What types of Insurance Covers are required for Factories

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Small Business Insurance Broker Quotes Australia | SMART


The working environment at factories or manufacturing facilities poses certain risks. 


Workers are often exposed to dangerous machinery, harmful particles or chemicals, traffic, falling objects, and heavy tools. Even bad lighting or short circuits can lead to serious accidents. No wonder injuries, deaths and fire breakout have become quite common in factories. 


On top of that, machinery, equipment, and stock are prone to theft, damage, and fire. 


Therefore, your concern towards the safety of your factory and visitors is justified. After all, accidents are unpredictable. 


Apart from stressing safety measures at your workplace, it is important to ensureyou have adequate insurance to cover your assets, stock and possible injury to visitors. 


Many insurance covers can protect you against any monetary loss caused by any damage to equipment and accidents. Generally, they are designed to ensure protection against a “choice of threats” like an implosion, explosion, natural disasters, fire, theft and mechanical breakdown. 


A factory owner should choose the right insurance covers to secure their business, people and resources. To help you, here we have rounded up some key insurance covers for factories. 


Business Equipment Insurance:


From machinery, tools, specialist systems, computers to POS system, your equipment are a critical business asset. 


However, they are not immune to breakdown, damage or theft, leading to a large loss. 


Enter business equipment insurance. 


As the name suggests, it can cover your business equipment and tools against damage, breakdown and losses. 


Keep in mind that some business insurance companies want your equipment to be maintained or stored in a specific way. This might be determined by the type of equipment or if the equipment is placed in your building or a third-party location. Make sure to ask your insurer on the maintenance, placement, and storage of machinery to keep the policy valid. 


Stock Insurance:


Stock is as valuable as your machinery. Losing stock can be a huge setback to your productivity and revenue. 


Stock is generally defined as raw materials, finished products or work in progress at your premises. Good thing is that stock insurance can cover the cost price of your lost, stolen or damaged stock. However, it can only cover the cost of the stock—not the price you sell them for. 


Like tools and equipment, business stock should be stored as required by your insurer. Besides, the insurance might vary based on the type of stock and insurer as well. 

Business Interruption Insurance:


Business interruption insurance is another important cover for factories. As the name implies, it covers the loss of income or profit occurred from an insured event like a fire, storm or theft.  


It is also known as business continuity insurance in Australia as the cover is designed to fund businesses while they are trading at their normal level due to a event. 


While Business interruption can help you continue your business operations, it is important to choose your indemnity period carefully. 


Indemnity period refers to the length of time for which compensation or benefits are payable to your business. Besides, this is the time a business think it requires to overcome the situation. 


A business that can easily relocates- needs a short indemnity period -perhaps 12 months -while a business that relies on specific infrastructure and machinery might take longer- perhaps 24 months. 

Public Liability Insurance:


Also known as general liability insurance or liability insurance, public liability insurance is an essential insurance for most businesses in Australia. 


This insurance type can cover the claims of personal injury or property damage that someone else suffers due to your business operations. 


For example, clients can end up with an injury after experiencing slips, trips and falls at your manufacturing plant. Or what if drilling at your premises damages the property outside? 


Public liability insurance might help you cover the damages and injuries caused by your business operations. 

Fire and Peril Insurance:


Manufacturing facilities are always vulnerable to the risk of fire and natural calamities. That’s why they should consider fire and peril insurance to get protection against such risks. Fire and peril insurance can cover buildings, contents, stock and work in progress. 

So these are some of the important insurance coverages to choose from for your factories or manufacturing facilities. Make sure you assess your risks and requirements before opting for any insurance covers. Or it may be wise to discuss your concern with your insurance broker. 

Disclaimer : 


*Important: Cover may be available subject to meeting insurers underwriting criteria. Some of the covers listed may or may not be available or may have limitations or exclusions. Cover inclusions vary significantly from insurer to insurer. DO NOT rely upon the above. Check your policy schedule carefully for inclusions and exclusions and limitations. Talk to a business insurance broker for more information.

Author Bio:


Romit Malhotra is the brand representative of Smart Business Insurance, a leading Australian insurance broker. A big foodie, he loves to travel the world. Also, a diligent businessman, Romit likes to pen down his thoughts on related topics whenever he finds some free time.



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