Insurance for a factory, is usually obtained on a business combined insurance policy wording. For insurance purposes, a factory is usually defined as an industrial building or number of buildings containing equipment for manufacturing items or altering items or where workers supervise machines engaged in the production of items. The range of goods that are produced in factories is almost endless. Obtaining Factory Insurance can sometimes prove a little harder than other types of commercial combined insurance cover, a factory will have a number of trade processes being carried out to do with the manufacture of goods and the insurance company will take these processes in to consideration when calculating it’s premium. In simple terms, the more risky the trade processes being carried out in the factory, the more expensive the insurance.
Insurance for a factory is usually arranged with a policy wording, that is split in to various sections, some will be compulsory, some will be a matter of choice. Before requesting a factory insurance quotation, it’s essential that you are in a position to supply all the relevant information in order for the insurance company to provide a quotation. This is a fairly complex cover and in order for the insurer to advise you correctly they will need fairly detailed information and have a good grasp of all the processes being carried out at the premises.
Factory Insurance-obtaining a quote
A good place to start is by providing a full description of the business, perhaps a little of it’s history from when it started, the description should include what the factory does, how it does it and to whom it supplies the finished goods (including if any of the goods are exported and if so, to which countries they are sent). Some of the extensions under the business interruption section may provide cover in the event of an eventuality occurring at one of your suppliers, so think carefully about who supplies materials etc to the factory and how reliant you are on them, think what would happen to your own production if supplies were not delivered to you on time.
Obtaining insurance for the factory building is reasonably straight forward, you will need to provide details of the construction ( brick stone etc), including the type of roofing material used. In many cases with factories, more than one material is used on the roof and it’s important to check the full details. You will also have to supply, the approximate age of the factory, ( and any later additions), the security employed such as locks and alarms etc and the method of heating the premises. If your factory building is equipped with a sprinkler leakage system, this should be pointed out at the quote stage. Both damage to the building and contents/stock can be covered against accidental sprinkler leakage, but the insurers will need to know full details of the system and will have some additional questions about it’s maintenance. Needless to say, the full address and postcode will be required as well of any known history of flooding, subsidence heave etc. Usually factory building insurance can be arranged to cover Fire & Special Perils ( may be referred to as standard insurance perils) or extended to include accidental damage. It’s important to check the range of perils on offer as some that you would consider to be standard ( such as subsidence) may only be offered as an optional extra. You may also find that you need to effect a separate section to cover such things as Glass & Sanitary fittings, One section that will definitely be an optional extra is Terrorism cover. A separate premium can be quoted for this.
When it comes to insuring the contents of the factory, you will need to provide a spit between general contents ( such as those provided in perhaps an attached office, tables, chairs desks etc, with a separate amount for computers). A sum insured will be required for machinery and equipment used at the factory in the manufacture of goods,( add a separate amount for any equipment etc that will be used away from the premises and for which cover is required). You will also need to provided to details of stock you hold and materials you use in the manufacturing process. The insurance company may well have some extra questions relating to how your stock and materials are stored. For certain types of goods, particularly those that would be ruined by water damage, they may insist on a “Stillage warranty” This will place a condition on you, that all stock ( and possibly materials) be stored on pallets, shelving, racking or similar of at least a certain number of centimetres off the floor. This helps to prevent eater damage.
The loss of income or business interruption section of the policy may be optional but it it is a very important policy section and can help provide insurance protection against a serious incident at the factory such as a major fire or flood. There is usually a basic form of cover to which various options can be added depending on the type of factory and it’s location. To obtain a quotation, you will usually be asked to provide details of the companies gross profit. It is essential that this information is accurate and obtaining the details form your accountant is a good idea. In the event of a loss, the insurers will want you to substantiate the amounts you have requested as sums insured and will probably want to have access to your financial accounts.
The liability section of a factory insurance policy, in common with most commercial insurance contracts is divided between, public, employers & products liability. All these covers are essential. The products liability will provide an indemnity against claims made in relation to the supply of goods ( Product liability insurance covers you against amounts awarded as a result of damage to property or personal injury caused by your product). Products must be ‘fit for purpose’. You are legally responsible for any damage or injury that a product you supply may cause. Even if you did not manufacture the product in it’s entirety, you may still be liable. However, this type of cover is not a panacea for proving you with protection, the insurance company will want to make sure that any manufacturing or services are conducted according to industry best practice, all staff involved in the production process are adequately trained with records kept and that all of your machinery is up to date and well maintained. To obtain a quotation you will have to provide the turnover of the business, you will probably have to split this amount by geography, in particular, your insurers will want to know about any exporting, especially to the USA or Canada.
As well as the above sections, you can also purchase cover for goods in transit ( to cover your stock and materials whilst being moved) book debts cover, in case you are unable to recover monies owed to the business. money, and in some cases personal accident or assault to staff. A commercial legal expenses insurance may be another optional extra. Each section of the factory insurance policy will have a different set of terms and conditions and possible even excess as well as the policy general terms & conditions. It is important that these are studied most closely. There will be a number of warranties and conditions and all of these will have to be adhered to, if cover is to be correctly in force.