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SPOT THE GAPS BEFORE A CLAIM DOES
Why This Page Matters
Aluminium manufacturing is exposed to severe losses: high-value plant, non-ferrous stock, fire and heat processes, heavy machinery injury risk, and strict customer contracts. Yet many problems at claim time are not about “no insurance” — they’re about definitions, exclusions, conditions and misaligned policy structure.
This guide explains the most common exclusions and policy gaps we see for aluminium manufacturers (extrusion, fabrication, machining, finishing, recycling and component production). It’s designed to help you sense-check cover before renewal, avoid assumptions based on “last year’s wording”, and present your risk in a way underwriters can support.
1) Property & Business Interruption (BI): Where Disputes Often Start
Property damage and BI are usually the foundation of an aluminium manufacturing programme. When these sections are split across different policies — or values/definitions are inconsistent — the “gap” often appears when you need the cover most.
Common Property Exclusions & Limitations
- Wear & tear / gradual deterioration – not an “insured event”, but a common contributor to damage.
- Defective design / workmanship – may exclude the cost to rectify the defect itself (even if resultant damage is covered).
- Mechanical / electrical breakdown – often excluded unless engineering cover is added.
- Heat / process-related damage – exclusions or limitations can apply depending on process and housekeeping controls.
- Unattended vehicle / open-yard theft conditions – especially relevant to non-ferrous metals stored externally.
Practical takeaway: treat property insurance as a “named perils / insured events” product unless you have confirmed broader wording. Then compare exclusions against your reality: dust, hot works, heat processes, electrical loads, and storage practices.
BI Gaps: Trigger, Indemnity Period & Dependencies
- Trigger mismatch – BI often requires insured property damage; many shutdown causes don’t qualify without extensions.
- Indemnity period too short – specialist equipment lead times can exceed 12 months.
- Understated gross profit / ICOW limits – results in shortfall when you need to accelerate recovery.
- Undeclared dependencies – utilities, key suppliers, contract packers, logistics, or single-source raw materials.
- Average / underinsurance – applied if declared values are inaccurate (buildings/plant/stock/GP).
Practical takeaway: BI should be engineered around your recovery reality — including recommissioning, testing, tooling, approvals, and supply chain constraints — not simply “renewed as is”.
2) Engineering / Machinery Breakdown: The “Resultant Damage” Trap
Aluminium sites rely on critical plant: extrusion presses, saws, CNC machinery, compressors, furnaces/ovens, cranes/handling systems, hydraulics, control panels, and specialist electrical infrastructure. A common gap is assuming the property policy automatically covers internal breakdown.
Typical Engineering Coverage Gaps
- Breakdown not insured – property responds to perils like fire, not internal mechanical failure.
- Incorrect basis of cover – market value vs reinstatement can materially change settlement.
- Minimum standards / inspections – cover can depend on planned maintenance and inspection regimes.
- Electrical and control systems – sensitive components can be excluded or subject to sub-limits.
- Consequential losses – BI following breakdown may need a specific “machinery BI” extension.
Practical takeaway: if a single piece of plant can halt production, confirm whether you have engineering and whether BI responds to breakdown events (not just property damage).
What Underwriters Typically Want to See
- Plant schedule with values, ages, and criticality (what stops production).
- Planned maintenance approach and contractor arrangements.
- Breakdown history and corrective actions.
- Electrical inspection evidence where relevant (especially high-load environments).
- Spare parts strategy and recovery planning for key assets.
Better information generally improves options and reduces “we can’t cover that machine” surprises late in the process.
3) Liability Exclusions: Product Defects, Contractual Risk & “Your Work”
Aluminium manufacturers can face third-party injury/property damage allegations, and (for components) significant downstream loss claims. But many manufacturers are caught out by the difference between liability for damage and the cost to fix your own work.
Common Public / Products Liability Exclusions
- Rectification / rework costs – the cost to repair/replace your own defective product is commonly excluded.
- Recall and withdrawal – usually not covered unless you buy product recall/contamination cover.
- Pure financial loss – loss of profit without physical damage is often excluded or heavily limited.
- Contractual penalties – liquidated damages and performance penalties often fall outside standard cover.
- Products “efficacy” / “fitness for purpose” – wording may limit claims that are essentially performance disputes.
Practical takeaway: read customer contracts and map them to insurance. If your customer expects you to cover penalties, recall, or pure financial loss, you may need additional solutions beyond standard PL/products.
Employers’ Liability (EL) Pitfalls
- Labour-only contractors – can be treated as employees for liability depending on control/supervision.
- Manual handling / repetitive strain – occupational disease claims can involve long-tail exposures.
- Machinery entanglement – guard/LOTO expectations can matter to how an incident is defended.
- Heat / burns – process safety, PPE, and training evidence supports claims handling and defence.
- Working at height / crane operations – contractor and permit controls can become central to disputes.
Practical takeaway: EL is legally required in most cases — but “having EL” isn’t the same as having a defensible control environment.
4) Heat Work, Fire, Dust, Fume & Process Risks: Conditions Matter
Insurers don’t just price “fire risk” — they price the controls. Aluminium manufacturing can involve hot works, high electrical loads, extraction systems, combustible packaging, and mixed-use areas (production + warehousing + offices). A frequent gap is not meeting (or not evidencing) insurer conditions.
Common Fire / Process-Related Policy Gaps
- Hot works conditions – permit-to-work, fire watch, separation and contractor controls.
- Housekeeping warranties – poor housekeeping can create disputes around causation and foreseeability.
- Extraction / LEV maintenance – failure to maintain can lead to restrictions or claims friction.
- Electrical inspection requirements – evidence of inspection regimes is often requested at renewal/claims.
- Mixed occupancy and storage – poor separation increases severity and can impact appetite/terms.
Practical takeaway: if your policy includes warranties/conditions, make sure they are achievable day-to-day and that your team understands them. “We didn’t know” doesn’t help at claim time.
How to Reduce Disputes
- Document hot works controls and contractor rules (and enforce them).
- Maintain inspection records: electrical, lifting equipment, pressure systems, LEV where applicable.
- Use realistic declared values and review them annually (buildings/plant/stock).
- Separate storage and ignition sources where possible; show layouts/photos where helpful.
- Keep a “risk improvements” log to support negotiations at renewal.
Underwriters respond better to clarity than to generic statements. Show what you do, not just what you intend to do.
5) “Specialist” Gaps: Pollution, Cyber, Transit & Contract Risk
Many aluminium manufacturing programmes fail not because the core covers are missing, but because the specialist risks are assumed to be “included somewhere”. If you have any meaningful exposure in these areas, it’s worth a deliberate review.
Pollution / Environmental Liability
- Sudden vs gradual pollution – many policies only respond to sudden, identifiable events (or exclude pollution entirely).
- On-site clean-up costs – can be excluded without specialist environmental cover.
- Waste handling and storage – contractual and regulatory expectations may exceed standard cover.
- Neighbour impact – odour, smoke, fume and contamination allegations can escalate quickly.
Practical takeaway: if your process creates environmental exposure, don’t rely on “it’s part of PL”. Often it isn’t.
Cyber, Transit & Contractual Risk
- Cyber exclusions – may limit certain loss pathways unless cyber is bought deliberately.
- Transit assumptions – courier/haulier terms may not match your liability exposure and delivery obligations.
- Contractual liability – agreements to “hold harmless” or accept higher duties may not be covered.
- Spec / tolerance disputes – often present as quality disputes, not insurable events.
Practical takeaway: contracts should be reviewed alongside insurance. Where the contract demands more than insurance delivers, you need to renegotiate terms, buy specialist cover, or ring-fence the exposure operationally.
“Most disputes we see aren’t because cover didn’t exist — they’re because definitions, triggers, or exclusions didn’t match the real cause of loss. Fixing that at renewal is much cheaper than fighting it after an incident.”
Insure24 Manufacturing TeamHow Insure24 Helps Reduce Exclusions & Close Gaps
You can’t remove every exclusion — and you shouldn’t try to buy cover for exposures that are better controlled operationally. The goal is to ensure the programme is coherent: the key risks are addressed, the wording matches your operations, and the insurer has the information needed to offer sustainable terms.
What We Do
- Stress-test cover against your process: heat work, plant failure, contractor use, stock and logistics.
- Align BI to recovery reality: indemnity period, declared dependencies, and realistic ICOW.
- Match liability to contracts: territories, limits, and key endorsements where feasible.
- Structure engineering and breakdown exposures so plant isn’t an uninsured “single point of failure”.
- Build insurer-ready submissions that reduce referrals and late-stage queries.
What We’ll Ask You For (So It’s Faster)
- Process overview (extrusion / fabrication / machining / recycling / finishing / warehousing).
- Declared values: buildings, contents, plant, stock/materials and peak stock levels.
- BI: turnover/gross profit basis, indemnity period, and dependencies.
- Workforce: headcount, payroll split, contractor use and supervision model.
- Claims history and risk improvements implemented.
If you have it, photos/layout plans and maintenance summaries can materially improve insurer confidence.
FREQUENTLY ASKED QUESTIONS
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What are the most common exclusions on aluminium manufacturing insurance?
Common exclusions vary by insurer and wording, but often include wear and tear, gradual deterioration, defective workmanship,
the cost to rectify your own defective work, and limitations around mechanical/electrical breakdown unless engineering cover is added.
Pollution, recall/rectification, contractual penalties, and some cyber-related losses may also be excluded unless specifically insured.
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Why do business interruption (BI) claims get disputed?
BI is commonly triggered by insured property damage and is then restricted by policy definitions, limits, indemnity periods and conditions.
Disputes often arise where the shutdown cause doesn’t match the BI trigger, sums insured are inadequate, dependencies are not declared,
or the indemnity period is too short for specialist equipment lead times and recommissioning.
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Does property insurance cover machinery breakdown?
Not usually. Property cover focuses on insured perils (like fire and storm) and may not respond to sudden internal breakdown unless
engineering/machinery breakdown cover is added. Many aluminium plants need a dedicated engineering section or companion policy.
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Are product defects, rework and recall costs covered?
Liability policies can cover third-party injury or property damage arising from products, but they often exclude the cost to repair/replace
your own defective work, pure financial loss, and contractual penalties. Product recall/rectification is usually separate cover.
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How can we reduce gaps and avoid surprises at claim time?
Start with accurate declared values and realistic BI structure, then review exclusions against your real operations (heat work, plant breakdown,
contractors, stock security, pollution, cyber and contract terms). Insure24 helps align wording, endorsements and submissions so cover matches
how you operate — reducing disputes and improving underwriting outcomes.