Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 6 minutes
Key Takeaways
- Manufacturing is vital to the American economy, but it exposes workers to significant risks and injuries.
- Workers’ compensation is crucial, covering medical expenses, lost wages, and employer protection against lawsuits.
- Manufacturers face heightened risks from machinery accidents, repetitive motion injuries, slips, trips, falls, and chemical exposure.
- Premiums for workers’ compensation vary based on risk and can range from $1.00 to $4.00 per $100 of payroll.
- Employers can lower their premiums by improving safety measures and implementing ergonomic workspaces.
Manufacturing is a critical part of the American economy. Businesses like precision metal shops, furniture makers, and food processors keep production moving all around the US each year. Without these efficient production businesses, it would be hard to get essential commodities. Behind every kind of production, there is a workforce that is exposed to workplace risks daily.
Workers’ compensation is required for most employers in most states, but requirements and exemptions vary by state (employee count, owner/officer elections, and industry-specific rules). This type of insurance is the lifeline that workers need access to when they are hurt on the job, and it’s a protective shield for your business to ensure that you don’t go broke trying to take care of workers who are injured on the job.
Why Manufacturers Face Increased Risk
According to the U.S. Bureau of Labor Statistics, in 2024, the incidence rate for total recordable cases in manufacturing was 2.7 cases per 100 full‑time workers.
· Machinery-Based Accidents — These businesses use machinery for nearly every stage of the production process. Forklifts, presses, moving parts, and conveyor systems all increase the risks associated with daily work processes and create constant hazards.
· Repetitive Motion Injuries — Many manufacturing processes are highly repetitive. This means that carpal tunnel, tendonitis, and back problems are common for those working in this space.
· Slips, Trips, and Falls — Manufacturing locations are notoriously busy and chaotic, and often use water or lubricants for production processes. Slippery floors are supposed to be avoided, but are quite common and can lead to falls on a routine basis. Other problems in manufacturing are related to stacked materials, cords, and other tripping or fall hazards that are just part of daily business operations.
· Chemical Exposure Risk — Chemical exposure can be a risk in manufacturing facilities that use solvents, coatings, adhesives, fuels, or process chemicals. Controls such as SDS access, labeling, ventilation, PPE, and training are essential to reduce occupational illness risk, leading to unnecessary exposure to chemical products that may impact long-term health and well-being.
Even with OSHA-compliant safety programs in place, accidents can happen in manufacturing locations. When these accidents occur, the costs can add up quickly.
What Does Workers’ Compensation Cover?
Workers’ compensation covers manufacturers for a variety of costs associated with industrial and manufacturing accidents. These insurance plans protect businesses as well as workers from the cost of doing business and the accidents that might happen due to the nature of manufacturing jobs.
· Medical Expenses
Things like hospital bills, surgeries, medication, and rehab after injuries.
· Lost Wages
Partial income replacement is usually covered while employees recover.
· Permanent Disability Benefits
If a worker cannot return to their previous job, there are typically benefits that will take care of them.
· Death Benefits
Sadly, sometimes people do die on the job. If this should come to pass, there is coverage for death benefits in these policies.
· Employer Protection
Workers’ compensation generally covers employees’ injuries. However, some policies also include Employers’ Liability (Part Two), which may respond to certain lawsuits that fall outside statutory workers’ comp benefits (for example, some third‑party over actions or loss‑of‑consortium claims), subject to policy limits and terms.
For those who operate businesses in the manufacturing space, this coverage could make all the difference between a minor disruption in business operation and a full-blown crisis that could sink your business.
Hypothetical Example
Say that you are a mid-sized furniture maker with around 50 employees on your payroll. During business operations one day, one of your workers gets their hand stuck in a table saw. The injury requires surgery as well as months of recovery. A serious hand injury could trigger surgery, wage replacement, and (if needed) vocational benefits. Actual benefits and claim costs vary by state law, the nature of the injury, and the employee’s earnings.
Without workers’ compensation insurance, you may be personally liable for the entire financial burden of the accident.
Cost of Worker’s Comp Coverage for Manufacturers
Workers’ compensation coverage rates can vary from state to state. Risk classification types also vary, and riskier professions need to be covered by policies that inevitably cost more to secure. Let’s look at the average numbers for these policies.
· Low-Risk Manufacturing Businesses
Pricing is based on class code, payroll, and experience modification (claims history). As a point of reference, it costs an average of about $1.00 per $100 of covered wages in 2022, but manufacturing could be higher or lower depending on class code and operation. Workers’ comp rates are commonly quoted per $100 of payroll (e.g., a $4.90 rate means $4.90 of premium per $100 of payroll, before mods/credits).
· High Risk Manufacturing
For those operating in the higher risk spaces(metal fabrication, wood product creation, machinery), you will need to budget for $2.00 to $4.00 per $100 in payroll.
Businesses that have in excess of $2 million in annual payroll will need to pay $20,000 to $80,000 annually for their workers’ compensation insurance. This is a significant investment, but well worth it when you consider the cost of a single claim.
How to Lower Your Premiums
You might now be wondering how you can control the costs of your workers’ compensation plan. Thankfully, there are some ways that you can keep your premiums to an affordable cost:
· Install machine guards and things like safety shutoffs
· Enforce lockouts/tagout processes and procedures
· Provide your staff with ergonomic workspaces
· Offer safety training programs for your teams
· Maintain a return-to-work policy and follow it
Preventing every injury may lower your claims and your insurance costs. The safer your business is, the cheaper it is to insure.
Why You Should Consider Working With USA Business Insurance
At USA Business Insurance, we know how to protect manufacturers. We offer the right coverage for the risk in your industry, and we partner with top-rate carriers to get you the right coverage for your specific needs. We offer:
· Industry Expertise
We know what the needs are for a variety of different industries, and we will help you pair up with the right coverage for your manufacturing space. Whether you run a machine shop, food plant, or are a plastics manufacturer, you will get the coverage that you need.
· Tailored Policies
You need to have insurance coverage that matches your specific business operations. You don’t need cookie-cutter coverage. We will provide you with fully customized insurance coverage for your business.
· Competitive Quotes
We shop around for you so that you can save time and stress. Getting access to the best deals for your niche is our goal, and you can count on us to present you with a competitive quote.
· Ongoing Customer Support
We don’t just find you a policy and then walk away. We offer continued support for claims to safety advice. You can trust us to take care of you and your business year-round.
Don’t let a workplace accident or injury close your business for good. Protect your business from loss with the right workers’ compensation coverage.
