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Engine & Propulsion Components Manufacturing Insurance (UK): A Practical Guide for Manufacturers
If you manufacture engine and propulsion components in the UK—whether for automotive, aerospace, marine, rail, defence, industrial power, or emerging electric propulsion—your risk profile is very different from a general engineering workshop. You’re dealing with high-value machinery, tight tolerances, complex supply chains, regulated end markets, and the kind of product failure scenarios that can escalate quickly.
That’s exactly why Engine & Propulsion Components Manufacturing Insurance needs to be built around your processes, materials, customers, and contractual obligations—not a generic “manufacturing” policy with a few add-ons. In this guide, we’ll break down the key risks, the covers that matter most, common exclusions to watch for, what affects cost, and the practical steps that can reduce both claims and premiums.
Who this insurance is for
This type of insurance is relevant for UK businesses involved in manufacturing, machining, assembly, testing, or refurbishment of propulsion-related components, including:
- Engine parts and sub-assemblies (e.g., housings, casings, manifolds, mounts)
- Turbocharger and supercharger components
- Fuel system components (including high-pressure systems)
- Exhaust and emissions components
- Propellers, shafts, couplings, gearboxes, and drive components
- Electric propulsion components (e.g., motor housings, inverters, cooling systems)
- Precision CNC machining, grinding, heat treatment, coating, and finishing
- Testing, calibration, and quality assurance operations
- Repair, overhaul, and remanufacture (including warranty obligations)
Even if you’re not producing complete engines, the moment your parts are integrated into a propulsion system, the consequences of a defect can be significant—financially, contractually, and reputationally.
Key risks for engine & propulsion component manufacturers
1) Product failure and downstream losses
A tolerance issue, material defect, incorrect heat treatment, or contamination can cause premature wear or catastrophic failure. The cost isn’t just the component—it’s the knock-on impact: engine damage, system shutdown, vehicle downtime, recall costs, and contractual penalties.
2) Product recall and batch issues
Manufacturing defects often present as a batch problem. If you discover a fault after distribution, you may face recall costs, rework, replacement, logistics, and customer disruption—especially if your parts are used in safety-critical applications.
3) Contractual liabilities and “fitness for purpose” expectations
Many supply agreements include strict quality clauses, liquidated damages, and warranty obligations. Some contracts push liability beyond what standard insurance automatically covers—particularly around pure financial loss, performance guarantees, and penalties.
4) Fire, explosion, and hazardous processes
Manufacturing environments can include flammables, oils, coolants, solvents, dust, welding, and heat treatment. A single incident can destroy machinery, stock, and tooling, and halt production for months.
5) Machinery breakdown and production interruption
CNC machines, lathes, grinders, furnaces, compressors, and test rigs are expensive and often difficult to replace quickly. If a key machine fails, your biggest loss may be lost revenue and delayed orders, not just repair costs.
6) Cyber risk and operational disruption
Manufacturers increasingly rely on CAD/CAM, ERP, CNC programming, remote support, and connected production systems. Ransomware or a supplier compromise can stop production, corrupt designs, or expose sensitive customer data.
7) Employers’ liability and workplace safety
Manual handling, rotating machinery, noise exposure, fumes, hot works, and forklift operations create a real risk of injury claims. In the UK, Employers’ Liability is compulsory for most businesses with staff.
8) Transit and supply chain risks
High-value components can be damaged in transit, lost, or delayed. If you ship internationally, you may also face customs delays, packaging requirements, and Incoterms responsibilities that affect where your liability begins and ends.
What insurance covers do engine & propulsion component manufacturers typically need?
Most UK manufacturers arrange cover as either a Commercial Combined policy (bundling core covers) or a tailored package with specialist add-ons. The right structure depends on your turnover, premises, processes, and contractual risk.
Public & Products Liability (including Product Liability)
This is the backbone for third-party injury or property damage claims. For propulsion components, the key is ensuring the policy is suitable for:
- Products supplied to safety-critical applications (where applicable)
- Worldwide territories (if you export)
- Work away/installation (if you fit or commission parts)
- Correct “products” definition (including repaired/refurbished items)
Product Recall / Product Contamination (where relevant)
Product recall cover can help with the cost of withdrawing products from the market, notifying customers, shipping, disposal, and replacement. Not all policies include this automatically—often it’s a specialist extension.
Professional Indemnity (PI) for design, specification, and advice
If you provide design input, prototypes, testing services, engineering advice, or sign-off documentation, you may need Professional Indemnity. PI is typically aimed at claims for negligence causing financial loss (and can be crucial if your contracts include design responsibility).
Property Insurance (buildings, contents, stock, and tooling)
Covers physical assets at your premises. For manufacturers, it’s important to correctly declare:
- Buildings and tenant improvements
- Contents and office equipment
- Stock (raw materials, WIP, finished goods)
- Patterns, jigs, dies, moulds, and specialist tooling
Business Interruption (BI)
BI covers loss of gross profit following an insured event (like fire or flood). For propulsion component manufacturers, BI is often where the biggest financial exposure sits. Key points include:
- Indemnity period long enough to rebuild, replace machinery, and regain customers (often 12–24 months)
- Correct gross profit calculation
- Extensions for denial of access, suppliers/customers (contingent BI), and utilities (where available)
Machinery Breakdown / Engineering Inspection
Machinery breakdown can cover sudden and unforeseen damage to plant and equipment, plus (optionally) associated BI. Depending on your equipment, you may also need statutory inspections (e.g., pressure systems, lifting equipment) and documentation.
Employers’ Liability (EL)
Compulsory for most UK employers. Ensure your policy reflects your actual activities (machining, welding, heat treatment, testing, warehousing, dispatch).
Cyber Insurance
Cyber cover can help with ransomware response, business interruption from cyber events, data recovery, and liability arising from data breaches. It’s increasingly relevant where production depends on digital systems.
Goods in Transit / Marine Cargo
If you ship high-value components, transit cover can protect against loss or damage in transit, including courier and freight movements. For exports, a marine cargo policy may be more appropriate than a basic transit extension.
Directors’ & Officers’ (D&O) Liability
D&O can protect company directors and officers against claims arising from management decisions—useful as businesses scale, take on contracts, or deal with regulatory and employment issues.
Legal Expenses
Legal expenses insurance can support with employment disputes, contract disputes, and certain legal costs—often a cost-effective add-on.
Common exclusions and gaps to watch for
Insurance is all about the detail. Here are common areas where propulsion-related manufacturers can get caught out:
Faulty workmanship vs. resulting damage
Many policies won’t pay to fix the defective part itself, but may cover the resulting damage it causes. The wording matters, especially for high-value assemblies.
Recall not included
Product recall is often excluded unless specifically added. If your customers require recall cover, it needs to be arranged intentionally.
Contractual penalties and liquidated damages
Contractual fines, penalties, and liquidated damages are commonly excluded. If your contracts include these, you’ll want to understand what risk remains uninsured and how to manage it contractually.
Known defects and gradual deterioration
Claims linked to known issues, wear and tear, corrosion, or gradual deterioration are typically excluded. Strong QA and maintenance records help avoid disputes.
Design liability not covered under standard liability
If you provide design, specification, or advice, relying solely on public/products liability can leave a gap. PI is often the correct solution.
Territorial limits
If you export to the US/Canada or supply into global OEM chains, you may need specific territorial and jurisdiction cover. Don’t assume “worldwide” is included.
What affects the cost of Engine & Propulsion Components Manufacturing Insurance?
Premiums are based on the likelihood and severity of claims. For propulsion-related manufacturing, insurers typically look at:
- Turnover and split by activity (manufacture vs repair vs design/testing)
- End-use and end markets (automotive vs aerospace vs marine vs defence)
- Materials and processes (heat treatment, coatings, welding, pressure testing, hazardous substances)
- Quality management (ISO 9001, AS9100, documented QA, traceability, batch control)
- Claims history and near-miss reporting culture
- Contract terms (warranties, indemnities, penalties, hold harmless clauses)
- Premises risk (construction type, fire protections, housekeeping, storage of flammables)
- Machinery values and maintenance regimes
- Cyber controls (MFA, backups, patching, segregation of OT/IT where applicable)
- Limits and excesses chosen for liability and property
In plain terms: the more safety-critical the application, the higher the potential severity. But strong QA, traceability, and risk controls can make a meaningful difference.
Practical risk management that insurers like (and that reduces claims)
Good insurance is one part of resilience. The other part is reducing the chance of a loss in the first place. Here are practical steps that often improve insurability and pricing:
Quality control and traceability
- Documented inspection plans and sign-off points
- Material certificates and batch traceability
- Calibration schedules for measurement equipment
- Controlled processes for heat treatment and coatings
- Non-conformance reporting and corrective actions
Testing and validation
- Defined acceptance criteria and test records
- Clear segregation of prototype vs production parts
- Retention of samples and records for warranty periods
Contract and documentation discipline
- Review indemnities, warranties, and penalty clauses before signing
- Make sure your scope is explicit (manufacture only vs design responsibility)
- Keep signed specs, drawings, and change requests on file
Fire protection and housekeeping
- Hot works permits and controlled welding areas
- Safe storage for oils, solvents, and flammables
- Regular waste removal and dust control
- Appropriate extinguishers and staff training
Machinery maintenance and spares planning
- Planned preventative maintenance (PPM) logs
- Condition monitoring for critical machines
- Identifying single points of failure and holding key spares
Cyber resilience
- Multi-factor authentication (MFA) for email and remote access
- Offline or immutable backups tested regularly
- Patch management and endpoint protection
- Supplier access controls and least-privilege permissions
Claims examples (realistic scenarios)
Every business is different, but these examples show how claims can arise in propulsion component manufacturing:
Example 1: Batch tolerance issue leads to engine damage
A machining tolerance drift goes unnoticed during a busy production run. Components are installed into customer assemblies and later fail under load, damaging associated engine parts. A claim follows for third-party property damage and associated costs. Strong traceability and QA records help identify the affected batch quickly and limit the scope of the loss.
Example 2: Fire damages machinery and halts production
A fire starts in a storage area containing oils and packaging. The building and several key CNC machines are damaged. Property insurance supports reinstatement, while business interruption cover helps replace lost gross profit during the downtime.
Example 3: Cyber incident stops dispatch and production scheduling
Ransomware impacts the business’s ERP and scheduling systems. Production continues for a short period, but dispatch documentation and customer order tracking become unavailable. Cyber cover supports incident response, data restoration, and interruption costs.
Example 4: Design advice dispute
A customer alleges that engineering advice provided during a prototype stage contributed to performance issues. The claim is primarily financial loss and professional negligence rather than physical damage—highlighting why PI can be essential when you provide design input.
FAQs: Engine & Propulsion Components Manufacturing Insurance
Is product liability insurance enough on its own?
Often not. Product liability is important, but many manufacturers also need property, business interruption, employers’ liability, and sometimes professional indemnity (especially where design/testing/advice is involved).
Do we need Professional Indemnity if we don’t “design engines”?
possibly. If you provide specifications, tolerances, drawings, test reports, sign-off documentation, or engineering advice, you may have a professional exposure even if you’re not the primary designer. If your contract includes any design responsibility (even partial), PI is worth discussing.
Will insurance cover the cost of replacing our defective components?
Not always. Many liability policies focus on third-party injury or property damage, and may not pay for the cost of repairing or replacing your own defective work (often called “own work” or “rectification”). Some covers can help with recall costs, but it typically needs to be added specifically. The exact answer depends on the policy wording and the circumstances of the loss.
Does product recall cover include the cost of re-manufacturing parts?
Recall cover usually focuses on the costs of withdrawing products from the market (notification, logistics, disposal, and sometimes replacement). Whether re-manufacture/rework is covered depends on the insurer and the extension you arrange. If recall is a key contractual requirement, it’s important to set the cover up properly from day one.
We export components. Do we need worldwide cover?
If you sell outside the UK, you should review territorial limits and jurisdiction carefully. “Worldwide excluding USA/Canada” is common by default. If you supply into the US/Canada or into contracts governed by those jurisdictions, you may need specific cover and higher limits.
Are prototypes and R&D activities covered?
They can be, but you should disclose prototype work, testing, and any unusual processes. Some policies treat R&D differently from standard production, especially if you’re working with new materials, unproven designs, or high-risk testing environments.
Do we need Employers’ Liability if we only have a few staff?
In most cases, yes. Employers’ Liability is legally required for most UK businesses with employees (with limited exemptions). Even with a small team, the potential cost of an injury claim can be significant.
What limit of indemnity do we need for product liability?
It depends on your end-use, customers, and contract requirements. If your components go into high-value equipment or safety-critical systems, a low limit can be a false economy. Many manufacturers choose higher limits to reflect worst-case scenarios, but the right level is best decided after reviewing your contracts and supply chain exposure.
Can we insure customer-supplied materials or items we’re working on?
Often yes, via “goods in trust” or “customers’ goods” extensions (wording varies). This is important if you machine, coat, or assemble parts owned by customers while they’re on your premises.
Does machinery breakdown include business interruption?
Not automatically. Machinery breakdown can cover repair/replacement of equipment, and you can often add business interruption specifically linked to breakdown. If one machine is a bottleneck for production, this add-on can be crucial.
What about subcontractors and outsourced processes?
If you outsource heat treatment, coatings, NDT, or specialist machining, you still carry reputational and contractual risk. Insurers may ask how you vet suppliers, what QA checks you perform on return, and whether contracts clearly allocate responsibility.
Can cyber insurance cover ransomware that stops production?
Many cyber policies can cover incident response, data restoration, and business interruption caused by a cyber event. The key is aligning the policy to your actual systems and dependencies, and making sure you meet baseline security requirements (like MFA and backups).
How to arrange the right cover (without overpaying)
The best outcomes usually come from presenting your business clearly to insurers—what you do, what you don’t do, and what controls you have in place. Here’s the information that typically helps you get accurate terms:
- Turnover split by activity (manufacture, repair/overhaul, design/advice, testing)
- End markets and largest customers (and any contract insurance requirements)
- Territories/jurisdictions (UK only vs exports, including USA/Canada if relevant)
- Quality standards (ISO 9001/AS9100), inspection processes, traceability, calibration
- Details of hazardous processes (hot works, heat treatment, solvents, pressure testing)
- Machinery list (key machines, values, maintenance approach, single points of failure)
- Fire protections (alarms, extinguishers, sprinklers where applicable, housekeeping)
- Cyber controls (MFA, backups, patching, segregation of systems)
- Claims history and what changed since any incidents
If you can show strong QA and traceability, clear contracts, and a sensible approach to risk management, you’ll typically have more options and better pricing.
How Insure24 can help
Engine and propulsion component manufacturing is specialist. The right insurance isn’t just about buying a policy—it’s about making sure the cover matches your real-world exposures: product liability, recall risk, design responsibility, machinery breakdown, business interruption, and export considerations.
At Insure24, we’ll help you map your risks, review key contract requirements, and compare suitable options—so you’re not left with gaps that only appear when something goes wrong.
Want a quote or a quick cover review? Get in touch and tell us what you manufacture, where you sell, and whether you do any design/testing work. We’ll take it from there.
Quick checklist: what to review this week
- Are your liability limits high enough for your end markets and contracts?
- Do you have PI if you provide design input, specs, or test documentation?
- Is product recall included (if your customers expect it)?
- Is business interruption set with a realistic indemnity period (12–24 months if needed)?
- Are tooling, jigs, dies, and customer goods correctly declared?
- Do your territorial limits match where your products end up?
- Do you have a plan for a key machine failure (spares, alternatives, breakdown BI)?
- Are cyber basics in place (MFA, backups, patching, access control)?
