.

Not automatically. Product recall coverage is a separate endorsement that covers notification costs to customers, costs of withdrawal and destruction of defective products, as well as associated business losses. For food, pharmaceutical or consumer product manufacturers, this is essential coverage — a recall can cost millions of dollars.

It covers claims by third parties injured or whose property is damaged by a product you manufactured. If a customer is injured by equipment you produced, your insurer assumes legal defense costs and indemnities, up to the policy limits. For export to the United States, a minimum limit of $5M is generally recommended.

Machinery breakdown insurance covers sudden mechanical or electrical failures of covered equipment. Business interruption insurance compensates for lost revenue during the stoppage. These two coverages work together: the first pays for repairs, the second compensates for what you lose during the downtime. They should be purchased simultaneously for optimal protection.

Inventory (finished products, work in progress, raw materials) must be declared at replacement value. Inventory value often fluctuates by season — inform your broker of predictable peaks to avoid underinsurance during high production periods. An automatic value adjustment clause can be helpful for businesses with highly variable inventory.

Industrial fire insurance covers replacement value of the building, equipment and destroyed inventory. In a manufacturing context, inventory reconstruction can take weeks or months depending on raw material availability — which is why the indemnification period for business interruption must be well calibrated. ULC-certified sprinklers often reduce premiums significantly.

Standard commercial policies generally do not cover merchandise in transit. Separate cargo insurance is needed. It covers damage that occurs during transport by truck, train or ship. For regular shippers, an annual open cargo policy is more economical than coverage for individual shipments.

Yes. If you entrust part of your production to a subcontractor and a defect in their work causes a claim, you can be held responsible as the final manufacturer. Always require a certificate of insurance from your subcontractors and verify that their product liability coverage is adequate. A well-drafted subcontracting agreement should include indemnification and insurance clauses.

ISO 9001 or ISO 14001 certification can positively influence your risk profile in the eyes of insurers, as it demonstrates formalized quality control processes. Some insurers offer discounts to certified companies. It does not replace insurance, but can facilitate negotiation of better terms, particularly for product liability.

Notify your broker and insurer immediately. Take emergency measures to prevent aggravation of the damage. Document everything with photos and videos before any cleanup. Begin compiling your financial statements and production data for the calculation of business interruption losses. An industrial claims adjuster will be appointed by the insurer — you can also hire your own adjuster to defend your interests.