Here at InsuranceHub, we love working with machine shop owners.
Whether you're a traditional job shop that does low-volume, high-quality work or a shop that handles high-volume work, we're here to help you. You have worked hard at building up your local business, haven't you? It's only right for you to be concerned about protecting yourself from liability. After all, your clients rely on your advice and the work that you do for them. That's why machine shop owners can be sued for fraud and negligence in the performance of their duties.
What would you do if you were hit with a liability suit for more than your current insurance covered?
Thankfully, here at InsuranceHub, we have experience helping machine shops with equipment like yours:
- Metal lathes
- Milling machines
- Machining centers
- Multitasking machines
- Drill presses
- Grinding machines
- Machinery and equipment for deburring, heat-treating, electroplating, or painting
Many of these tools are controlled by CNC and are very expensive to replace or repair. What would you do if your industrial and commercial machinery was out of order or damaged by a fire?
Types of exposure that machinist shops need protection from:
Property exposures: Your office, production plant, and storage warehouse all face risks. Potential ignition sources include sparks from grinding or lathing, production machinery, and electrical panels. This is why it is imperative to practice good housekeeping routines. Think about all of the potential fire hazards, like the greasy and oily rags that your machinists use to clean the machinery!
Equipment breakdown exposures: If your equipment and machinery isn't working, then you will miss deadlines and lose customers! Talk to your agent about investing in an equipment breakdown policy.
Crime exposures: We encourage all of our clients to do background checks on all employees. Unfortunately, employee dishonesty is your biggest concern here. Temptation to steal high-tech parts or exotic metals can be a concern. We encourage having different employees accept payments, disburse cash, and balance bank statements. Finally, we suggest monitored security systems and a video camera system.
Inland marine exposures:
- Do you offer credit to your customers? Then your accounts receivable is at risk.
- If you are machining your customer's parts and products, then you have a Bailees customers exposure.
- You have a computer risk from your computers that transact business, maintain inventory, and operate your machinery.
- Are you delivering your clients' finished products? Then you have a goods in transit exposure. Your biggest concern is fire, theft, collision, overturn, and water damage.
- Valuable papers and records. Keep copies of paperwork and computer files off site.
Premises liability exposure: This can be higher than usual if you have customers that need to be on-site for quality control purposes. Although they aren't your employees, they face the same on the job hazards your workers do. You also can be creating nuisance hazards for your neighbors with fumes, dust, and noise from your metal work.
Products liability exposure: This can be high if the final product is a critical part or system. Another concern you may have is whether you can handle the customer's specifications and the underwriter's specs. We suggest having contracts that spell out your responsibilities, their responsibilities, and quality standards.
Additional exposures for machine shops:
Environmental impairment liability exposure: This can be a major concern due to ground, air, and water contamination from the chemicals, paint, and solvents that you use. Make sure that you stick to federal and state guidelines for properly disposing of wastes.
Automobile exposure: Do you pick up raw materials, customers' property for you to work on, or deliver finished products to customers? Train your drivers on how to safely load, unload, and secure the goods during transport. Take the time to do MVR checks on all drivers on a regular basis.
Workers compensation exposure: This can be high. Many of your projects are bid with a deadline. Workers that are working under deadlines and penalties can rush and have accidents. Rushing can tempt workers to take safety guards off of machinery, causing accidents that lead to cuts and amputations.
Teach safe lifting techniques to prevent back injuries and hernias. Provide personal protection gear, like safety glasses that will prevent eye injuries from metal shavings. Design workstations ergonomically to prevent repetitive stress injuries.
Other machinist shop insurance coverage to consider:
- Employment-Related Practices Liability
- Business Auto Liability and Physical Damage
- Stop Gap Liability
Minimum recommended machine shop insurance coverage:
- Business Personal Property
- Business Income with Extra Expense
- Equipment Breakdown
- Employee Dishonesty
- Accounts Receivable
- Bailees Customers Floater
- Goods in Transit
- Valuable Papers and Records
- General Liability
- Employee Benefits Liability
- Environmental Impairment Liability
- Umbrella Liability
- Hired and Nonownership Auto Liability
- Workers Compensation