Companies that manufacture, distribute, and sell sporting firearms and supplies play a critical role in the country's economy. According to the Firearm Industry Trade Association (FITA), these companies account for more than 342,000 jobs in the U.S. each year, with an annual economic impact of nearly $63.5 billion.
Whether you're in charge of a large-scale plant or a small, local enterprise, you need ample insurance coverage. Gun manufacturers are exposed to many of the same risks as other business owners, but the nature of the industry requires special consideration.
Today, we're sharing the ultimate guide to insurance in the firearms manufacturing realm.
The Importance of Insurance in the Firearm Manufacturing Industry
Firearm manufacturers are different from other business owners. The products you create are highly specialized and technical in nature, and your business requires careful, comprehensive protection at every turn.
Talk to your insurance agent about your unique risks, and consider all of the types of business insurance that could benefit your team. An agent is not only qualified to talk to you about all of the different plans and policies to invest in but can also help you secure the lowest rates and best coverage around.
Keeping that in mind, let's take a look at some of the most important policies to review.
Liability Insurance for Gun Manufacturers
There are several different types of basic business insurance that firearm manufacturers are required to hold. However, let's start with one of the most important types of coverage: liability insurance.
There is a myriad of different liability exposures that apply to any company that's responsible for manufacturing guns. As you consider all of the different types of insurance your business needs, pay particular attention to your level of exposure and the types of risks they open your company up to.
Here are a few of the different types of liability insurance to consider.
Commercial General Liability Insurance
It's unlikely that you'll have many members of the general public visiting your operational facilities. Most gun manufacturers don't allow visitors or customers, but you will have business partners, distributors, and suppliers who enter onto your grounds.
As such, you will need commercial general liability insurance to protect your business in the event that a third party experiences any type of bodily injury or property damage while at your property. If these incidents occur due to any type of negligence on your end, then the injured party could sue you for damages.
For instance, the equipment could malfunction while in operation causing shattered parts to scatter across the facility. This could injure the user or any nearby bystanders. In addition, the property itself could be a hazard, causing someone to slip, fall, or otherwise harm themselves because obstacles and safety risks were not adequately marked or communicated. If you have a test facility in-house, these lead to additional risks.
With a commercial general liability policy in place, you'll protect your company against any lawsuits that could ensue.
Product Liability Insurance
As a firearm manufacturer, you naturally take pride in your work. You follow strict industry standards to make sure each part and product is designed to rigorous safety and operational standards. You include detailed instructions and guides to ensure that all users fully understand how to operate, maintain, and store your equipment.
However, the reality is that problems can still occur.
Any type of firearm could go to market with an unknown manufacturing or production flaw, despite intensive testing and quality assurance processes. Similarly, there could be an inherent design defect within your product or instructions/warnings that are not entirely correct or detailed enough.
When any of these issues happen, personal injuries and property damages can occur. Usually, these incidents occur away from your manufacturing facility, when users are operating the firearm on their own terms. In this case, they can sue for product-related damages.
If your company is found negligent (and even if it isn't), you could be required to pay for those damages, which can include:
- Medical bills
- Attorney fees
- Court costs
- Other compensatory costs
Navigating the Types of Liability Insurance
If you have product liability insurance, then this plan will cover your financial responsibility for any types of losses or injuries that a user, buyer, or bystander may experience as a result of your product. If a defect or malfunction occurs, this coverage will kick in to cover the associated costs.
Note that some commercial general liability insurance plans will include a degree of product liability coverage. However, this level of coverage is usually insufficient to cover most damages, especially for large manufacturers. In that case, you may need to purchase a separate product liability plan.
A reputable insurance company with experience in the firearm and ammunition industry can guide you on the type and level of liability insurance you need.
Additional Business Insurance Policies
In addition to the liability insurance coverage detailed above, there are other types of insurance that gun manufacturers need to have. Let's take a look at a few of the most common ones to discuss with your insurance agent.
Worker's Compensation Insurance
Manufacturing plants expose workers to a range of risks that can affect both their health and personal safety. If any employee experiences an injury or illness as a result of working at your plant, then they may need to miss work to recover.
Worker's compensation insurance will not only cover their lost wages but can also help pay for their associated medical expenses. Not only is this coverage critical to your ongoing operations, but most states require you to have such a policy in place.
Commercial Property Insurance
What would you do if the buildings at your facility fell victim to significant property damage? There are many issues that can cause destruction, including:
- Hail and wind
- Smoke damage
In many cases, these damages will not only affect the physical structures on your property, but they can also affect the industrial equipment and furnishings within them. As a result, you could be looking at a significant degree of lost inventory as well as compromised warehouse/office space.
Without immediate access to your office equipment, computers, and other necessary machines, your manufacturing plant could be forced to temporarily cease operations. With commercial property insurance, you can replace or repair this gear and keep your doors open.
Equipment Breakdown Insurance
Speaking of compromised or unusable equipment, you may also experience breakdowns that are not the direct result of an outside force. For instance, a critical part of one of your conveyor belts may suddenly malfunction.
If this happens, it could render your operations temporarily inaccessible. It could also damage nearby equipment. With equipment breakdown coverage (also called boiler and machinery coverage), you can cover the costs of immediate repairs so you can get back to business.
Business Interruption Coverage
Commercial property insurance will protect your business's physical assets if a covered disruption occurs. However, how would you protect your gun company's most important resource: your employees?
If your business is unable to operate due to damages inflicted by natural causes, equipment breakdowns, or theft, then your employees could be without their earnings for a designated period of time.
With business interruption coverage, you can help them maintain their financial footing during this temporary setback. As a business owner, it can also prevent you from dipping into your own pockets to keep the lights on at work.
This type of policy will usually cover the following types of expenses:
- Facility rent
- Employee salaries
- Relocation fees
- Lost business income
Some business owners also choose to add an extension to this policy that applies to disruptions in their utility service. This way, if you're forced to close for a while due to a problem with your electrical system or water supply, you won't lose a substantial portion of your business income.
Employment Practices Liability
If an employee at your firearm plant finds you guilty of discrimination, then they could file a costly and defamatory lawsuit that could have long-reaching consequences.
The same applies to any type of issue that could occur as a result of the employment practices that you currently have in place. With this type of policy, you can legally protect your company against these types of cases.
Cyber Security/Liability Insurance
Increasingly, cyber security coverage has become one of the most important types of insurance that small businesses can have. Gun manufacturers are no less vulnerable to these types of attacks than other manufacturers.
If any of your operations are automated or online in any way, then ask your insurance agent about this policy. It can protect your company from the financial and operational issues that could occur if there's a data breach at any point in your computer system.
Get Insurance for Your Firearm Industry Business Today
Are you interested in securing a comprehensive insurance policy for your firearm industry business? If so, you've come to the right spot.
Our insurance agents are well-versed in the unique requirements that gun manufacturers have, and we can help guide you on the specific types of plans that you need. We'll also compare rates from the top firearm industry insurance carriers to make sure you're getting the best deal.
Contact us today to learn more and get started.