Clothing manufacturers have faced complicated challenges over the past few years. Supply chain interruptions, cargo theft and new workplace safety demands have drastically changed the standard insurance portfolio for clothing and textile producers. Here, we’ll look at the basics and some of the specialized products you should consider.
Commercial general liability insurance is the baseline
If you have visitors to your facilities for tours or to display your products, you have liability exposures. You may also run retail outlets where guests can get injured. Incidents can occur in dressing rooms as well. General liability coverage helps with investigation, settlement and defense costs for any liability claims brought against your company. Commercial general liability insurance also covers personal injury and advertising harm, which helps if a competitor alleges you infringed on a copyright or used its advertising slogan or trade dress in your ads. With more online sales activity, advertising injury insurance is an important consideration for today’s clothing manufacturers.
Commercial property insurance protects your buildings, contents and products
Whether you own or lease, it’s important to protect your company from damaged or destroyed facilities that house your business personal property. Commercial property insurance protects your buildings, business equipment and supplies. It can even include coverage for lost business income due to a property loss. Within your commercial property coverage, you should also consider something called “inland marine” insurance. This covers any fabrics or clothing that you take to trade shows or customer meetings, and merchandise awaiting shipment. For example, if your product is destroyed while being stored at a warehouse awaiting transfer to a merchant, inland marine would cover your loss. One type of inland marine insurance, called cargo insurance, covers product while in transit from your facility to the buyer. If you are transferring product via an ocean vessel or aircraft, you will need ocean cargo or air cargo coverage. Shipping insurance, as you can see, is complicated.
Lastly, you may want to consider flood or earthquake insurance, since floods and earthquakes are not covered under basic commercial property insurance.
A businessowners policy may be right for you
Some insurers offer a businessowners policy (BOP) designed specifically for clothing manufacturing companies like yours. BOPs offer some of the following insurance coverages:
- Premises liability — if a visitor to your facility is hurt
- Property — if your building is destroyed or its contents are damaged
- Business income — if you lose revenue due to a covered loss
A BOP is one of the most comprehensive ways to insure smaller manufacturing risks. Another advantage of a BOP is a single renewal date, which eliminates the need to track multiple policies.
Equipment breakdown coverage can minimize losses after machinery failure
When electrical or mechanical equipment malfunctions, you can lose income and face costly repairs. Electric arcing, power surges, and other equipment and power malfunctions can create havoc for your assembly line. Equi pment breakdown insurance usually covers lost income as well as repairs to the equipment and any other property the breakdown may have damaged. Many insurers also offer an added layer of protection: risk control services that can help prevent breakdown and mitigate downtime by rushing critical parts or repair expertise.
Workers’ compensation insurance
Garment workers are at risk for several types of injury, including repetitive motion disorders, puncture wounds, gashes and amputations. There are also disease hazards, most notably upper respiratory infections. Workers’ compensation covers wage replacement, medical treatment and (in some cases) vocational rehabilitation if an injured worker is unable to perform the duties of their original position.
Cyber insurance for liability and property
In today’s fashion world, the internet plays a role in your sales, inventory, revenue and production. Cyber insurance can help when there is a digital failure. It covers both liability (if your negligence or error causes harm to another party) and property (if a hack impedes your ability to conduct business). A quality cyber insurance program also includes expert help for preventing and recovering from a digital disaster.
Umbrella insurance. As you grow, you may require extra production facilities. Talk to your agent or broker about options to scale up your coverage in terms of property, personnel and insurance coverage limits.
Employment practices liability. As an employer, you should also consider employment practices liability insurance. This type of coverage protects your company from financial loss if a worker makes a claim of harassment or other wrongful treatment. These claims are common across industries and should be considered as part of your risk management plan.
Business auto. Anyone who travels for your company, whether for meetings, sales calls or conventions, should be insured by you. That includes carrying business auto insurance, even if they use their own vehicle.
Directors and Officers. Your directors and officers also need protection, even if you are a closely held company. Stakeholders are becoming more aggressive about leadership’s duties regarding the environment, social responsibility and governance (such as fiduciary care). If you are a family or closely held organization, talk to your agent about key person insurance, which provides financial help in the event of the untimely death of an owner.
Errors and Omissions. Lastly, all companies that offer a health benefits or retirement plan should consider errors and omissions insurance to cover any financial problems caused by an on-staff benefits administrator’s error or neglect. One missed filing or lost document could result in serious monetary losses for an employee participant, who could sue for those damages.
Contact Consolidated Insurance + Risk Management to tailor a program that suits your business!