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Updated 19 Apr 2018

3 'Covers’ that should be in place when starting a factory

Before you push play in your new manufacturing operation, you need insurance. Tailored, bespoke insurance. Here’s why. 

Pritesh Ruthun, 16 April 2017  Share  0 comments  Print

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“From the day an entrepreneur starts a business, he exposes himself to certain risks. Even before the first employee is hired, a business is at risk, making it important to have the right insurance in place. One lawsuit or catastrophic event could be enough to wipe out a business before it even has a chance to get off the ground,” says John Boitnott at Entrepreneur. 

This is particularly true for you, as you venture into the digitally charged world of modern manufacturing. Standard Bank’s Head of Corporate and Business Insurance, Bryan Verpoort explains that it is essential to seek expert insurance advice for your business and that cheap insurance isn’t always the best insurance.

Related: Essential elements to consider when moving your factory into the digital age


“Get professional advice. The market’s flooded with insurance adverts saying buy this and we’ll sort out all your insurance needs, and that’s not the right approach,” Verpoort says. He explains that you need to consider your specific business needs and that a tailored insurance solution would work best.

As a start-up manufacturer, it can be difficult to judge the exact cover you’ll need upfront. A reputable insurer will provide you with sound advice based on your business model. If you’re still finalising your business model, here are three insurance packages you must consider when signing up for cover: 

1. Insure for general liability 

“Liability insurance, also known as errors and omissions (E&O) insurance, covers a business against negligence claims due to harm that results from mistakes or failure to perform,’ says Boitnott. Verpoort agrees, but he also adds that there’s no ‘general-fit’ policy for liability insurance. 

“Each industry has its own set of concerns that will be addressed in a customised policy written for a business,” adds Boitnott. Here’s where you need to be detailed and honest about the type of operation you’re going to run, and the risks at play, when engaging with an insurance provider. If your employees work with hazardous machinery, for example, you’re going to need to cover them for mishaps on the production line.

2. Insure for on-duty injury

On -duty -injury -on -a -factory

Anything can happen on a mechanised production line. Fingers can become lodged where they aren’t supposed to be in the first place and nicks and cuts can become a challenge too.

Worse still, what happens if more than one worker is injured in a one-in-a-million-chance forklift accident in the warehousing area? Can you afford to pay their salaries while they recover, and can you afford additional salaries for temporary-replacement employees? 

“Cover medical treatment, disability and death benefits in the event an employee is injured or dies as a result of his work. Even if employees are performing seemingly low-risk work, slip-and-fall injuries could result in a pricey claim,” Boitnott explains.

Related: 3 Essential insurance cover types you need to protect your work site

3. Insure for data hacking 

In the past, pre-everything-connected, you would probably get away with not spending money on cover for data breaches. But, in this digital age, your sensitive information is at risk of being hacked by savvy hackers. 

“Since the company is responsible for protecting the information, if a data breach occurs, an insurance product will protect against any potential loss,” say Hippo spokesmen.

Manufacturing sector experts add that your company’s intellectual property and its digital assets contribute to the overall net-worth of your company. It’s therefor essential that this data be covered in the event of a breach and loss of information.

Imagine your prototypes leaking onto the Internet to be picked up by an unscrupulous manufacturer elsewhere in the world? How are you going to monetise your products if there’s cheaper knock-offs in circulation? The right insurance can mitigate these risks.

You might think that your company won’t face the challenges that other manufacturers have in the past because you’re planning differently, but why take a chance? Contact Standard Bank for more information on the ideal cover for your manufacturing business.


  • All businesses face risks, but in the manufacturing game you need tailored cover to adequately insure the company.
  • Anything can go wrong on the production line, so you need to cover your workers for injuries sustained on the job.
  • As most of your intellectual property exists in the digital realm these days, you could be hacked. You need cover for cyber-crimes.
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About the author

Pritesh Ruthun

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