Class I (Low-Risk) Device Factories Manufacturing Insurance: A Practical UK Guide

  • Home
  • Blog
  • Class I (Low-Risk) Device Factories Manufacturing Insurance: A Practical UK Guide

Class I (Low-Risk) Device Factories Manufacturing Insurance: A Practical UK Guide

CALL FOR EXPERT ADVICE
GET A QUOTE NOW
CALL FOR EXPERT ADVICE
GET A QUOTE NOW

Class I (Low-Risk) Device Factories Manufacturing Insurance: A Practical UK Guide

What “Class I” means (and why insurers care)

Class I medical devices are generally considered low-risk products. In the UK, they typically include items like non-invasive instruments, basic medical accessories, manual wheelchairs, bandages, and other products that don’t actively administer medicine or energy to the body.

From an insurance perspective, “low-risk” doesn’t mean “no-risk.” It usually means:

  • Lower likelihood of severe patient harm compared to higher classes

  • More predictable manufacturing processes

  • Often lower product recall severity (but recalls can still be expensive)

  • Claims may be less catastrophic, but can be frequent (especially for volume production)

If you operate a factory that manufactures Class I devices, insurers will focus less on “life-or-death” exposure and more on quality control, traceability, contamination risk, and contractual liability.

Who this guide is for

This blog is for UK-based businesses that:

  • Manufacture Class I medical devices in a factory or light-industrial setting

  • Assemble, package, label, or sterilise Class I products

  • Produce components that become part of Class I devices

  • Supply the NHS, private clinics, distributors, wholesalers, or export markets

It’s also relevant if you’re a contract manufacturer (CMO), own-brand manufacturer, or you manufacture under another company’s technical file.

The core risks in Class I device manufacturing

Even “simple” devices can trigger complex claims. Here are the main risk areas insurers will want to understand.

1) Product liability (including defective product claims)

Product liability is often the headline exposure. A claim can arise if a device is alleged to be defective and causes injury, infection, allergic reaction, or worsens a condition.

Common Class I scenarios include:

  • Incorrect materials (e.g., latex allergy exposure)

  • Poorly finished edges or sharp components

  • Contamination during assembly or packaging

  • Incorrect sizing or tolerance causing failure in use

  • Mislabelled instructions or warnings

Even where injury is minor, legal costs can be significant—especially if multiple claimants are involved.

2) Product recall and withdrawal costs

A recall doesn’t need a serious injury to become expensive. A label error, traceability issue, or packaging failure can trigger a withdrawal.

Recall costs can include:

  • Customer notification and call centre costs

  • Logistics, shipping, and reverse logistics

  • Disposal and destruction

  • Retesting, rework, repackaging

  • Overtime and temporary labour

  • PR and crisis communications

Many businesses assume product liability automatically covers recall costs. It often doesn’t—recall is usually a separate section or specialist policy.

3) Quality management failures and regulatory exposure

Medical device manufacturing is heavily process-driven. If your quality system breaks down, the business impact can be immediate.

Insurers may ask about:

  • Your quality management system (often aligned with ISO 13485)

  • Batch/lot traceability and retention of records

  • Incoming goods inspection and supplier controls

  • Non-conformance handling and CAPA processes

  • Complaint handling and post-market surveillance

Even if you’re not legally required to hold a specific certification, demonstrating robust controls can improve insurability and pricing.

4) Contamination and hygiene risks

Class I factories often handle high-volume consumables. Contamination can be physical (foreign bodies), chemical (cleaning residues), or biological (microbial contamination).

Key exposures:

  • Cleanroom or controlled environment failures

  • Poor segregation of raw materials and finished goods n- Inadequate cleaning validation

  • Pest control issues

  • Packaging integrity failures

Contamination can cause both product claims and business interruption if production must stop.

5) Contractual liability and “flow-down” requirements

If you supply the NHS, large distributors, or OEMs, your contracts may impose insurance requirements and liability clauses.

Typical contract issues include:

  • Indemnities broader than your negligence

  • Fitness-for-purpose obligations

  • Liquidated damages for late delivery

  • Warranty terms that create strict liability

  • Requirements to name customers as additional insureds

A good broker will review these clauses and ensure your policy wording doesn’t leave gaps.

6) Property damage and manufacturing interruption

Factories face the usual property risks—fire, flood, theft, and machinery breakdown—but medical device manufacturing can be especially sensitive to downtime.

Common drivers of interruption include:

  • Failure of packaging lines or sealing equipment

  • Breakdown of sterilisation equipment (if applicable)

  • HVAC failure affecting controlled environments

  • Utility outages impacting production stability

  • Supplier delays for specialist materials

Business interruption cover can be the difference between a short disruption and a long-term cashflow crisis.

7) Employers’ liability and workplace safety

In the UK, Employers’ Liability (EL) is legally required for most employers. Manufacturing environments can create injury and health risks such as:

  • Repetitive strain injuries from assembly

  • Slips, trips, and falls in production areas

  • Manual handling injuries

  • Exposure to cleaning chemicals or adhesives

  • Noise and vibration (depending on machinery)

Insurers will look at training, risk assessments, accident history, and safety culture.

8) Cyber and data risks (yes, even for Class I)

Many Class I manufacturers rely on ERP systems, supplier portals, label printing software, and customer ordering platforms. A cyber incident can halt production or corrupt traceability data.

Cyber exposure may include:

  • Ransomware disrupting production scheduling

  • Data loss affecting batch records and release documentation

  • Supplier compromise leading to fraudulent payments

  • Email compromise and invoice redirection n Cyber insurance can help with incident response, business interruption, and liability.

What insurance should a Class I device factory consider?

A typical insurance programme may include the following.

Product liability and public liability

This is the foundation. It can cover:

  • Injury or property damage caused by your products

  • Legal defence costs

  • Liability arising from on-site visits (public liability)

Key points to check:

  • Territorial limits (UK only vs worldwide)

  • USA/Canada exposure (often restricted or priced differently)

  • “Products supplied” definition (includes labels, packaging, components?)

  • Contractual liability extensions

  • Retroactive dates (if claims-made wording applies)

Product recall / product contamination cover

If you manufacture high-volume consumables, recall cover can be crucial. Look for:

  • Recall and withdrawal costs

  • Third-party recall costs (customer’s costs)

  • Consultant and PR costs

  • Replacement and rework options

Some policies also include “adverse publicity” triggers, but wording varies widely.

Employers’ liability

Typically arranged at £10 million (common market standard). Ensure:

  • Correct description of work activities

  • Inclusion of temporary workers and labour-only subcontractors (where applicable)

  • Overseas work extension if staff travel

Property damage (buildings, contents, stock)

Consider:

  • Buildings (if you own them)

  • Contents, plant, and machinery

  • Stock values (raw materials and finished goods)

  • Goods in transit and off-site storage

Medical device stock can be high value, and packaging materials can be surprisingly expensive.

Business interruption (BI)

BI can cover loss of gross profit following insured damage (like fire or flood). Key decisions:

  • Indemnity period (often 12–24 months)

  • Increased cost of working (e.g., outsourcing production)

  • Supplier and customer extensions (contingent BI)

Machinery breakdown / engineering insurance

If your production relies on specialist equipment, engineering cover can help with:

  • Sudden and unforeseen breakdown

  • Repair or replacement

  • Optional BI from breakdown (engineering BI)

Professional indemnity (PI) (sometimes relevant)

If you provide design input, specifications, or consultancy (even informally), PI may be relevant. This is especially true if:

  • You design devices or components

  • You provide technical advice to customers

  • You produce custom devices to customer specs

Cyber insurance

A practical cyber policy can include:

  • Incident response and forensic support

  • Ransomware negotiation and recovery

  • Business interruption from cyber events

  • Liability for data breaches

Directors’ and officers’ (D&O)

If you have investors, a board, or significant regulatory exposure, D&O can protect directors against claims relating to management decisions.

What insurers will ask you (and how to prepare)

Underwriters usually want clarity and evidence. Expect questions like:

  • What exactly do you manufacture (and what is the end use)?

  • Are products sold under your brand or someone else’s?

  • Where do you sell (UK/EU/US)?

  • What is your annual turnover and split by product line?

  • What quality system do you operate (e.g., ISO 13485 alignment)?

  • How do you manage traceability and batch records?

  • Any history of complaints, recalls, or near misses?

  • Do you use subcontractors for sterilisation or packaging?

  • What contracts require (limits, additional insureds, indemnities)?

Preparation tips:

  • Keep a one-page product and process summary ready

  • Maintain a clear claims and complaints log

  • Document supplier approval and incoming inspection

  • Be ready to show traceability and retention practices

Common coverage gaps to avoid

Here are frequent “gotchas” for Class I manufacturers.

  • Assuming recall is included in product liability

  • Territory mismatch (e.g., exporting but policy is UK-only)

  • Exclusions for USA/Canada when you sell via distributors

  • Incorrect business description (manufacturing vs wholesaling vs importing)

  • No cover for contract manufacturing liabilities if you manufacture to another party’s spec

  • Inadequate BI indemnity period for long lead-time machinery

  • No cover for work away if engineers install or service equipment on client sites

How to reduce premiums (without cutting protection)

Insurers reward control and consistency. Practical steps include:

  • Strengthen supplier audits and incoming goods checks

  • Improve batch traceability and retention of records

  • Introduce final QA sign-off with documented release criteria

  • Validate cleaning and packaging processes

  • Maintain equipment servicing logs and calibration records

  • Run mock recall exercises to prove readiness

  • Keep contracts reviewed so you don’t accept uninsured liabilities

Even small improvements can help you access better terms.

Choosing limits: how much cover is enough?

There’s no universal answer, but a sensible approach is to base limits on:

  • Contract requirements (NHS, distributors, OEMs)

  • Volume of units sold and potential aggregation of claims

  • Export markets (especially US exposure)

  • Worst-case recall scenario (logistics + replacement + PR)

Many UK manufacturers start with a strong baseline for product liability and then add recall and BI limits that match their operational reality.

Final thoughts

Class I device factories sit in a unique space: lower clinical risk, but high operational and quality exposure. The right insurance programme should protect you against day-to-day liability, major disruptions, and the “silent killers” of manufacturing businesses—recalls, downtime, and contractual surprises.

If you want a quote or a quick review of your current cover, it helps to share your product list, where you sell, and whether you manufacture under your own brand or as a contract manufacturer.

Quick FAQs

Do Class I medical device manufacturers need product liability insurance?

It’s not always legally required, but it’s strongly recommended. Many customers and distributors will require it contractually.

Is product recall covered under product liability?

Often not. Recall is typically a separate extension or specialist policy section.

What if we only assemble and package Class I devices?

You can still face product liability and recall exposure, especially if packaging integrity, labelling, or contamination is involved.

Does exporting change the insurance we need?

Yes. Territory, jurisdiction, and local legal environments can significantly affect policy terms and pricing.

Can insurers exclude certain materials or processes?

They can. For example, latex exposure, sterilisation processes, or adhesive use may attract additional underwriting questions or exclusions.

Related Blogs

Hospital Bed Manufacturing Insurance: A Complete Guide

Hospital Bed Manufacturing Insurance: A Complete Guide

By Insure 24

Hospital Bed Manufacturing Insurance: A Complete Guide

The hospital bed manufacturing industry plays a critical role in healthcare infrastructure, producing essential equipment that directly impacts patient care and safety. As a manufacturer in this spe…

Continue Reading
Viral Vector Manufacturing Insurance: A Complete Guide

Viral Vector Manufacturing Insurance: A Complete Guide

By Insure 24

Viral Vector Manufacturing Insurance: A Complete Guide

The viral vector manufacturing sector represents one of the most innovative and rapidly expanding areas of biotechnology. As gene therapies, vaccines, and advanced therapeutics continue to revolutio…

Continue Reading