Leather artisanship is widespread outside the apparel sector. Some examples include leather goods producers making durable products such as handbags, wallets, suitcases, upholstery, and sporting goods like baseball gloves, cricket balls, and footballs.
Leather products are made by processing animal hides at tanneries and using them for multiple purposes, such as luggage, handbags, sporting goods, straps, upholstery, and decorative items. Making the item begins with a design, followed by the development of patterns, perforating or cutting the individual pieces, sewing or lacing them together, applying trimmings or clasps, finishing or treating the product, and then the packaging for dispatch.
Stitching merchandise by hand is labor-intensive, although some automation is possible. Despite the specific materials and methods used to manufacture an item, phases involved in production can sometimes be carried out at a different place or in another country. Leather artisans will utilize the finest hides or skins for their products from tanneries, design their items, and craft them in a method that incorporates cutting and sewing.
In this competitive industry, there's room for both large and small independent makers of a wide range of leather products. If your business produces several kinds of handbags or other leather goods, you know it faces many challenges and opportunities.
Cost of Leather Goods Manufacturers' Insurance
The monthly average cost of a standard $1,000,000 per occurrence General Liability Insurance policy for small leather goods manufacturing businesses is about $57 to $79 per month, depending on competitive location, revenue, type of product, and claim history.
Why Do Leather Goods Manufacturers Need Insurance?
While making and selling merchandise from beautiful handbags to sporting goods, is not as hazardous as other companies in the manufacturing sector, you must still consider that your manufacturing business is susceptible to an array of threats.
Like other businesses, yours might be hit by a natural occurrence, like a tornado, hurricane, severe fire, lightning strike or loss caused by humans, burglary, vandalism, or riot. The criminal activity could also threaten your organization by inflicting severe property losses. Such unexpected losses can negatively impact your company's financial stability and adversely affect your future revenue.
If a worker is injured while making leather products or even as a consequence of an accident like a fall on a wet surface, remember that your company will be held accountable for the resulting medical costs and lost wages. The same could occur if a visitor or customer is injured on your property; if they get hurt because of a condition at your location, like a wet floor, they might also look to your company for reimbursement of the expenses incurred for medical care and missed work resulting from the accident.
These examples connect to costly expenses that demonstrate how these exposures can detract from a company’s financial future and survival. You can recover from these adverse occurrences if you have the proper leather goods store and manufacturer insurance.
Types of Insurance Recommended for Leather Goods Manufacturers
The insurance industry features many policies to meet a business’ insurance requirements. A company's coverage needs to depend on several factors, including location, number of employees, and value of manufacturing equipment. Leather goods producers should discuss their operations with a professional commercial insurance broker. Some types of leather products manufacturers' insurance coverage are:
If vandalism or nature damages your manufacturing facility, this insurance can assist in recovering losses due to damaged or stolen property. Commercial property covers your building, the contents of your building, machinery, raw materials like skins and hides, and finished leather goods.
Commercial General Liability
Commercial general liability insurance can be helpful if your company is sued for bodily injury or property damage. Situations that fall under commercial general liability insurance include a third-party bodily injury or property damage caused by your business premises and operations.
Product liability is part of the general liability policy, and it protects the business from the financial repercussions if a consumer or others injure themselves or have their property damaged by your products. This coverage starts after the product’s sale, and the consumer takes possession.
At a minimum, even very small companies should consider worker's compensation insurance. One employee hurt while at work will be covered for medical costs and lost pay, protecting the employer from lawsuits.
Leather Goods Manufacturing's Risks & Exposures
Premises liability exposure: Visits are typically limited due to the design of the company's facilities. If the company gives tours of its facilities or has a showroom, visitors might be injured by slips, trips, or falls. Chemical substances used in the tanning and finishing processes may be corrosive and create hazardous conditions. Fumes, leaks, or spills may damage nearby property or people. Note, General Liability insurance does not cover any loss from pollution. Some tanning operations may use chemicals that could be considered to be pollutants. To cover this exposure, you would need a pollution liability policy, also called environmental impairment coverage.
Product liability exposure: Legal counsel and insurer should review the warranties and guarantees. These terms may create unnecessary liability for your company. However, litigation and losses are typically lower for handbags and purses, but the risk is higher for sports equipment and safety straps.
Quality control: Institute thorough reporting and documentation of any quality control issues and resulting solutions. These logs are beneficial, especially for products with governmental regulations, guidelines, and standards.
Environmental impairment or pollution exposure: Any heavy metals and toxic compounds used in tanning leather, if released into the environment from improper processing or disposal methods, can lead to contamination of land or water sources. Waste removal and treatment procedures adhering to environmental and safety regulations can reduce these risks. Know that accidental chemical spills are no excuse and not a legal defense for polluting the environment.
Workers' compensation exposures: Employees may incur various injuries from production machinery, such as damage from puncture wounds, burns, cuts, trips, falls, foreign particles in the eye, hearing loss from machinery noise, and injuries to the back after lifting. Workers should be required to attend safety training and receive personal protective equipment if appropriate. However, no safety program will prevent all accidents, so this policy will alleviate any worry about the company having to pay medical expenses and lost wages if a staff member gets hurt on the job.
Dust-generating areas need respiratory devices, protective eyewear, and washing stations. Flammable chemicals or organic solvents used as dyes, finishers, or tanners can irritate the skin and eyes or lead to long-term occupational illness.
The enormous volume necessary for production timelines may lead to employees neglecting to use safety guards on equipment or the shop manager postponing equipment repairs and upgrades. Overuse of machinery can bring on repetitive motion injuries. Workstations ought to be ergonomically devised.
In terms of compliance and due diligence, management's emphasis on safety consciousness and adherence to best practices is of utmost importance. Most of the work should be completed by people over 18 or perhaps sub-contracted.
Property exposures: For manufacturers, the workplace, manufacturing site, and warehouse for raw materials and finished goods are components of an ignition source. Ignition sources are electricity, heating devices, and production machinery. Flammable chemicals used to do dying, finishing, or tanning should be labeled with signs and stored in approved containers as preventative measures.
Dust from cutting, punching, and buffing operations can cause a fire in the event of a lack of proper dust collection systems. Loose fragments and filings from processing leather are flammable and increase fire hazards.
Leather can be damaged by fire, smoke, humidity, and water. Poor housekeeping can introduce lint and dirt, damaging the leather. If those rags are not disposed of properly, grease or oil residue might cause a fire to produce without a direct heat source.
Equipment breakdown exposures: Involves malfunctions of production equipment, dust collection and ventilation systems, control panels, and other machinery. Sudden and accidental equipment breakdowns can halt manufacturing processes, not to mention the damage to equipment. Equipment breakdown insurance can address losses resulting from a breakdown, such as damage to the building or contents, loss of revenue, and expediting expenses to repair parts or new equipment. Property policies don’t typically cover loss to buildings and contents when caused by an equipment malfunction. Don’t confuse this coverage with a maintenance contract you may have on equipment; this policy does not cover losses from lack of maintenance or normal wear and tear.
Crime exposure: Leather products have a high street value, and it has encouraged employee dishonesty and theft. Employees may work alone or with outsiders to steal money, raw materials, or finished items.
All employees should be subject to background checks. There must be a separation of duties between staff handling deposits and employees handling accounts payable. There must be systems in place to prevent employee theft. But if prevention doesn’t work, then this policy will step in.
Business auto exposure: Designers or sales representatives might have company-owned vehicles. Or the business may own box trucks or even tractor-trailers to transport products to reach retail clients. Either way, there is a business auto or trucking exposure. This coverage provides not only state-required auto insurance but many options can be included:
- Bodily injury or property damage liability for auto accidents
- Personal Injury Protection is also known as No-Fault coverage
- Uninsured or Underinsured Motorists coverage
- Comprehensive and Collision coverage for damage to your vehicles
- Rental Reimbursement
Inland Marine Insurance: This coverage can cover your product shipments while transported by truck, air, or otherwise.