Commercial General Liability Insurance Of Mask Manufacturers

Why Commercial General Liability is essential for mask manufacturers

Stylin’. With mask wearing by the general public rapidly becoming ubiquitous, demand has never been greater for facial coverings. As consumers search online for their newest accessory, Canadian fashion houses are meeting demand.

Fashion Magazine recently reported on 22 well-known Canadian brands that are producing stylish and functional masks. Here’s a sampling:

• “…a Toronto label…is manufacturing face masks made from repurposed fabric…the masks consist of two layers of a linen-cotton-polyester-silk blend”
• “designed in Toronto, these masks…are made using 100 per cent mulberry silk.”
• “made from Italian microfibre knit, the non-medical grade masks are machine-washable, sweat-wicking and double-layered”
• “lined with 100 per cent cotton, the masks feature a filter as well as an adjustable nose wire for a more personalized fit”
• “the machine-washable, reusable masks are made using 100% cotton and include a filter sheet, which the brand says “adds an extra layer of support to facilitate safe breathing and to ensure that harmful particles are removed.”¹ 

You may be an established medical mask manufacturer and increasing production during COVID-19. Or perhaps you’re new to manufacturing non-medical masks. Regardless, your business is facing new risks. And with new risks it’s important to know that your insurance will respond if and when a worst-case scenario happens.

While pivoting, are you overlooking critical manufacturing risks?

Keeping up with demand. With many governments requiring the wearing of non-medical masks to some degree, mask manufacturers are responding.

With any spike in consumer demand, there’s a rush to meet it. And when products are rushed to market sometimes key risks can be overlooked. Gowling WLG notes, “Whether or not facial protections are classified as medical devices, manufacturers may still be liable for injuries arising from negligent design, manufacture, or labelling/marketing of the sample products (i.e. a failure to warn).”²

Furthermore, “Manufacturers owe a duty of care to avoid risk to consumer safety and must manufacture products that are reasonably safe for intended purposes. They also owe a duty of care to see that there are no defects in manufacture that are likely to give risk to injury in the ordinary course of use. Manufacturers must warn consumers of risks inherent in the use of the product and about which it has or ought to have knowledge.”³

In addition to Product Liability insurance for mask manufacturers, there’s another foundational exposure that manufacturers – particularly those who are first-time mask makers – should be aware of. This risk is more general in nature and during these unprecedented times can easily be overlooked.

What a material change in risk is and why it changes your CGL risk profile

To ramp up production, you’ve been sourcing new materials and products from suppliers,  adapting your facilities and likely hiring additional staff. And it’s changes like these that can put your business at risk.

More specifically, Insurance Business Canada notes:  

“When manufacturing companies restructure their business operations and pivot to non-traditional production, they also create a material change in risk. In the most extreme cases, this shift could nullify some of their existing insurance coverage, so it’s vitally important for manufacturers to reach out to their brokers in advance of making any changes in order to ensure they’re adequately protected.”⁴

Manufacturing masks for the first time? Your current commercial general liability is most likely impacted. This is because your existing commercial general liability insurance covers the operations and exposures associated with your original business and/or reported since your policy’s inception date.

After that, any material changes to operations, services, products, property, automobiles or use of automobiles, drivers or procedures must be reported to your insurer(s). Above all, when your business is changing, it is essential that you contact your insurance broker.

In other words, failure to report a pending or completed operational change could result in a claim being denied and/or in your coverage being cancelled.

When it comes to your duty of care, Commercial General Liability is essential

What’s a duty of care? And why does it matter? Canadian businesses must deliver on their duty of care. The only exception to this is in the province of Quebec. And because your mask manufacturing company owes a duty of care, the possibility of a lawsuit is very real.

Here’s an example of how a worst-case scenario may unfold for your business.

• Firstly, an injured party alleges that damages or injuries were incurred after your owed duty of care was breached.
• Secondly, incurred damages, breached duty of care and/or owed duty of care allegations may all be claimed as part of the lawsuit.
• To sum up, if your mask manufacturing business is sued for negligence relating to its duty of care, compensation for damages may be sought.

If an injured individual or group makes a claim related to your duty of care, you need insurance that will deliver. This is why Commercial General Liability (aka CGL) insurance specifically responds to duty of care related claims.

It’s also why it’s essential that your Commercial General Liability always aligns with your current business operations. CGL insurance protects against liability claims for bodily injury and property damage liability claims. These claims may be against your completed operations, products, premises, operations, as well as advertising and personal injury liability.

As your manufacturing business evolves to meet evolving consumer demands, we can deliver commercial general liability insurance that addresses all of your new risk exposures. Talk to us to get expert advice and guidance to help your business change and grow with confidence during COVID-19 and beyond.

Sources: ¹ Fashionmagazine.com: 22 Canadian Fashion Brands Making Face Masks For Consumers ; ^2,3 Gowling WLG.com: Manufacturing Face Masks During The COVID Pandemic ; ⁴ InsuranceBusinessMag.com: Insurance considerations for manufacturers pivoting to PPE production;
Canada.ca: Non-medical masks and face coverings: About ;