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If you run a manufacturing business you’ll need to insure not just your workers but your machinery and stock. There are plenty of options – but where do you begin?
In Australia, manufacturers have numerous companies to choose from when it comes to business insurance. Some of the better known companies include: NRMA, GIO, Shine, Allianz, AAMI and OAMPS.
The three main types of insurance you’ll need to consider are: product liability insurance, public liability and professional indemnity insurance.
Product liability insurance will cover you if there is damage or injury to another business or person because the product you make (or are selling) failed in some way.
Public liability insurance protects you and your business if liable for the death or injury of a person, property loss or damage or “economic loss” as a result of negligence.
Professional indemnity insurance covers you if you get sued by a client for negligent acts and shields you from some of the associated legal costs.
More about product liability insurance
Product liability insurance protects a manufacturer from damages their product could cause to another business. It also insures against death or injury resulting from a fault in the manufactured product. In some circumstances, the shop that sells the product can also be protected by product liability insurance. This insurance can cover products that the manufacturer imports, modifies or assembles, as well.
Since liability for damages can cost businesses millions of dollars, manufacturers in particular need an appropriate level of cover. As well as running the risk of expensive legal action from individual parties, manufacturers can have action taken against them by the Australian Competition and Consumer Commission (ACCC). If people are affected by faulty goods, the Trade Practices Act allows the ACCC to pursue businesses on their behalf.
Workers compo plus more
A variety of other insurance policies are available to manufacturers, from workers compensation policies to fire prevention; machinery breakdown to damage of goods. In Australia, insurance regulations and offerings vary from state to state. The Australian Government website for businesses has a list of links to information about business insurance requirements in each state. Some of this advice is specific to manufacturers and is well worth a look.
While different business will require different types of insurance, there are some areas of commonality. For example, fire insurance covers you if the buildings and contents of a business are lost as a result of fire, while loss of gross profit insurance insures against money a business loses because of disasters. This includes costs such as wages for employees. Depending on the exact nature of the business, other types of insurance, such as machinery breakdown or burglary insurance are recommended.
Insurance regulations by Australian state
Some states and territories require businesses to have certain types of insurance, such as Workers’ Compensation insurance. Other states, such as Victoria, only require businesses to take out a WorkCover insurance policy if they expect to pay more than $7500 a year in remuneration to staff. Check with the state government where you are operating the business for greater detail about your obligations.
