Commercial General Liability Insurance Of PPE Companies

Does your PPE company have the Commercial General Liability insurance it needs?

Retooling your manufacturing business during COVID-19? You are not alone. Across Canada, companies are responding to unprecedented demand for Personal Protective Equipment (PPE).

Many brand-new PPE companies have sprung up across Canada in recent months. Businesses are “ramping up PPE production at home rather than relying on sprawling global supply chains that have come up short in the crisis, part of a shift that could have lasting repercussions for domestic production and international trade.”1

While shifting gears and retooling business models, manufacturing PPE products comes with its own set of unique risks. Whether you are a new PPE company or in the process of pivoting to manufacture PPE products, you need to know that your insurance will respond in a worst-case scenario. This article provides some helpful insights about commercial general liability insurance of PPE companies in Canada.

How companies are changing operations in response to PPE market demand

If there’s one thing we know, it’s that alignment always matters. Recognizing the vital importance of having local suppliers of PPE equipment, governments are providing financial support.

Manufacturers are buying new equipment, increasing PPE production capacity, retooling production lines as well as incorporating physical distancing protocols.

Here are just a few examples:

  • A medical device manufacturer in Barrie, Ontario is “double(ing) its output of oxygen masks, triple(ing) its output of ETCO2 masks, which are specialty masks used to monitor breathing prior to ventilator use, and quadruple(ing) its output of eye and face shields to help meet the province’s need for PPE.”2 
  • Another Ontario manufacturer is “increase(ing) its output of face shields from 200,000 per week to more than a million per week.”3
  • And a manufacturer is “convert(ing) a portion of its production from emergency lighting solutions for the nuclear, aerospace, construction and defence sectors to manufacturing medical-grade face shields, which will be supplied to regional hospitals and long-term care facilities.”4

Changing your business also changes your risk exposures

Each one of these manufacturers is making dramatic changes to their facilities, supply chains, staffing and day-to-day operations. Their existing insurance policies cover operations and exposures associated with their original business and/or reported since their policy’s inception date.

However, material changes to operations, services, products, property, automobiles or use of automobiles, drivers or procedures must be reported to the insurer(s).

A recent article in 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.”5

Most importantly, failing to report a pending or completed change to your operations is problematic. It may result in a claim being denied and/or in coverage being cancelled.

This is why when your business undergoes significant changes, it is essential that you contact your insurance broker.

Why your Commercial General Liability needs to directly align with your current operations

With the exception of Quebec, in every Canadian province business owners owe a duty of care to the general public. So if and when a liability claims situation should occur, a claim may be made by an injured individual or group. Because it provides protection that responds to duty of care related claims, commercial general liability is a foundational coverage for all Canadian businesses.

Let’s say an owed duty of care is breached. What might happen next? Well, an injured party may allege that they incurred damages or injuries as a result of that breach. It’s important to note that any part of the allegation may lead to a costly lawsuit.

This is why it is so vitally important that your Commercial General Liability precisely aligns with your current business operations. Commercial General Liability (aka CGL) insurance protects against liability claims for bodily injury and property damage liability claims against your completed operations, products, premises, operations, as well as advertising and personal injury liability.

If COVID-19 is leading your business to evolve, we know how to align commercial general liability insurance that responds to new risks. Talk to our business insurance experts for help adapting with confidence during COVID-19 and beyond.

Where to find more info about COVID-19 and the Canadian workplace

The pandemic is changing how we live, work and interact with each other. To help understand COVID-19 risks and commercial insurance Canada products, read our Insurance Blog. In addition, you can keep current by subscribing to our e-news ALIGNMENT Matters on our homepage.

Here’s a selection of recent COVID-19 related news articles that we hope you will find helpful.

Sources: 1 Manufacturers scramble to find raw materials amid ‘desperate’ shortage for PPE ; 2,3,4 Ontario Newsroom: Ontario Helps Manufacturers Ramp Up Production of Personal Protective Equipment ; 5 Insurance considerations for manufacturers pivoting to PPE production

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