Property & Machinery Insurance for Electrical Factories (UK)

Introduction

Electrical manufacturing is asset-heavy. You’ve got buildings, switchgear, test rigs, winding machines, CNC equipment, ovens, compressors, forklifts, and a lot of high-value stock and components. If one key machine fails or a fire damages a production area, the cost isn’t just repairs — it’s lost output, missed delivery dates, and pressure on cashflow.

Property & Machinery Insurance (often arranged as part of a Commercial Combined policy) is designed to protect electrical factories against two big risks:

• Property damage: fire, flood, storm, theft, escape of water and other insured events.
• Machinery breakdown: sudden and unforeseen mechanical or electrical failure of insured plant.

This guide explains what the cover usually includes, what insurers look for in electrical factories, and how to build a policy that actually responds when you need it.

What is Property & Machinery Insurance?

Property & Machinery Insurance is a practical way of describing two covers working together:

• Commercial property insurance for your buildings, contents, stock and (often) business interruption.
• Machinery breakdown insurance (sometimes called Engineering Breakdown) for sudden failure of plant and equipment.

You can buy these as separate policies, but many factories prefer a combined approach so there are fewer gaps and fewer disputes about whether damage was “fire” or “breakdown”.

Who needs it?

If you manufacture, assemble, test, refurbish or store electrical products, you’re likely exposed. This includes:

• Panel builders and switchgear manufacturers
• Cable and harness manufacturing
• PCB assembly and electronics manufacturing
• Motor, generator and transformer manufacturing
• Battery assembly and energy storage equipment manufacturers
• Electrical component distribution with light assembly

Even if you outsource some production, you may still rely on on-site equipment for test, calibration, packaging, and quality control.

What does property insurance typically cover?

Exact cover depends on the wording, but most UK property policies can include:

• Buildings: factory, offices, warehouses, outbuildings, fixed plant, landlord’s fixtures.
• Contents: tools, office equipment, racking, furniture, IT equipment.
• Stock and materials: raw materials, components, finished goods, packaging.
• Goods in transit (optional): your stock while being moved by you or a carrier.
• Theft: forced entry/exit, sometimes with conditions on alarms and security.
• Escape of water: burst pipes, leaking systems.
• Storm and flood: subject to location and flood history.
• Fire and smoke: including damage from firefighting.

Common property perils for electrical factories

Electrical factories have a few risk features insurers pay close attention to:

• Fire load from packaging, plastics, solvents, and stored components.
• Hot works (welding, grinding, soldering, rework) and poor permit control.
• Dust and fumes (for example from cutting, sanding, or certain processes).
• Battery and charging areas (lithium-ion risks, charging stations, storage controls).
• High-value stock that’s attractive to thieves.

What does machinery breakdown insurance cover?

Machinery breakdown cover is there for sudden, unforeseen physical damage to insured plant. It’s different from wear and tear.

Typical insured equipment can include:

• CNC machines, presses, lathes and milling machines
• Winding machines, crimping and termination equipment
• Ovens, curing systems, heat treatment equipment
• Compressors, pumps and hydraulic systems
• Forklifts and material handling equipment (sometimes)
• Production line equipment and automation
• Electrical switchgear, control panels and drives
• Test rigs, calibration and measurement equipment (where accepted)

Typical costs covered can include:

• Repair or replacement of damaged parts
• Overtime labour and express freight (optional extensions)
• Dismantling and re-erection costs
• Debris removal (sometimes)

Machinery breakdown vs electrical failure

For electrical factories, breakdown cover is often valuable because failures can be electrical as well as mechanical — for example:

• Motor burnout
• Drive failures
• Control system faults causing physical damage
• Power surge damage (where included)

The key is to ensure the policy wording is broad enough for your equipment profile.

Business interruption (BI): the cover many factories underbuy

Property damage and breakdown are only half the story. If a key machine is down for six weeks, you may still be paying wages, rent, finance, and utilities — while turnover drops.

Business interruption insurance can cover:

• Loss of gross profit (or loss of revenue, depending on basis)
• Increased cost of working (e.g., outsourcing, temporary equipment hire)
• Accountants’ fees for preparing the claim

Indemnity period

The indemnity period is how long the policy will pay out after a loss. Many factories choose 12 months, but depending on your supply chain and lead times, 18–24 months can be more realistic.

Machinery BI

Some policies can extend BI to include machinery breakdown events, not just fire/flood. This is worth checking — it can be the difference between a manageable incident and a major cashflow shock.

Key policy sections and extensions to consider

Electrical factories often benefit from tailoring. Common add-ons include:

• Deterioration of stock: for temperature-controlled goods (if relevant).
• Data and software restoration: if production relies on PLCs, SCADA, or bespoke control software.
• Public utilities: cover for interruption caused by loss of power/water at the supply.
• Service media: cover for damage to cables, pipes, and service lines.
• Trace and access: costs to locate leaks or faults.
• Alternative premises: temporary relocation costs.
• Customers and suppliers extension: BI triggered by damage at key suppliers.
• Contractual penalties: sometimes available, often limited.

Common exclusions and “gotchas”

Most claim disputes come from misunderstandings. Common issues include:

• Wear and tear / gradual deterioration: breakdown cover is not a maintenance plan.
• Known defects: if a fault was identified but not addressed.
• Poor maintenance: lack of servicing records can weaken a claim.
• Electrical arcing and short-circuit: some wordings restrict this unless it causes further damage.
• Cyber events: property policies may exclude cyber-triggered damage; cyber insurance may be needed.
• Unattended theft conditions: alarm requirements, lock standards, and key control.
• Underinsurance: if sums insured are too low, insurers can reduce claims proportionally.

How insurers assess electrical factory risk

When pricing and setting terms, insurers typically look at:

• Construction: roof type, wall construction, compartmentation, fire doors.
• Fire protection: alarms, detection, sprinklers, extinguishers, hydrants.
• Processes: soldering, coating, use of solvents, battery handling.
• Housekeeping: storage height, clear aisles, waste removal routines.
• Maintenance: planned preventative maintenance (PPM), inspection logs.
• Electrical safety: fixed wiring inspections, PAT testing, thermal imaging.
• Security: intruder alarms, CCTV, access control, perimeter fencing.
• Claims history: past losses and what changed afterwards.
• Business continuity: spares strategy, supplier alternatives, disaster recovery.

Practical ways to reduce risk (and often premiums)

Insurers like evidence. A few practical improvements can make a real difference:

• Hot works permit system with trained sign-off and fire watch.
• Battery storage controls: segregated areas, charging rules, fire separation.
• Thermal imaging surveys of switchgear and distribution boards.
• Documented PPM: service schedules, breakdown logs, and corrective actions.
• Spare parts strategy for critical machines (drives, motors, control boards).
• Fire compartmentation between production, storage and offices.
• Improve housekeeping: reduce combustible waste, control packaging storage.
• Security upgrades: monitored alarms, better lighting, keyholder procedures.

Getting your sums insured right

Two numbers matter most:

1. Rebuild cost for buildings: not market value. Include professional fees and debris removal.
2. Replacement cost for plant and stock: consider lead times, currency changes, and installation costs.

For BI, your broker will usually ask for:

• Turnover
• Gross profit (or gross revenue) figures
• Payroll split (if you want wages included)
• Worst-case downtime estimate

If you’re unsure, it’s better to model a realistic “maximum loss” scenario than to guess.

Claims: what good looks like

If something happens, speed and documentation help.

• Notify your insurer/broker early.
• Take photos and preserve damaged parts where safe.
• Keep maintenance records ready.
• Track downtime, overtime, outsourcing costs, and lost orders.
• Record mitigation steps (temporary repairs, alternative suppliers).

A well-prepared claim is usually faster, less stressful, and more likely to be settled fairly.

FAQs

Is machinery breakdown included in standard property insurance?

Not usually. Property insurance covers insured perils like fire, flood and theft. Machinery breakdown covers sudden mechanical or electrical failure. Many factories need both.

Do I need cover for hired-in plant or leased machinery?

Often yes. Leasing agreements may make you responsible for damage. You can usually add hired-in plant or specify leased equipment under the machinery section.

Will the policy cover power surges?

Sometimes, but it depends on the wording and the cause. If surge protection is fitted and maintained, that can also help underwriting.

What if a machine fails but there’s no visible damage?

Many policies require physical damage for a breakdown claim. If the issue is purely a fault code or calibration problem, it may not be covered.

Can I cover losses caused by a supplier’s fire?

Often yes via a customers/suppliers BI extension, but you’ll need to list key suppliers and choose suitable limits.

Call to action

If you run an electrical factory, the right Property & Machinery Insurance is about more than ticking a box — it’s about protecting production, contracts, and cashflow.

If you’d like a quick review of your current cover, or you want a quote that reflects your equipment, processes and downtime risk, get in touch with Insure24. Call 0330 127 2333 or visit https://www.insure24.co.uk/ to speak with a specialist.