Protecting Against the Unforeseen

As with any avenue in life, the unforeseen can occur and unintentional actions can cause harm to another. In day to day activities we protect ourselves with different forms of insurance so we are protected individually. We pay car insurance to ensure our safety and property is protected every time we pull out of the driveway. We insure the contents of and the physical structure of our homes against theft or natural disasters. We insure our own health and lives with insurance against disease or critical injuries that will have a detrimental impact on how we live our lives. For business owners, it is no different – risk assessment must be managed effectively and in the manufacturing industry there is a specific policy called

Manufacturer’s Errors and Omission Liability Insurance that fills the gaps general liability insurance can not provide.

In the world of manufacturing there are many moving parts or, cause and effect. In the metal manufacturing industry, this can range from handling raw materials, machine deficiencies, workers’ training (or lack thereof,) or a malfunction of the final product. It is important for manufacturers to have the right protection to cover all forms of liability. General liability protects as its name suggests; generally. But there are many specifics that also need consideration.

What is E&O Liability Insurance?

Manufacturers errors and omission liability insurance protects business owners against unforeseen circumstances that are without intent but can cause harm to others or their properties due to design flaws or malfunctions. By definition, this policy agrees to pay sums that the insured party is legally obligated to pay as damage due to bodily harm or property damaged that their manufactured product caused to a third party.

It’s simple: if a manufactured product is flawed in design, or its intended use malfunctions, it could cause harm.  General liability insurance will not protect against losses or damage in this instance. Error and omission liability (E & O) will cover these gaps and are written for this specific need. A comprehensive E&O policy will cover the cost of defending a client in any legal course of action taken as a result of harm done. This will also cover the financial loss of others the client is obligated to pay, meaning anyone impacted by a faulty design or malfunction of the product is compensated.

Who Qualifies for E&O Insurance?

With plans like Prime Manufacturing provided by leading insurance company Aviva Canada, there are certain stipulations that must be met for a client to receive this type of coverage. Specific underwriting guidelines include:

• Primary business is manufacturing and the business is located in Canada;
• Documented quality control processes must be provided for review;
• Client must demonstrate three years or more of experience in a specific manufacturing industry;
• There must be a documented product recall process in place for review.

These are just some of the stipulations that a manufacturing specific policy will require, but each case is independently reviewed.

Good risk assessment management will involve partnering with a local broker who can provide you the best advice on which Manufacturer’s Errors and Liability Insurance product to choose. Brokers like those at Regional Insurance based in the GTA have worked for more than 30 years in the insurance industry and have deep roots with clients over multiple generations of leadership. Choosing the right broker will enable manufacturers to take full control of their business and move forward confidently knowing their best interests and those who are using their products are covered.