Manufacturing businesses face unique risks from heavy machinery, product defects and facility operations. Below we've summarized the insurance coverage types manufacturers need most, including recommended amounts for each type.
What Insurance Do You Need For a Manufacturing Business?
Manufacturing businesses need workers' comp, general liability, property insurance and equipment breakdown coverage for complete financial protection.
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Updated: November 24, 2025
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Manufacturing Business Insurance Requirements: Key Takeaways
Workers' compensation is most critical for manufacturers due to high injury rates from heavy machinery, repetitive motion and hazardous materials. (Read More)
Manufacturing businesses need workers' compensation, commercial auto and general liability insurance required by state law and client contracts. (Read More)
Optional coverage manufacturers should get includes equipment breakdown insurance, business interruption insurance and pollution liability insurance.
To stay compliant, get certificates of insurance, verify coverage matches requirements, add clients as additional insured and maintain coverage. (Read More)
What Insurance Types Are Needed For a Manufacturing Business?
Required by law in most states once you hire employees, workers' comp pays medical costs and lost wages for machinery accidents, repetitive strain injuries, chemical burns and back injuries from lifting materials. Manufacturing businesses report high injury rates due to heavy equipment, moving parts and hazardous processes. | State-mandated minimums vary by location and payroll. Verify your policy covers medical expenses, lost wages, rehabilitation costs and death benefits per state requirements. | A machine operator's hand was caught in a CNC machine, requiring emergency surgery and six months of physical therapy that cost $89,000 in medical bills plus $34,000 in lost wages. Workers' comp covered all $123,000, protecting the employee and business from financial burden. | |
Covers third-party bodily injury and property damage from your operations, including customer injuries on premises, damage during delivery and product liability for defective goods that harm end users. This provides your primary defense against lawsuits from customers, visitors or anyone injured by your products. | We recommend $1 to $2 million per occurrence and $2 to $3 million aggregate for most manufacturers. Retailers and distributors often require $2 to $5 million in total coverage before carrying your products. | A batch of metal brackets had a defect that caused structural failures in 47 customer installations, resulting in $340,000 in property damage, $125,000 in injury claims and $85,000 in legal fees. General liability covered all $550,000, preventing bankruptcy and allowing a voluntary recall. | |
Protects your facility, machinery, raw materials, work-in-progress inventory and finished goods from fire, theft, vandalism, wind and hail. Landlords require this for leased facilities and lenders require it for financed properties. | Coverage should equal the full replacement cost of your building (if owned), all equipment, inventory and raw materials—$500,000 to $5 million depending on facility size. | An electrical fire destroyed $280,000 in CNC equipment, $95,000 in raw aluminum, $140,000 in work-in-progress parts and caused $380,000 in building damage. Commercial property insurance covered the full $895,000 loss, allowing the manufacturer to rebuild within four months. | |
Equipment Breakdown Insurance | Covers repair costs and production loss when machinery breaks down from mechanical failure, electrical issues, operator error or boiler explosions—perils standard property insurance excludes. A single equipment failure can halt production entirely. | Most manufacturers need $250,000 to $2 million in equipment breakdown coverage based on their most expensive machinery, plus business interruption for 30 to 90 days of lost revenue. | A hydraulic press suffered a pump failure that cost $87,000 to repair, required three weeks of downtime costing $156,000 in lost revenue and spoiled $34,000 in materials. Equipment breakdown insurance covered all $277,000, including expedited parts shipping to minimize downtime. |
Replaces lost income and covers continuing expenses like payroll, rent and loan payments when manufacturing operations shut down due to covered property damage or equipment failure. This keeps your business financially stable during the weeks or months needed to repair damage and resume production. | Coverage should equal three to 12 months of gross revenue plus fixed expenses, with most manufacturers choosing six months ($250,000 to $2 million depending on annual revenue). | A warehouse fire forced an 11-week production shutdown during repairs and equipment replacement, resulting in $520,000 in lost revenue and $180,000 in continuing payroll and rent. Business interruption insurance covered all $700,000, allowing the manufacturer to retain employees and reopen without loans. | |
Manufacturing Business Insurance Requirements
Manufacturing business insurance requirements include workers' compensation, commercial auto, general liability and commercial property coverage mandated by state law and client contracts. Requirements vary by state, client type and manufacturing processes.
Workers' Compensation Insurance | Required by law in most states once you hire your first employee, with penalties including fines up to $10,000 per employee, criminal charges, business license suspension and personal liability for all injury costs. Manufacturing businesses face strict enforcement due to high injury rates from machinery and hazardous materials. | State-mandated minimums vary by location and payroll. Coverage must include medical expenses, lost wages, rehabilitation costs and death benefits per state statute. |
Required by law in 49 states for all business-owned vehicles used to transport materials, deliver products or move equipment. Personal auto policies don't satisfy state requirements for commercial use. | State minimums range from 25/50/10 to 30/60/25 split auto liability limits. Many manufacturers carry $1 million combined single limit to meet state law and client contracts. | |
General Liability Insurance | Commercial landlords require this before leasing manufacturing space, lenders require it for financing, retailers and distributors require it before carrying your products, and some municipalities require it for business licensing. This protects clients and property owners from liability claims related to your operations or products. | The industry standard is $1 million per occurrence and $2 million aggregate for most manufacturers. Major retailers often require $2 to $5 million in total coverage before stocking your products. |
Commercial Property Insurance | Landlords for leased manufacturing facilities and lenders for financed properties require this to protect their investment. Most commercial leases and loan agreements specify minimum property coverage in the contract terms. | Coverage equals the replacement cost of the building and contents, from $500,000 to $5 million depending on facility value. Lenders require coverage equal to the loan amount or full replacement cost, whichever is higher. |
Pollution Liability Insurance | Manufacturing facilities using chemicals, solvents or hazardous waste face contractual requirements from landlords and EPA regulations requiring financial assurance for environmental cleanup. State environmental agencies may mandate this for RCRA permits and hazardous materials storage. | Coverage requirements range from $1 million to $5 million based on the volume and toxicity of materials used. Federal and state agencies set minimums based on potential cleanup costs for your manufacturing processes. |
Large commercial clients, Fortune 500 companies, government contractors and major retailers require umbrella coverage above your primary liability limits. High-value manufacturing contracts mandate this before awarding bids or purchase orders. | High-value clients require $3 to $5 million in total coverage for standard contracts. Premium clients like aerospace, medical device and government agencies may require $5 to $10 million. | |
Performance and Payment Bonds | Government manufacturing contracts and large commercial clients require performance bonds guaranteeing contract completion and payment bonds ensuring subcontractors and suppliers get paid. The Miller Act mandates these bonds for federal contracts to protect against manufacturer default. | Bond amounts equal 50% to 100% of the total contract value. Federal government contracts require 100% performance and payment bonds for contracts exceeding $150,000. |
How To Ensure Manufacturing Business Insurance Requirements Are Met
Below we've outlined steps for maintaining compliance with manufacturing insurance requirements after purchase, including obtaining proof of insurance, verifying coverage meets contract terms and keeping documentation current.
- 1Request Certificates of Insurance (COI) from your insurance provider
After purchasing policies, immediately request COIs from each insurer since most providers offer instant download or email delivery within minutes to hours. Manufacturing businesses need COIs that specify covered products, especially when supplying retailers who require product-specific documentation before placing orders.
- 2Add clients and landlords as "Additional Insured" and verify coverage amounts
Commercial contracts and facility leases require adding clients, retailers and landlords as additional insured on your general liability policy. Contact your insurer to add endorsements for $25 to $100 each. Review each COI to confirm policy limits match contract requirements: retailers need $2 million to $5 million while government contracts may mandate higher limits.
- 3Submit COIs to retailers, landlords, lenders and licensing authorities
Submit COIs to retailers before they'll stock your products, to landlords before lease signing, to lenders for equipment financing and to municipalities for business licensing. Each entity has specific submission requirements and deadlines—retailers may need COIs listing specific product lines while government contracts require precise certificate language.
- 4Update equipment schedules and property values as you acquire machinery
When you purchase new manufacturing equipment, contact your insurer to add machinery to your property and equipment breakdown policies with current replacement values. New machinery won't be covered if it breaks down until you update equipment schedules, and annual property audits will catch discrepancies between reported and actual values.
- 5Complete annual workers' comp audits and maintain continuous coverage
Workers' compensation insurers conduct annual payroll audits to verify actual wages versus estimates, resulting in premium adjustments or refunds. Set renewal reminders 30 to 60 days before expiration and proactively send updated COIs to active clients and landlords to avoid contract breaches from coverage gaps.
Get Business Insurance You Need For Your Manufacturing Business
Use our tool below to get matched with insurers specializing in manufacturing coverage. Compare quotes from several providers and research costs for equipment breakdown, product liability and workers' comp tailored to industrial operations. Choose insurers who understand machinery risks and handle equipment failure claims efficiently.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.