If you run a manufacturing business in the Greater Toronto area you have a lot of different risk factors to consider. In fact, manufacturers insurance can be a difficult business decision because you need to keep your costs down and still cover all your risks. However, it’s never a good idea to scrimp on insurance and here is an example why.
Paul wanted to build a better mouse trap and he put a lot of time and effort into designing the perfect trap. It worked on electricity and once the mouse entered the unit, it was humanely electrocuted. There were many other electronic rodent traps on the market, but Paul’s was different. His product would also take care of rats, and the price was very reasonable. By cutting costs on the high voltage transformer and making other changes, he was able to offer a trap for significantly less money than the competition.
As soon as Paul was able to get a business loan, he bought a small facility just outside of Toronto for his manufacturing plant. He started out small, and soon his trap became very popular.
Before long, Paul expanded his operation and when he told his insurance agent, the agent advised Paul to increase his manufacturing insurance and raise all his liability coverage. Paul wanted to keep his operating costs down but his agent was an experienced risk management professional, and Paul trusted him. He decided to spend the extra money on product liability insurance. This turned out to be an excellent business decision.
Five months later, Paul’s company started getting claims of defective traps. One of his transformer suppliers sent him units made with smaller wiring and some of them overheated in customer’s homes, resulting in fires. The claims totalled several million dollars, and had Paul not raised his product liability coverage, he would have been financially devastated. Instead, his insurance company paid the claims and soon things returned to normal.
Manufacturer’s coverage is specifically designed to meet risk factors of the 21st Century manufacturing company. It should include all the things that can go wrong, and offer fair compensation for them.
