Manufacturing Insurance: The Coverage Gaps That Can Cost You with Michael Senderovich
Your manufacturing business has insurance. But will it actually cover the risks your operation has today?
In this episode of The Manufacturers Network Podcast, Lisa Ryan talks with Michael Senderovich, President of Six Thirteen Business Insurance Services, about insurance gaps small and mid-sized manufacturers may not discover until there's a claim. They discuss equipment coverage, workers' compensation, cyber liability, AI, automation, additional insureds, employment practices liability, and the questions manufacturers should be asking their insurance brokers.
Is Your Manufacturing Equipment Properly Insured?
Manufacturers may have significant investments in CNC machines, tooling, inventory, and equipment that has been operating for decades.
Michael explains why understanding the difference between actual cash value and replacement cost matters. A 40- or 50-year-old machine may be essential to production, but replacing its capability after a major loss could be much more complicated than its depreciated value suggests.
The problem gets worse when insurance policies simply renew year after year without anyone reviewing what has changed.
Michael recommends an annual insurance review even when the business appears unchanged. Manufacturers should discuss new equipment, products, employees, facilities, storage configurations, processes, and other operational changes with their broker.
AI, Automation and Cyber Risk in Manufacturing
As manufacturers add AI, robotics, automation, and connected equipment, their risk profile changes.
Michael identifies cyber liability as a major concern for connected manufacturing operations. Small and mid-sized manufacturers shouldn't assume they're too small to become ransomware or cyberattack targets.
AI can create additional insurance questions. Depending on how AI is being used and what happens when an automated system makes an error, traditional general liability coverage may not respond the way a manufacturer expects. Professional liability or errors and omissions coverage may need to be considered depending on the operation.
The takeaway: tell your insurance broker how you're actually using AI and connected technology. Don't assume an existing policy automatically covers a new risk.
Workers' Compensation: What Should Manufacturers Do After an Injury?
When an employee is injured on the job, Michael's advice is straightforward: act quickly.
Take care of the employee, notify the insurance carrier promptly, document what happened, and preserve relevant evidence. Delays and poor documentation can make a workers' compensation claim more difficult.
Manufacturers should also understand whether their workers' compensation limits and policy provisions match the actual risks employees face.
Additional Insured Doesn't Mean Fully Insured
Michael also explains a common source of confusion involving additional insured status.
Being listed as an additional insured does not necessarily provide the broad protection a customer, supplier, contractor, or business partner may assume it does. Certificates of insurance also need to be managed and monitored rather than filed away and forgotten.
That false sense of security can become expensive when a claim occurs.
What Insurance Should Manufacturers Ask About?
Beyond general liability and workers' compensation, Michael recommends manufacturers discuss coverage such as cyber liability and employment practices liability insurance (EPLI).
EPLI can address claims involving employment practices such as wrongful termination or discrimination. Manufacturers need to understand where their policies leave them exposed before a claim tests the coverage.
Questions to Ask Your Manufacturing Insurance Broker
• What exclusions in our policies create our biggest vulnerabilities?
• Is our equipment insured for actual cash value or replacement cost?
• Have changes to our products, processes, machinery, facilities, or workforce changed our risk profile?
• Does our cyber insurance reflect our use of AI, automation, and connected equipment?
• Are our workers' compensation limits appropriate for our operation?
• Are certificates of insurance and additional insureds being properly managed?
• Should we carry employment practices liability insurance?
• When was the last time our policies were reviewed against how we actually operate today?
Manufacturing insurance isn't something to put on autopilot. Your operation changes. Your technology changes. Your equipment changes. Your risks change with them.
The policy that worked five years ago may not protect the manufacturing business you're running today.
Guest: Michael Senderovich
President, Six Thirteen Business Insurance Services
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