What Does General Liability Insurance for Manufacturing Business Cover?
- May 25
- 6 min read
One small defect in a product, one forklift incident on your shop floor, or one visitor injury during a facility walkthrough can escalate into a serious liability claim faster than most owners expect. If you operate a production facility, you already know risks don’t stay hypothetical for long—that’s exactly why manufacturing business insurance, especially general liability, plays such a critical role in protecting your operation.
At Wexford Insurance, we’ve worked with manufacturers ranging from small fabrication shops to multi-line production facilities. One thing we consistently see is that many business owners carry general liability—but don’t fully understand what it actually covers until a claim happens.
Nate Jones, CPCU, ARM, CLCS, AU, founder of Wexford Insurance, explains it clearly:
“In my experience as a former underwriting manager, manufacturers often assume general liability is a catch-all policy. It’s not. It’s incredibly important—but it works best when it’s part of a well-structured overall risk management strategy.”
Let’s walk through what general liability really does, where it fits into your coverage, and how to approach it like an experienced operator—not just a policyholder.
Average Insurance Costs for Manufacturing Businesses
Before we dive into coverage specifics, it helps to understand how general liability fits into your broader insurance costs. Most manufacturing businesses carry multiple policies—each addressing different exposures.
$1,000 to $5,000 annually for small to mid-sized manufacturers
Larger or higher-risk operations may exceed $10,000 annually
Pricing depends heavily on product type, production methods, and sales volume
General liability is typically one of the foundational policies included in a comprehensive manufacturing business insurance program.
$2 to $10 per $100 of payroll depending on job classifications
Covers employee injuries such as machinery accidents or repetitive stress injuries
You can learn more about how this works on our workers compensation insurance page: https://www.wexfordins.com/workers-compensation-insurance
$1,500 to $8,000+ annually depending on building value and equipment
Covers your building, machinery, and inventory from fire, theft, or certain natural events
Business Owner’s Policy (BOP)
Typically $1,500 to $6,000 annually depending on size
Combines general liability and property coverage into a single policy
$1,200 to $4,000 per vehicle annually
Covers delivery vehicles, transport trucks, and company cars
Umbrella Insurance
$750 to $3,500 annually for additional liability protection
Extends limits above general liability and auto policies
At Wexford, we’ve seen many manufacturers underestimate how these coverages interact. General liability is essential—but it’s just one piece of a larger structure.
What Factors Affect the Cost of General Liability for Manufacturers?
Not all manufacturing businesses are viewed the same by insurance companies. Your pricing depends on how your operation actually functions—not just what industry you’re in.
Type of Product You Manufacture
A company producing food products faces very different risks than one fabricating steel components.
Higher-risk categories include:
Consumer goods with direct public exposure
Products used in critical systems or machinery
Items with electrical or chemical components
Annual Revenue
Insurance carriers use revenue as a proxy for exposure.
Higher sales volume = more products in circulation = greater potential liability.
Production Process
Manual assembly, automated production lines, and custom fabrication all carry different risk levels.
For example, automated machinery can reduce human error—but introduces mechanical failure risks.
Claims History
Past incidents matter. Even a single product liability claim can affect your premium for years.
At Wexford, we’ve worked with manufacturers who saw rate increases not because of frequent claims—but because of one poorly documented incident.
Facility Conditions
Clean, organized facilities signal lower risk to underwriters.
Slip hazards, cluttered walkways, or poor maintenance can increase your perceived liability exposure.
Contract Requirements
If you supply larger companies, they may require higher limits or endorsements, which can increase your cost.
What General Liability Insurance Covers for Manufacturing Businesses
Now let’s break down what you’re actually getting with general liability insurance.
Third-Party Bodily Injury
If a non-employee is injured because of your operations, this coverage helps.
Example:
A vendor visiting your facility trips over equipment left in a walkway and suffers an injury.
Your policy may cover:
Medical expenses
Legal defense costs
Settlements or judgments
Third-Party Property Damage
This is one of the most common manufacturing claims.
Example:
A component you produce is installed into a customer’s system and damages their equipment due to a defect.
General liability may help cover repair or replacement costs.
Product Liability
Once a product leaves your facility, you still carry risk.
If that product causes harm or damage, this coverage helps address those claims.
At Wexford, product-related claims are one of the most frequent exposures we see in manufacturing—and often one of the most misunderstood.
Legal Defense Costs
Even if a claim ultimately has no merit, defending your business can be expensive.
General liability helps cover:
Attorney fees
Court costs
Settlements if applicable
According to the Insurance Information Institute, liability claims can involve significant legal costs even when the insured party is not found at fault.
What General Liability Does NOT Cover
Understanding exclusions is just as important as understanding coverage.
General liability does NOT cover:
Employee injuries (handled by workers’ compensation insurance)
Damage to your own property or equipment
Commercial vehicle accidents (covered by commercial auto insurance)
Professional errors or design flaws (covered by professional liability insurance)
Learn more here:
professional liability insurance – https://www.wexfordins.com/professional-liability-insurance
One of the most common mistakes Nate Jones, CPCU, ARM, CLCS, AU sees manufacturers make is assuming product design issues fall under general liability—they often do not.
How General Liability Fits Into a Complete Manufacturing Insurance Plan
A strong manufacturing insurance program layers multiple coverages together.
At Wexford, we typically structure programs that include:
General liability insurance as the foundation
Workers’ compensation insurance for employee protection
Commercial property insurance for buildings and equipment
Inland marine insurance for mobile tools and specialized machinery
Umbrella insurance for high-limit protection
Real-World Manufacturing Scenario
At Wexford Insurance, we recently worked with a manufacturer that supplied components to a larger assembly company. One of their parts malfunctioned after installation, damaging a downstream system.
The situation required coordination between:
General liability for property damage
Legal defense support for claim investigation
Additional policy layers for full resolution
What stood out wasn’t just the claim—it was how critical it was that the coverage was structured correctly ahead of time.
This is why we emphasize planning over reaction.
Why General Liability Matters for Manufacturers
Manufacturing carries unique risks compared to many other industries.
You’re not just operating a business—you’re producing something that leaves your control and enters someone else’s environment.
That creates exposure at multiple stages:
During production
During handling and delivery
After installation and use
The National Safety Council highlights how workplace and operational risks can evolve into broader liability issues if not properly managed. https://www.nsc.org/workplace/safety-topics
Even a single claim can impact your reputation, your relationships, and your financial stability.
How to Lower Your Manufacturing Insurance Costs
You can’t eliminate risk completely—but you can influence how insurers price your business.
1. Implement Strong Quality Control Processes
Document inspections
Track defect rates
Maintain product consistency
2. Maintain a Clean, Organized Facility
Reduce slip and trip hazards
Improve workflow safety
3. Formalize Safety Training
Train employees on equipment use
Keep written records
4. Review Contracts Carefully
Understand liability transfer clauses
Avoid unnecessary exposure
5. Separate High-Risk Operations
Isolate riskier processes where possible
Improve containment and control
6. Work With an Independent Insurance Agency
An independent agency like Wexford Insurance can shop multiple carriers and tailor your policy structure to your actual operations—not a one-size-fits-all approach.
FAQ About General Liability for Manufacturing Businesses
Do I need general liability if I already have workers’ compensation?
Yes. Workers’ comp covers employee injuries, while general liability covers third-party claims. Both are essential for full protection.
Does general liability cover defective products?
It often includes product-related claims, but coverage depends on how your policy is structured and the nature of the defect.
Is general liability required for manufacturing businesses?
It may not be legally required, but most contracts, lease agreements, and vendor relationships require proof of coverage.
How much general liability coverage should I carry?
Many manufacturers start with $1M per occurrence / $2M aggregate, but higher limits are often needed depending on contracts and exposure.
Can general liability cover recalls?
No. Product recalls typically require specialized coverage not included in standard policies.
Why Manufacturing Business Owners Choose Wexford Insurance
At Wexford Insurance, we don’t approach manufacturing risks from a theoretical standpoint—we work with businesses like yours every day.
We’ve helped manufacturers:
Identify coverage gaps before claims happen
Restructure policies after denied claims
Align insurance with real production risks
Nate Jones, CPCU, ARM, CLCS, AU brings a unique perspective. As a graduate of Indiana State University’s Insurance and Risk Management program and a former underwriting manager, he understands how insurers evaluate manufacturing risks—and how to position your business properly.
We are also a Trusted Choice independent agency, which means we work for you—not the insurance company. We compare multiple carriers to find the best fit based on your operation.
Our team, including experienced professionals like Crystal Reeves (20+ years in the industry), focuses on clarity, service, and long-term relationships—not just quick quotes.
Get the Right Coverage for Your Manufacturing Business
If you’re reviewing your current policy or getting a quote for the first time, this is your opportunity to make sure your coverage actually matches your risk.
Our office address is107 N State Road 135, STE 304,Greenwood, IN 46142
Call 317-942-0549 or visit www.wexfordins.com.We will compare multiple carriers and help you secure the right protection at the best possible price.
