Construction Worker Injured by Our Excavator’s Malfunction: Product Liability Paid $XM Claim!
The Hydraulic Hose That Became a Multi-Million-Dollar Weapon
My company manufactures large excavators. A hydraulic hose on one of our machines, which was later found to have a manufacturing defect, ruptured on a job site. The excavator’s arm swung uncontrollably, striking a construction worker and causing a permanent, disabling injury. The lawsuit against our company was for over $10 million. In our business, a simple component failure can turn a ten-ton machine into an instrument of destruction. Our massive Product Liability insurance policy was the only thing that allowed our company to survive such a catastrophic failure.
Building Big Machines, Managing Big Risks: Heavy Machinery Manufacturer Insurance
The Bigger the Machine, the Bigger the Lawsuit
The owner of the heavy machinery plant where I work says, “We build machines that can move mountains. But if one of them fails, we face a lawsuit that can move our entire company into bankruptcy.” He explained that their insurance isn’t like a normal factory’s policy. The potential for a single product failure to cause a multi-million-dollar wrongful death or catastrophic injury lawsuit is immense. Their huge, specialized insurance program is the financial bedrock that allows them to build and sell such powerful and inherently dangerous equipment.
Heavy Machinery Insurance Needs: High Limit Product Liab!, Property, WC, Inland Marine/Cargo!
The Four-Part Chassis of Our Business Protection
A heavy machine is built on a strong chassis, and so is our insurance program. The massive, high-limit Product Liability policy is the main frame, handling the immense risk of our equipment failing. Property insurance is the engine, protecting our huge factory and assembly lines. Workers’ Comp is the heavy-duty suspension, for employees injured while building the machines. And Inland Marine/Cargo is the oversized tires, protecting the finished machine while it’s being transported to the customer. Each part is essential for a heavy-duty business.
Product Liability is HUGE: Covering Injuries/Deaths Caused by Equipment Failure or Design Flaws!
The Defective Weld That Led to a Fatal Accident
My company manufactures large cranes. A single, faulty weld on a crane’s boom, which passed our initial inspection, failed years later while lifting a heavy load. The boom collapsed, killing the operator. The wrongful death lawsuit was for tens of millions of dollars. For a heavy machinery manufacturer, this is the ultimate risk. Our Product Liability insurance is the largest and most important policy we carry. Its massive limit is designed to respond to these rare but catastrophic failures that have life-and-death consequences.
Property Insurance Protecting Large Manufacturing Plants and Assembly Lines!
A Factory the Size of a Football Field Needs a Policy to Match
Our heavy machinery manufacturing plant is a massive, sprawling facility. It houses huge overhead cranes, enormous CNC machining centers, and long assembly lines where we build tractors. A fire or a tornado in a place like this would be a multi-hundred-million-dollar loss. Our Commercial Property insurance policy is a massive, complex document that covers the buildings, all the multi-million-dollar machinery, and our inventory of raw steel and finished equipment. It’s a policy built to protect a business of immense physical scale.
Workers’ Comp for Welding, Machining, Assembly Crews (Heavy Lifting, Machine Safety!)
The Most Dangerous Jobs in Manufacturing
The factory floor where we build heavy machinery is an incredibly dangerous environment. Our welders face risks of burns and flash. Our machinists work with powerful, unforgiving equipment. And our assembly crews have to lift and move incredibly heavy components. Serious injuries are a constant risk. Our Workers’ Compensation insurance is a huge expense, but it’s absolutely essential. It’s the mandatory coverage that provides medical care and wage replacement for the skilled workers who perform these high-risk industrial jobs.
Inland Marine / Cargo Insurance for Transporting Oversized, Heavy Machinery! Specialized!
The Oversized Load and the Overturned Truck
Our company was transporting a brand-new, massive mining truck, worth over $2 million, to a customer. The specialized, oversized transport truck had to take a sharp turn too quickly, and the entire rig overturned, destroying the new machine. This is where “Inland Marine” or “Riggers Liability” insurance comes in. It’s special coverage that protects high-value, oversized equipment during complex transit and loading operations. A standard cargo policy would not have been sufficient for such a unique and expensive piece of machinery.
Comparing Insurance Policies for Different Types of Heavy Equipment (Construction vs. Ag vs. Industrial)
A Bulldozer and a Combine Are Not the Same Risk
A company that manufactures a bulldozer faces a certain type of product liability risk—primarily, construction site accidents. A company that makes a farm combine harvester faces different risks, like a failure that causes a crop fire. And a company that makes a massive, stationary industrial press for a factory has another risk profile entirely. The insurance policy for each of these companies is highly specialized, with underwriters who are experts in either construction, agriculture, or industrial risks, but rarely all three.
Does Your Policy Cover Failure to Meet Performance Specifications? E&O?
The Machine That Didn’t Dig Fast Enough
My company manufactured a massive trenching machine for a pipeline company. Our contract guaranteed it would dig at a certain speed. The machine worked safely, but it never met the promised performance specifications, causing major delays and costing our client millions. They sued us for breach of contract. This was not a product liability claim. It was an “Errors & Omissions” (E&O) claim based on a failure of our professional promise. We needed a separate E&O policy to cover this financial performance risk.
Filing Catastrophic Product Liability Claims Involving Severe Injuries or Fatalities
The Accident Scene Becomes a Legal Battleground
When a piece of our heavy equipment is involved in a fatal accident, the claims process is immediate and intense. Our insurer doesn’t just take a report. They dispatch a team of accident reconstruction engineers and top-tier defense lawyers to the scene within hours. Their job is to work alongside the NTSB and OSHA investigators, preserve the evidence, and begin building the legal defense for the multi-million-dollar lawsuit that they know is coming. It’s a rapid-response, high-stakes legal and technical operation.
Operating Heavy Machinery: Trusting the Manufacturer Has Solid Insurance!
The Operator’s Trust in the Engineers
My brother is a heavy equipment operator. Every day, he climbs into the cab of a massive crane or excavator and trusts that the thousands of components, welds, and hydraulic lines will work perfectly. He is placing his life in the hands of the machine’s manufacturer. He’s also, indirectly, placing his trust in their massive product liability insurance policy. That policy is the ultimate financial safety net that ensures if a part does fail and he gets hurt, there are immense resources available to take care of him and his family.
Protecting Your Business from Lawsuits Alleging Inadequate Safety Warnings or Instructions
The Warning Label That Wasn’t Big Enough
A worker was injured while using a piece of our machinery. He sued us, not claiming the machine was defective, but that the safety warning labels on the machine were not clear or large enough, and that our instruction manual was confusing. These “failure to warn” lawsuits are a major risk for manufacturers. Our Product Liability insurance has to defend us against these claims, which are not about our engineering, but about the quality and clarity of our communication and safety instructions.
Business Interruption If a Critical Production Component Fails
The Broken Gear That Broke Our Production Schedule
The main gearbox on our largest CNC milling machine—a critical part of our production line—suffered a catastrophic failure. A replacement had to be custom fabricated and would take two months. Our entire production of our most profitable product ground to a halt. Our Equipment Breakdown policy paid for the expensive repair, but it was our Business Interruption coverage that paid our lost profits for the two months we were down. It’s a vital protection against a single-point-of-failure in your production process.
Finding Insurers Capable of Handling High-Severity Heavy Equipment Risks
The “High-Hazard” Underwriters
When my company needs to renew our insurance, we can’t just get quotes from standard carriers. We have to go through a specialized broker who has access to the handful of global insurance companies that have dedicated “high-hazard” manufacturing departments. These are the insurers with the engineering expertise and, more importantly, the massive financial capacity to handle a potential $50 million product liability claim. It’s a very small and exclusive insurance market designed for the biggest risks.
Coverage for Product Recalls or Retrofits on Heavy Machinery?
The “Field Fix” That Cost Us a Million Dollars
We discovered a potential defect in a hydraulic valve on a model of bulldozer we sell. It wasn’t a full recall, but we had to send technicians out to hundreds of job sites across the country to perform a “field retrofit” to replace the part. The logistical cost of this operation was over a million dollars. Our standard liability policy didn’t cover it. But our separate Product Recall policy, with an endorsement for “retrofit expenses,” did.
Supply Chain Risks for Large Castings, Engines, or Hydraulic Components?
The Engine Supplier That Stalled Our Assembly Line
Our company builds tractors, but we don’t build the engines. We rely on a single, major engine supplier. That supplier had a labor strike that shut down their factory for a month. We couldn’t get any engines, and our own assembly line went silent. Our “Contingent Business Interruption” insurance was essential. It’s a special coverage that pays for our lost profits when a key, named supplier fails to deliver, protecting us from the vulnerabilities in our own supply chain.
Protecting Expensive Tooling, Molds, and Dies Used in Production
The Fire Didn’t Just Damage Our Factory, It Damaged Our “DNA”
A fire in our plant damaged several of our custom-made molds and dies. These aren’t just tools; they are the unique “DNA” of our proprietary parts, and they cost hundreds of thousands of dollars to fabricate. Our property insurance policy has a separate, high-value limit specifically for our “tooling, molds, and dies.” It recognizes that these are not generic equipment but are irreplaceable, high-value assets that are critical to our ability to manufacture our products.
How Engineering Design Reviews Impact Product Liability Exposure
The Safety Committee That Lowers Our Insurance Premium
My company has a strict “design review” process. Before any new machine is built, a team of senior engineers and safety experts has to formally review every aspect of the design and document any potential safety risks. We show this documented process to our insurance company. Because they can see we are proactively engineering safety into our products from day one, they view us as a lower risk and give us a significant credit on our product liability premium. Good engineering is good risk management.
Liability Associated with Equipment Training Provided to Customers?
We Taught Them How to Use It, Then They Sued Us
Our company often provides on-site training to customers when they buy a new piece of our heavy equipment. A customer we had trained was later injured in an accident. They sued us, claiming our training was inadequate and didn’t properly cover the specific situation that led to their injury. This is a “professional liability” claim based on the quality of our training service. Our Errors & Omissions (E&O) policy is what protects us from claims arising from our role as trainers and consultants.
Heavy Machinery Manufacturing Insurance: Engineering Financial Security
The Steel Framework of Our Business
A heavy machine is built on a massive, powerful steel framework that gives it strength and resilience. A heavy machinery manufacturer’s business must be built on an equally powerful financial framework: its insurance program. This massive structure of product liability, property, and other specialized coverages provides the strength and resilience for the company to withstand the immense, catastrophic risks it faces every day. It is the engineered financial security that allows the business to build, sell, and thrive.