The 5 Biggest Risks Facing Plastic Producers in 2025–And How to Insure Against Them

In 2025, privately held small to medium-sized plastics manufacturing companies are operating under pressure. From climate regulations and uncertain geopolitical tensions to supply chain bottlenecks and workforce shortages, the challenges are real. And with every new challenge comes increased exposure to risk. For plastic processors, navigating this environment isn’t just about operational excellence—it’s about risk readiness. 

A comprehensive commercial insurance strategy isn’t a luxury; it’s a necessity. While insurance and risk management cannot eliminate all risk, and some are beyond insurance, the good news is that it can help avoid “the perfect storm” of multiple issues escalating at one time. The right insurance coverage can safeguard your bottom line and enhance your resilience and long-term competitiveness. In this post, we’ll explore five of the most pressing risks facing plastic manufacturers today and the insurance solutions that can help mitigate them. 

Risk #1: Supply Chain Disruptions

Over the past few years, global supply chains have undergone seismic shifts. The COVID-19 pandemic, ongoing international conflicts, and logistics gridlock have all contributed to increased volatility. For plastic manufacturers, raw material delays—especially of resins and polymers—can shut down operations, delay orders, and damage customer relationships. 

Insurance solution: Contingent Business Interruption (CBI) Insurance steps in when your business is financially impacted by a disruption to a supplier or partner (think cyber-attack or physical disaster). According to Marsh, CBI claims have surged post-pandemic, underlining the growing need for this lesser-known coverage. CBI can help cover lost revenue, extra expenses, and ongoing operational costs when supply chain problems hit. 

📍 Risk management tip: Maintain a list of backup suppliers and routinely evaluate their risk exposure to mitigate the need for coverage activation. 

Risk #2: Regulatory Compliance & Environmental Liability

Plastics are under increasing scrutiny for their environmental impact, especially single-use plastics and microplastics. Regulatory agencies like the EPA are implementing stricter guidelines on emissions, waste management, and chemical usage. State-level legislation is also evolving quickly, with new laws targeting plastic production and disposal practices. 

Why it matters: Violations can lead to fines, reputational harm, legal costs, and even shutdowns. For instance, a New York-based plastics producer faced over $2 million in cleanup and legal fees after improperly disposing of industrial waste. 

Insurance solution: Environmental Liability Insurance (also known as Pollution Liability Insurance) is designed to cover the costs of pollution cleanup, third-party bodily injury, property damage, and legal defense. If your operations involve hazardous materials or waste, this coverage is essential. 

PlasticsToday frequently reports on regulatory developments, highlighting the importance of keeping ahead of changing environmental standards. 

📍Risk management tip: Conduct regular environmental audits and ensure all staff are trained in compliance procedures to reduce exposure. 

Risk #3: Equipment Breakdown and Downtime

Plastic production relies on specialized machinery that operates at high temperatures and pressures. A single equipment failure can bring your entire facility to a halt. Whether it’s an extruder overheating or a mold press malfunctioning, the consequences of unplanned downtime are costly. 

Cost implications: According to Deloitte, unplanned downtime in manufacturing costs an estimated $50 billion annually in the U.S. alone. For small to mid-sized plastic producers, this can be devastating. 

Insurance solution: Equipment Breakdown Insurance (also known as Boiler & Machinery Insurance) covers the cost of repairing or replacing machinery and the income lost during production interruptions. This coverage is especially important for manufacturers that depend on a few key machines. 

📍 Risk management tip: Double down on preventative maintenance programs and invest in monitoring technologies to detect wear and tear before failures occur. Note that this can be critical for fire prevention as well. 

Risk #4: Product Liability & Recalls

Components used in highly regulated sectors such as automotive, food and beverage, and medical devices increase risk. If one of your products is found to be defective or harmful, your company could face a costly recall and litigation. 

Real-world example: A supplier of plastic components used in car airbags was held liable for defects that caused injuries, resulting in a multimillion-dollar lawsuit and reputational damage. 

Insurance solution: Product Liability Insurance helps cover legal defense, settlements, and medical costs stemming from defective products. Pairing it with Product Recall Coverage ensures you’re protected if you’re forced to remove products from the market. 

According to the International Risk Management Institute, product liability claims are among the most expensive and reputation-damaging lawsuits manufacturers face today. 

📍 Risk management tip: Maintain strict quality control and thorough documentation of every production step to defend against liability claims. Also, partnering with an insurance carrier that is comfortable with your product application has proven to be critical should litigation arise. 

Risk #5: Labor Shortages and Workplace Safety

The skilled labor shortage continues to plague the manufacturing sector, making hiring and retaining experienced workers harder. Short-staffed facilities can result in rushed training, overworked employees, and increased workplace injuries, even impacting property claims. 

The data: The U.S. Bureau of Labor Statistics reports that plastics manufacturing has a higher-than-average injury rate compared to other sectors. Inexperienced or improperly trained workers are especially vulnerable. 

Insurance solution: Of course, Workers’ Compensation insurance provides coverage for medical bills, lost wages, and rehabilitation for employees injured on the job. Pairing this with a robust safety program can reduce premiums and improve employee well-being. 

OSHA offers tailored safety resources for manufacturers, including updated guidelines and training tools. 

📍 Risk management tip: Invest even more in worker safety education and create a culture of safety with regular training, rewards for safe behavior, and visible leadership support. 

Take Action to Secure Your Future

2025 is already proving to be a year of both opportunity and challenge. Understanding and addressing these five critical risks can strengthen your company’s resilience and reduce the chance of catastrophic loss. More importantly, working with an insurance partner who understands your industry can help ensure you’re not just covered but truly protected. 

Ready to evaluate your exposure? Book a free risk assessment with BakerHopp Insurance Group today. Our team of experienced commercial insurance experts understands the plastics industry, and we’re here to help you build a more secure future.