Insurance for Company Construction Equipment Manufacturers

The U.S. construction equipment manufacturing industry is vital to the economy, providing the machines and tools that fuel infrastructure, development, and industrial growth. According to IBISWorld, there are over 2,000 construction machinery manufacturing businesses in the U.S., generating over $40 billion in annual revenue. As the industry continues to grow—both in scale and significance—so do its risks. As a result, having the right insurance coverage for your construction equipment manufacturing business isn’t just smart; it’s essential.

If you manufacture compact construction equipment or specialized tools, your work likely involves high-value machinery, detailed specifications, and significant product liability exposure. In this article, commercial lines underwriter Rachel Pinsonneault offers advice on the best ways you can protect your business in the face of these risks.

What Tools Are Considered Compact Construction Equipment?

“Compact construction equipment refers to smaller, more maneuverable machinery used in construction, landscaping, and related fields,” Pinsonneault says. “That’s going to include things like skid steers, smaller bulldozers, or even single-man Caterpillars.”

These smaller machines are commonly used across a wide range of industries, and while they may be compact, they still come with serious risks. Whether you manufacture the equipment itself or produce specialized parts for compact machines, it’s essential to have the right coverage to protect against liability, equipment failure, and operational disruption.

Common Risks for Compact Construction Equipment Manufacturers

Tool and compact construction equipment manufacturers operate in a uniquely complex space. Many are tasked with producing highly specialized tools designed to meet a customer’s exact specifications. That means quality control, performance standards, and safety expectations are all high, and the risk of liability is even higher.

Some of the most common risks businesses in this industry face include:

• Product Design Flaws: If a tool is not manufactured to spec or fails during use, the customer could suffer injuries or losses.
• User Safety Issues: From sharp edges to load-bearing failures, poorly designed or tested tools can injure end users.
• Machinery Downtime: Equipment used in your manufacturing process is often high-value and central to operations. A breakdown can bring production to a halt.
• Imported Competition: Many manufacturers face increased pressure from low-cost, imported tools, which can impact production volume, quality standards, and risk profiles.
• Customized Production: Unlike mass producers, many insureds at Central are making one-of-a-kind tools designed for very specific uses—which adds complexity and requires a higher standard of care.

While many of these risks are based on final output, one of the most significant risks Pinsonneault has seen occurs during manufacturing.

Did You Know: Top carriers like Central offer commercial policyholders access to experts in loss control as part of their coverage. These teams can come on-site to a manufacturing facility to help write guidelines, reinforce rules, or provide training to employees on best practices. Research shows organizations that invest in these services experience lower insurance rates, fewer claims, and fewer injuries on the job than businesses that do not. | Learn More: Loss Control Manufacturing Tips to Protect Your Business

Best-Fit Insurance Policies for Managing Risk

Construction equipment manufacturers face a wide variety of exposures that require equally comprehensive protection. From property damage and product liability to equipment breakdowns and injuries, having the right insurance portfolio in place can mean the difference between a quick recovery and a long-term disruption. 

To protect against these challenges, Pinsonneault recommends the following insurance coverages be part of compact construction equipment manufacturers’ package policies:

Commercial Property and Equipment Breakdown Coverage

Your machines are essential to production. Commercial property insurance can protect your physical assets, while equipment breakdown coverage helps cover repairs or replacements if those machines break due to a covered accident. These policies are critical to addressing financial and business consequences resulting from property and equipment breakdown losses.

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Products Liability Insurance

If a tool or piece of compact construction equipment causes harm due to a defect or design issue, your business could be held liable. Products liability insurance helps cover the legal and medical costs associated with these claims.

Workers’ Compensation

Many tool and part manufacturers use heavy machinery or may even install the parts they produce. Workers’ Comp coverage is a must-have policy, in general, to comply with legal regulations, but is especially relevant in fields like this where employees are involved in on-site installations or operate hazardous equipment.

Inland Marine Coverage

If your tools, components, or custom-built machinery parts are being transported off listed premises on your policy, inland marine insurance can protect those goods in transit.

Peak Season Endorsement

For manufacturers who stock up during high-demand times of the year, adding on a peak season endorsement to your existing policies helps protect fluctuating inventory values.

Why Central Insurance is the Right Partner

When it comes to compact construction equipment manufacturing, you need an insurance provider that understands your business’s unique risks and has the experience and expertise to provide coverage to manage those risks. At Central, we combine industry insight with exceptional service to deliver coverage that fits your operation.

With over 145 years of experience working with manufacturers across the country, we’ve developed a deep understanding of the tools, processes, and liabilities that define your business. Our tailored policies are designed to meet the needs of specialized operations, from custom tool design to parts production and more.

But it’s not just about what we offer—it’s how we deliver it:

• Fast, Reliable Claims Service: We act quickly so you can get back to business.
• Empathetic, Experienced Adjusters: Our team understands your industry and treats each claim with care.
• Clear, Transparent Communication: We keep you informed and supported at every step.
• Custom-Fit Coverage: From equipment breakdown to inland marine, we’ve built our policies for how you work.
• Proactive Risk Management: We help you spot potential exposures before they become problems.
• Nationwide Reach with a Personal Touch: We serve businesses of all sizes across the country but maintain the relationship-driven approach of a trusted partner.
• Proven Customer Satisfaction: Central holds a Net Promoter Score of 72 and a 4.9-star rating on Google, reflecting the trust we’ve earned from thousands of policyholders.

When you choose Central, you’re choosing an insurer who knows the industry, values your business, and is committed to helping you succeed.

Whether you’re designing cutting-edge tools, managing a machinery parts operation, or manufacturing custom-built compact construction equipment, the right insurance coverage can keep your operation moving forward with confidence. Connect with your independent agent to learn more about how Central can help protect your business.