Unique Insurance Considerations for Machine Shops

construction-worker-working-on-a-machine

Not all small businesses require the same insurance coverage. Some businesses may even require specialized coverage due to

However, it's important as a business owner to understand which insurance policies would best benefit their particular type of company.

Machine shops are a specialized business that require unique insurance considerations.

ARC Insurance can create a policy unique to your machine shop business.

Read on to learn what you should take into considerations when insuring your machine shop business.

What is a Machine Shop?

A machine shop refers to a building or company where trained tradespeople (machinists) use machine tools and cutting tools to make parts out of metal or plastic. Machine shops serve a wide variety of different industries including automotive, aircraft, agricultural, oil and gas, energy, and many more.  While many machine shops are run as small businesses, though they can sometimes be a division of a factory or large company.

There are a number of different types of services that machine shops can offer, including:

  • CNC turning and milling
  • Instrument manufacturing
  • Tool manufacturing
  • Pattern manufacturing
  • CAD/CAM interfacing
  • Live tooling
  • Sheet metal work
  • Heat treating
  • And many more!

Why Having the Right Insurance for Your Machine Shop is Important

Not all business insurance policies are made equally, so it's important to choose the right policy for your machine shop business. While there are some general requirements for all business insurance policy, some components are optional. This means that your commercial insurance policy may not cover everything that you think it does. While you may think that basic commercial coverage is sufficient for your machine shop, there are a number of unique considerations.

Some potential issues that could impact a machine shop's revenue and reputation include:

  • 3rd party injury on company property
  • Physical damage to the building due to fire, weather or vandalism
  • Product or service malfunction
  • Employee injury and worker's compensation
  • Company vehicle breakdown
  • Machinery or equipment breakdown due to electrical or mechanical issues

The future is unpredictable and it would be better to prepare for unforeseeable circumstances than to place your business in jeopardy should any of these issues occur.

Not sure what your business insurance policy covers? Contact ARC Insurance for help understanding your current policy.

Coverage You Should Have for Your Machine Shop

Property Insurance

Property insurance is a must regardless of whether you rent, lease, or own the property for you business. In addition to being covered against incidents such as fire, theft, and vandalism, commercial property insurance can also protect tools, equipment, computers, and documents inside the business.

Tool & Equipment Insurance

While property insurance can offer some protection for equipment, tools, and machinery, it typically will not cover internal malfunctions or breakdowns. Specialized coverage for tools and equipment can help in the event that a machine breaks down or is out of service for a considerable amount of time. Given how important specialized equipment is for a machine shop, this type of coverage is an absolute must.

Worker's Compensation Insurance

As long as you have employees who are not owners of your business, you are required by Canadian law to have  Worker's Compensation insurance. This coverage  protects you as a business owner should one of your employees become injured in relation to their job and workplace.

Without Worker's Compensation coverage, you would be financially responsible to cover your employee's medical bills, cost of rehabilitation, any damages awarded by the courts and a percentage of their lost wages.

Commercial Auto Insurance

If you use your vehicle for work, you may need to invest in commercial auto insurance. While there are a few factors that can help determine whether or not you need commercial auto insurance, it;s best to speak to your broker if you are unsure.

Commercial auto policies can protect against injury and property damage in ways that a personal policy may not.

Business Liability Insurance

Perhaps one of the most important types of insurance coverage for a machine shop is Business Liability Insurance. In the event

This type of insurance is not required by law but can go a long way in protecting your business from legal fees. Business Liability Insurance covers all aspects of your business that may negatively affect 3rd parties such as clients and customers.

There are three key policies under business liability insurance include: commercial general liability insurance (CGL), product liability insurance, and professional liability insurance. All three should seriously be considered for a machine shop.

Commercial General Liability Insurance (CGL)

Commercial general liability insurance is the most basic form of business liability coverage. It protects against third party claims such as bodily injury, property damage, and legal fees associated with such claims. There are a number of different options for CGL coverage, so it's important to consult your broker when making changes or shopping for a new policy.

Product Liability Insurance

Machine shops create products that are used by a wide range of clients, from individuals to large companies. Your business is responsible for every product that leaves the shop. Product liability insurance protects the company in the event that there is damage or an injury from a products to to a design, manufacturing, or marketing flaw (for example, improper or insufficient instructions regarding product use).

Professional Liability Insurance

Professional liability insurance protects machine shops in the event that a client claims they are negligent - either due to an error in work or if expectations were not met. Lawsuits such as these can be costly. Professional liability coverage can help cover the costs associated should a civil suit arise.

While no one wants to see a situation come to this, mistakes happen and it's best to be protected.

Don't Leave Anything to Chance

You want to do whatever you can to protect your machine shop business and we want to help!

Contact ARC Insurance for more information on how you can safeguard your small business.

 

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