The toy manufacturing industry is made up of establishments that manufacture complete dolls, doll parts, doll clothes, action figures, toys, games (including electronic), hobby kits, children's vehicles, and other types of toys and games.
Manufacturing toys involves a wide range of processes and equipment, depending on the type of toy being produced and the materials involved. But any manufacturer faces risks, including losses due to equipment breakdown, defective parts, fire, weather, employee injuries, and other types of unforeseen business interruptions.
If you own or operate a toy manufacturing business, you need to understand all of the risks that are present, and work with an independent insurance agent to find business insurance policies that will help mitigate those risks.
Why Do You Need Toy Manufacturer Insurance?
Toy manufacturers engage in complex and sometimes hazardous work with large, expensive, and dangerous equipment. This makes risks for employee injuries, equipment breakdowns, product defects, fire, weather damage, and other types of interruptions a daily concern.
If you own or operate a toy manufacturing facility, you need to understand all of your risks and how to protect your business and your employees against devastating injuries, property damage, and financial losses.
Here are some of the risks that your facility could face every day:
- Employee safety concerns (burns, machinery dangers, slips and falls, etc.)
- Equipment and building damage due to accidents, fire, theft, weather, and other natural disasters
- Machinery and equipment breakdowns
- Business interruption due to accidents, fire, natural disasters, machinery breakdowns, utility interruptions, and more
- Damage to products in transit
- Product defects and recalls
You need a comprehensive toy manufacturer insurance program in order to address these risks, and more, depending on the specific needs of your business.
What Does Liability Insurance Cover for Toy Manufacturers?
You can protect your operations, products, and employees with a variety of manufacturing insurance policies tailored to your needs.
Every business needs general liability insurance for occasions when the business is negligent and causes third-party bodily injury or property damage. A commercial general liability (CGL) policy protects you in the event of third-party lawsuits with coverage for attorney fees, court costs, settlements, and judgments up to the limits of your policy.
Most manufacturers will have product liability exposures. Claims for product-related damages are usually related to manufacturing or production flaws, design defects, or defective warnings or instructions. If you are sued for some type of product negligence, you may be required to pay for medical costs, compensatory damages, economic damages, attorney fees, court costs, and more.
Product liability insurance covers your financial responsibility for losses or injuries to a user, buyer, or bystander caused by a defect or malfunction of your product. Some product liability coverage is usually included in standard commercial general liability (CGL) policies, but never assume that the coverage is sufficient. You need an experienced agent to help you determine how much product liability exposure you have, and how much and what type of coverage you need.
If you own a fleet of vehicles to transport your products, equipment, and other goods from place to place, you need commercial auto insurance. This insurance covers your vehicles and drivers in the event of an accident or other vehicle damage that occurs. Commercial auto insurance provides coverage for property damage and bodily injury liability claims, vehicle damage, and any costs related to lawsuits due to auto accidents involving your vehicles.
What Does Property Insurance Cover for Toy Manufacturers?
Most toy manufacturers need to protect their plant and equipment from property damage caused by all kinds of unforeseen events. Your commercial property is susceptible to fire, theft, vandalism, and natural disasters. Commercial property insurance can protect your building and other property in the event of a covered loss.
Commercial property insurance protects your business if a fire, vandalism, smoke, theft, or another covered peril (cause of loss) damages your property. It can provide coverage for lost inventory, industrial equipment and machinery, warehouses and office space, office equipment, computers, valuable papers, and more. It may also provide coverage for neighboring facilities and completed products housed on your premises.
Commercial property insurance policies typically include business interruption coverage, which protects your earnings if your business is unable to operate because of damage caused by some type of covered disruption (fire, hail, wind, equipment breakdowns). This coverage is invaluable if you are forced to close your doors for some time in order to make repairs. It pays for rent, employee salaries, lost income, relocation fees, and more.
In addition, you can expand your business interruption coverage to include coverage for breakdowns in utility services (water, electrical) that force you to temporarily close your doors.
Covering commercial property can be complex if you have multiple locations. Manufacturers with multiple buildings or locations must list each one separately on their commercial property policy in order for each location to be covered. An independent insurance agent can help you calculate appropriate valuations for your plant and equipment, determine the right policy limits, and ensure that all of your owned properties are covered.
What Is Inland Marine Insurance?
Another major property concern for toy manufacturers is the potential for damage to your product as it is being transported from place to place. Your shipping contracts determine which party is responsible for a product as it is transported, and you may often need inland marine insurance. Inland marine insurance is designed protect you from losses when cargo is damaged in transit. It covers a variety of shipping and transit situations, including:
- Shipments from a supplier to a user
- Private shipments from one party to another
- Shipments from a main warehouse to a retail outlet
Any piece of property that is moved from one location to another can be covered with an inland marine policy. The best way to ensure that you find the right type of inland marine coverage for your needs is to work with an independent agent who has experience working with toy manufacturers.
Why Do You Need Equipment Breakdown Coverage?
Another potentially devastating property risk for toy manufacturers is damage to or breakdown of equipment. Without your specialized equipment, your business would be unable to operate, pay for expenses, and earn revenue.
Equipment breakdown insurance, often referred to as boiler and machinery coverage, supplements your commercial property insurance. It covers certain costs associated with accidental breakdowns of machinery or equipment and the resulting property damage or loss.
Equipment breakdown coverage typically covers breakdowns due to power surges, motor burnout, boiler malfunction, and even operator error. While the name evokes images of old or outdated machines, equipment breakdown insurance includes coverage for the latest technologies. You can obtain coverage for mechanical and electrical equipment, computers and computer systems, boilers, and other types of pressure equipment.
Boiler and machinery insurance covers repair and replacement costs related to a breakdown of covered machinery or equipment. It may also cover related business interruption costs.
Toy Importers and Exporters May Need Cargo Insurance
Any importer or exporter who buys or sells goods overseas needs protection from huge financial losses should those goods be damaged or lost while in transit. If your goods are damaged during transit, you may lose out no matter which side of the transaction you are on.
Cargo insurance covers the loss and/or damage of cargo while it is in transit by sea, air, or land. It is often referred to as ocean cargo insurance, as in many cases the primary form of shipment is by boat. Cargo insurance can be standardized for all of your shipments, or customized for every shipment you make or receive.
Worker's Compensation Insurance is Required for Toy Manufacturers
All manufacturing facilities can be dangerous places, and the safety of your employees is of the utmost importance.
Your workers may come into contact with heat and welding tools, electrical components, heavy machinery, and numerous dangers to fingers, toes, eyes, and other appendages. Employees who regularly work with hand tools are particularly vulnerable to repetitive motion injuries. And constant exposure to lacquers, paints, and other chemicals also can be potentially dangerous to workers.
Worker's compensation insurance provides insurance coverage when accidents happen in the workplace. It ensures that the injured worker gets medical care and income protection while unable to work.
Worker's compensation insurance provides benefits to injured workers regardless of who is at fault for their injury. And it will provide death benefits for a worker’s dependents if they are killed.
Find an experienced independent insurance agent who has experience with toy manufacturers in order to make sure you have the right coverage and safety programs in place.
Product Recall Insurance for Toy Manufacturers
Toys are often found to have some type of problem or defect that leads to a product recall. Toys are particularly sensitive to safety considerations. If a product that you’ve manufactured presents a choking or strangulation hazard, you're likely to be forced to recall the product, remove it from the market, and absorb all of the related costs.
If one of your toys is recalled, the costs can disastrous. Product recall costs can include:
- Product removal costs (pulling the product from the marketplace)
- Advertising and promotional costs to launch the recall
- Product storage, destruction, and disposal costs
- Product replacement, repair, and distribution costs
- Fees to wholesalers, distributors, and retailers
- Communications costs, including detailing the recall to the public and government agencies, as well as continued public relations costs
- Investigative costs
- Business interruption costs
- Fines, legal fees, settlements and judgments
After the immediate crisis subsides, the costs of a recall can continue to haunt your business for years in the form of decreased sales, reputational and brand harm, and decreased stock value.
Product recall insurance can help you with many of these costs, and might even help you avoid bankruptcy or closing your doors.
How Much Does Toy Manufacturer Insurance Cost?
The cost of toy manufacturer insurance depends on several factors, including the size of your business and the types of policies you need to cover your unique risks.
With so many variables (e.g., number of employees, types of manufacturing equipment, size and location of your building, and the volume and geographical distribution of your products), your costs may vary significantly from other toy manufacturers.
Find and Compare Quotes
An independent agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Independent insurance agents simplify the search process for finding the right toy manufacturer insurance. They’ll walk you through some handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
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