How Electronics Manufacturing Businesses Are Insured in the UK

Introduction

Electronics manufacturing is a high-value, high-responsibility business. You may be building printed circuit boards (PCBs), sensors, power supplies, control panels, IoT devices, medical or automotive components, or specialist assemblies for industrial clients. In the UK, the insurance you need is shaped by a mix of practical risks (fire, theft, breakdown, supply chain delays) and “downstream” risks (a component failure causing damage, injury, or costly recalls).

This guide explains how electronics manufacturers are typically insured in the UK, what each policy does, where claims often arise, and what underwriters usually want to see.

1) The main risks insurers look at

Insurers usually assess electronics manufacturing around a few core questions:

• What could go wrong with the product? Component failure, overheating, battery issues, firmware faults, EMC interference, incorrect labelling, or poor traceability.
• What could go wrong at the premises? Fire (including soldering/heat processes), theft of high-value stock, water damage, and damage to plant.
• How quickly could you recover? Lead times for machinery, availability of specialist parts, reliance on single suppliers, and ability to outsource.
• How exposed are you to contracts and standards? OEM supply agreements, fitness-for-purpose clauses, liquidated damages, and compliance requirements.
• How exposed are you to cyber and data risks? Ransomware, production downtime, compromised firmware, or loss of design files.

2) Core insurance policies for electronics manufacturers

Most UK electronics manufacturers are insured using a Commercial Combined policy (or a package of policies) that can include several covers under one schedule.

Employers’ Liability (EL) (usually compulsory)

If you employ staff in the UK, you generally need Employers’ Liability. It covers claims from employees who are injured or become ill due to their work.

Common manufacturing examples:

• Burns, eye injuries, or respiratory issues from soldering fumes/flux
• Manual handling injuries
• Slips, trips, and falls
• Occupational dermatitis from chemicals

Public Liability (PL)

Public Liability covers injury or property damage claims from third parties (non-employees) arising from your business activities.

Typical scenarios:

• A visitor trips in your warehouse
• You damage a client’s property while installing or testing equipment on-site

Products Liability (often combined with PL)

For electronics manufacturing, Products Liability is often the most critical liability cover. It covers claims where your product causes injury or property damage after it leaves your control.

Examples:

• A power supply fails and causes a fire in a customer’s premises
• A component causes damage to an industrial machine
• A battery pack overheats and injures a user

Key point: Products Liability is primarily about injury and property damage. It does not automatically cover every type of financial loss.

Product Recall and Rectification (specialist cover)

Electronics manufacturers often need recall/rectification cover, especially if supplying OEMs or regulated sectors.

This can help with costs such as:

• Notifying customers and distributors
• Shipping and logistics to recover products
• Inspection, testing, and rework
• Disposal of defective stock
• Crisis management/PR support (depending on wording)

Recall cover is usually triggered by a safety issue or a reasonable belief of a safety issue. Some policies also offer “non-damage” recall extensions, but terms vary.

Professional Indemnity (PI) (design, advice, specification)

If you design electronics, provide technical advice, produce drawings/specifications, write firmware, or offer consultancy, Professional Indemnity can be essential.

PI is aimed at financial loss claims caused by negligence in professional services (for example, a design error).

Examples:

• A PCB design flaw causes a client’s product launch delay and they claim costs
• Incorrect specification advice leads to a batch being unusable
• Firmware advice causes performance failures and contractual penalties

Many electronics manufacturers have a blend of exposures: they both make and design. Underwriters will often want to see PI and Products Liability aligned so there are no gaps.

Property insurance (buildings, contents, stock)

Property cover protects your premises and physical assets.

Usually includes:

• Buildings (if you own them)
• Contents (tools, office equipment)
• Stock (raw materials, components, finished goods)
• Plant and machinery

Common perils:

• Fire, smoke, explosion
• Theft
• Flood and escape of water
• Storm damage

For electronics, insurers pay close attention to:

• Fire protection (alarms, extinguishers, housekeeping)
• Storage of lithium batteries and flammables
• Security (alarm grade, CCTV, shutters)
• High-value stock concentrations

Business Interruption (BI)

Business Interruption covers loss of gross profit (or revenue) and increased costs of working after an insured event (like a fire) disrupts trading.

BI is often the difference between “a bad year” and “business-ending”. Electronics manufacturing can have long recovery times due to:

• Specialist machinery lead times
• Requalification/testing requirements
• Tooling and calibration
• Supplier constraints

Two key BI settings:

• Indemnity period: how long the policy will support you (often 12–24 months; sometimes longer).
• Sum insured: based on gross profit and realistic recovery time.

Machinery Breakdown / Engineering insurance

If you rely on pick-and-place lines, reflow ovens, CNC machines, test rigs, compressors, or specialist inspection equipment, engineering cover can help with:

• Sudden and unforeseen breakdown
• Electrical/mechanical failure
• Repair/replacement costs
• (Optional) BI from breakdown

Goods in Transit

Covers stock and products while being transported (by you or carriers, depending on wording).

Important for:

• High-value components
• International shipments
• Time-critical deliveries

Cyber insurance

Electronics manufacturing is increasingly exposed to cyber risks:

• Ransomware halting production
• Theft of CAD files, schematics, firmware, or BOMs
• Supplier compromise affecting your systems
• Compromised firmware leading to product security issues

Cyber policies can cover incident response, data restoration, business interruption, extortion, and third-party claims.

Directors’ and Officers’ (D&O)

D&O protects directors and senior managers if they face allegations relating to management decisions (for example, from investors, regulators, or other stakeholders). It’s more common as businesses scale, take investment, or operate in higher-risk contractual environments.

3) Common exclusions and “gotchas” to watch

Electronics manufacturing claims often fall into grey areas. Common issues include:

• Contractual liability: if you accept broad indemnities in contracts, insurers may not cover liabilities you’ve assumed beyond common law.
• Fitness for purpose clauses: can increase exposure. Insurers may want to review key contracts.
• Pure financial loss: Products Liability may not cover losses that aren’t linked to injury/property damage.
• Workmanship and own product: damage to your own work/product may be excluded unless you have specific extensions.
• USA/Canada exports: often require specific acceptance and higher limits.
• Heat work and fire risk: processes involving heat may drive conditions or higher premiums.
• Cyber exclusions: some property/liability policies have cyber limitations; standalone cyber can fill gaps.

4) What underwriters typically ask for

To quote electronics manufacturing properly, insurers commonly request:

• A clear description of products (including end-use)
• Turnover split by product type and territory (UK/EU/USA/other)
• Any design responsibility and whether you provide advice
• Quality control processes (ISO 9001, testing, traceability)
• Compliance approach (UKCA/CE, EMC, RoHS, REACH where relevant)
• Contracts and key customers (OEM supply, critical applications)
• Claims history
• Fire and security protections
• Details of premises (construction, occupancy, storage)
• Business continuity planning and key supplier dependencies

The more clearly you can evidence controls, the easier it is to access better terms.

5) How to reduce risk (and often premiums)

Insurers price risk. Practical improvements can reduce both claims and cost:

• Documented QA: incoming inspection, batch traceability, test records, calibration logs
• Supplier management: approved supplier lists, audits, dual sourcing for critical parts
• Product safety and compliance: EMC testing, thermal testing, clear labelling and instructions
• Fire risk controls: housekeeping, separation of flammables, battery storage controls
• Security: monitored alarms, access control, CCTV, secure cages for high-value stock
• Cyber hygiene: MFA, offline backups, patching, least-privilege access, incident plan
• Contracts review: avoid accepting unlimited liability; align caps with insurance limits

6) Choosing limits and sums insured (practical guidance)

There’s no one-size-fits-all, but these are common decision points:

• Products/Public Liability limit: often £2m–£10m depending on clients and contracts.
• Employers’ Liability: typically £10m (common market standard).
• PI limit: driven by contract requirements and worst-case financial loss scenarios.
• Property sums insured: rebuild cost for buildings; replacement-as-new for contents/plant; realistic stock peak levels.
• BI indemnity period: choose based on realistic recovery time, not optimism.

If you supply safety-critical sectors (medical, automotive, aerospace, industrial controls), limits and scrutiny often increase.

7) Special considerations: contract manufacturing vs own-brand

Your insurance needs shift depending on your role in the chain.

Contract manufacturer / EMS provider

• Focus on Products Liability, care, custody and control exposures, and contract terms.
• Clarify who is responsible for design and specification.
• Ensure you have cover for work done on customers’ materials/components.

Own-brand manufacturer

• Higher exposure to recall, product safety, and consumer claims.
• More need for strong documentation, instructions, and traceability.

Design + manufacture

• Often needs both PI and Products Liability with careful wording alignment.

8) Claims examples (what “insured” can look like in real life)

• A batch of power adapters overheats and causes property damage at a customer site: Products Liability responds (subject to policy terms).
• A ransomware attack stops production for two weeks: Cyber BI may respond; property BI usually won’t unless triggered by physical damage.
• A reflow oven fails and damages itself: Engineering breakdown can respond.
• A design error in a PCB causes a client to scrap a production run and claim costs: PI may respond.
• A safety issue triggers a voluntary recall: Recall/rectification cover may respond.

9) How to buy the right cover (a simple checklist)

Before you renew or approach the market, gather:

• Product list + end-use + key clients
• Turnover split by territory
• Contract requirements (liability limits, indemnities)
• QA/testing evidence and certifications
• Stock values (average and peak)
• Plant list with replacement values
• BI figures (gross profit) and recovery timeline
• Cyber controls summary

Then ask for your insurance to be structured around your real exposures, not a generic “manufacturer” template.

Call to action

If you run an electronics manufacturing business in the UK and want a practical review of your insurance—covering Products Liability, recall, PI, property, business interruption, and cyber—Insure24 can help you sense-check your risks and arrange cover that matches your contracts and customers.

Call 0330 127 2333 or visit insure24.co.uk to discuss your requirements.