Manufacturing, Wholesale & Retail

Commercial liability packages (sometimes referred to as CPP's or BOP's) provide balance sheet protection in the form of financial reimbursement and liability protection in the form of coverage for defense costs and damages resulting from:

• Claims asserting bodily injury and/or property damage
• Product liability claims (unless excluded)
• Advertising Injury such as libel, slander and infringement related claims 
• Theft and property damage losses for inventory, business property, machinery, etc
• Loss of business income
• Equipment breakdown
• Key Broadening endorsements (Transit coverage, basic cyber, employee dishonesty, ERISA, basic EPLI, and more)

Due to the fact that endorsements can either broaden and extend coverage or limit/exclude coverage, policies should be carefully reviewed. Seemingly small endorsements such as “selling price” endorsements and business income coverage for dependent properties (such as suppliers, retailers and leaders) can provide substantial coverage enhancements. Due to the advertising risks faced by this sector, it is also often wise to seek coverage through a carrier that has a strong reputation for advertising coverage.

overage, policies should be carefully reviewed. Seemingly small endorsements such as “manufacturers’ selling price” endorsements and business income coverage for dependent properties (such as suppliers, retailers and leaders) can provide substantial coverage enhancements. Due to the advertising risks faced by this sector, it is also often wise to seek coverage through a carrier that has a strong reputation for advertising coverage. 

Many wholesalers’ are likely to find that locating a “standard” or “admitted” carrier is a challenge, or that product liability has been carved out due to the increased potential for litigation resulting from a product failure. Partnering with a broker that understands how to navigate the market can be helpful. Implementing strong risk management procedures, quality controls and performing product liability audits can help with improving your underwriting outlook and assist with maintaining competitive premiums. While product liability policies are fairly standardized, there are still important coverage terms to consider, such as: occurence reporting vs claims made forms (and the implications of each), inclusion of coverage for completed operations and availability of extended reporting periods or discontinued operations. Coverage for claims related to product recalls or asserting financial damages resulting from a delay or failure to deliver product(s) require separate coverage under manufacturers’ errors and omissions and product recall coverage. Coverage should be evaluated carefully as policies may be written on an occurrence or claims made trigger which both react very differently.

Workers Compensation insurance is a mandatory coverage for companies with employees (including volunteers, uninsured independent contractors, leased or part time labor). It provides coverage for employees’ wages and medical payments resulting from injuries sustained while “on the job”. Coverages to consider include “broad form all states” coverage and foreign workers compensation coverage (especially important for employees traveling abroad for business). Additional employee related coverages that should be considered include: 

• EPLI/Employment liability (protection for the hiring/firing of employees and discrimination/harassment related claims)
• Employee benefits
• ERISA/Fiduciary coverage (for the administration of employee benefits)
• Long term disability
• Kidnap & Ransom (for employees traveling abroad for business)

Claims against product-based businesses and their directors & officers are broad in nature, can arise form a variety of activities and can be unpredictable. Online apparel companies have recently become the target of class action claims arising from their website's user terms. Studies have also indicated that companies with revenues over 25 Million are significantly more likely to encounter a D&O related suit. Recent claim trends include:

• False & deceptive advertising claims surrounding the labeling and advertising of organic and sustainable products
• False & deceptive advertising claims arising from outlet pricing schemes and artificially reduced prices
• An uptick in claims brought by clients and the FTC against companies mis-labeling their products as “Made in the USA”.
• For companies seeking funding through crowdfunding and the JOBS Act, claims from investors and the potential assertions of fraud are increased

In addition to direct protection for the executives and balance sheet protection for the entity, D&O can also provide coverage for regulatory and administrative proceedings and investigations as well as a level of reputational protection in the form of coverage for PR expenses for “crisis management”. 

D&O packages can also include coverage for: 1) crime and employee theft (which is often a critical coverage for wholesalers) and 2) EPLI (employment related liability) for claims asserting wrongful termination, failure to hire, discrimination, harassment, retaliation, etc. Trends such as the DOL’s recent changes to overtime laws and mis-use of social media in the workplace when making employment decisions are fueling employment related claims against employers. 

Cyber insurance is quickly becoming a critical coverage for manufacturers and wholesalers companies. While companies in this sector may be less susceptible to theft of personal information, breaches can be equally damaging. Breaches against manufacturers and wholesalers can result in:

• Supply chain disruption/interruption (which can also result in loss of business income)
• Theft of clients’ IP and corporate confidential information
• Disruption in assembly or manufacturing through virus or malware introduction to critical machinery/equip (which can result in loss of business income)
• Cyber espionage and phishing attacks (according to a Verizon study, these attacks most affect manufacturing companies)
• Theft of employee tax data and health records
• Breaches affecting cloud providers and 3rd party processors

Crime & fidelity insurance provides protection for the entity against financial losses resulting from crime, theft and dishonest acts committed by employees, executives, independent contractors and other parties. Claims can include theft of money or securities, forgery, alteration, computer fraud, fraudulent invoicing, credit card and funds transfer fraud and more. More modern schemes include social engineering attacks (such as business email compromise, also known as CEO fraud). Third party crime coverage provides protection for claims of theft asserted by clients or customers while your employees are working on their premises or have access to computer networks. 

Ocean Cargo and inland transit insurance is a critical component for wholesalers, providing protection for damage to products, goods and inventory during foreign transit overseas (via vessel or aircraft) and/or domestic transit in the US (via air, rail, truck, mail or common carrier). Damage can result from theft, physical losses (such as fire or water damage), spoilage, jettison, concealed damage, and more. Cargo policies also provide protection for products and inventory while in storage at the warehouse.

For companies considering securing coverage through their freight forwarder, there are numerous advantages to self controlled insurance policies such as:

• Generally broader coverage
• True "warehouse to warehouse" protection - eliminating any potential coverage gaps in between
• Insurance is not "pooled", meaning rates and premiums are not affected by other shippers in your "pool"
• Immediate certificate issuing minimizing potential shipping delays

Not all product failures result in bodily injury or property damages, sometimes the only damage sustained is a financial loss to your client. The only policy designed to respond to such a loss is an E&O policy. These damages can result from your errors, design oversights or failure to deliver. The IOT (internet of things) and emerging 3D technology has also increased the need for E&O insurance in this sector. While almost all product based businesses can benefit from the implementation of professional liability insurance, it is particularly important for manufacturers, designers and fabricators involved with: 

• Custom design or products
• Installation
• Performing CAD or engineering work
• Design and materiel consulting or advising
• Packaging and labeling