General Liability Insurance for Manufacturers: Coverage, Cost & Common Exclusions Explained

General Liability Insurance for Manufacturers: Coverage, Cost & Common Exclusions Explained

General liability insurance is one of the most important coverages a manufacturing company can carry. Whether you produce metal parts, food products, or industrial components, this policy forms the backbone of your risk management program.

In this article, we’ll break down what general liability insurance covers, how costs are calculated for manufacturers, and what exclusions you need to know about.

What General Liability Insurance Covers for Manufacturers

General liability insurance protects your business from third-party claims related to:

• Bodily injury – for example, if a visitor or delivery driver is injured at your facility.
• Property damage – such as accidentally damaging another company’s equipment during operations.
• Personal and advertising injury – including claims of libel, slander, or copyright infringement.

For manufacturers, products and completed operations liability is especially critical. This part of your general liability policy protects your business if a product you’ve made or sold causes injury or property damage after it leaves your facility.

Not all general liability policies automatically include product liability, so it’s important to review your coverage closely—especially if your products could create downstream exposure.

How the Cost of General Liability Insurance Is Determined

Insurance companies calculate your premium based on several factors:

• Gross Sales – Your business’s total annual sales help determine your level of exposure.
• Type of Manufacturing – Risk levels vary by industry. A chemical or metal manufacturer will generally pay higher rates than a furniture or food manufacturer.
• Claims History – Businesses with clean loss runs typically receive better pricing.
• Class Code – Every type of manufacturing has a unique classification code that drives the rate applied to your operations.

Just like workers compensation policies, general liability is often audited at the end of your policy term. The insurance company reviews your actual sales and exposures to make sure your premium matches your risk. If your estimates were low, you could owe an additional premium after the audit—so providing accurate projections is key.

Typical Coverage Limits

Most manufacturers start with:

• $1 million per occurrence
• $2 million aggregate limit

Depending on your operations or contractual requirements, you may want to increase these limits or add a commercial umbrella policy for extra protection. Many vendors and distributors require proof of higher limits before doing business.

Common Exclusions Manufacturers Should Watch For

While general liability covers a broad range of risks, it does not cover everything. Common exclusions include:

• Pollution Liability – Claims related to chemical spills, waste, or contamination are typically excluded and require a separate pollution liability policy.
• Product Recall Costs – The expense of recalling a defective or contaminated product is generally not covered under general liability. Specialized product recall insurance can fill this gap.
• Professional Services – Design or engineering errors are excluded and should be covered under professional liability or E&O insurance.

Understanding these exclusions ensures you’re not surprised when a claim arises. Reviewing your coverage with an experienced agent familiar with manufacturing risks can help tailor your protection.

Final Thoughts

General liability insurance provides crucial protection for manufacturers, but it’s just one part of a complete commercial insurance program. From property and equipment coverage to product liability, pollution liability, and umbrella protection, manufacturers face unique risks that require careful planning.

If you’re not sure whether your business has the right protection—or if your current limits and exclusions are leaving you exposed—it’s worth having your policy reviewed.