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WHAT DRIVES THE COST OF ELECTRICAL MANUFACTURING INSURANCE?
How to Estimate Insurance Costs for Electrical Components Manufacturers
There isn’t a single “standard price” for electrical manufacturing insurance because insurers price risk based on exposures. A small cable harness workshop with low product risk will be priced differently to a high-volume PCB assembly operation supplying critical sectors (EV charging, medical devices, rail or aerospace), especially where exports and contractual requirements drive higher liability limits.
The most accurate way to price your cover is to obtain quotes. But you can estimate costs by understanding how insurers calculate each section: Employers’ Liability based on wage roll and processes; product liability based on turnover, product hazard and territories; property/stock and business interruption based on sums insured, premises characteristics and fire/security protections; and cyber based on turnover, data profile and security controls.
This guide shows what insurers look at, how to avoid the most common pricing mistakes, and what you can do to reduce the premium without leaving dangerous gaps.
A Simple Framework to Calculate Your Insurance Cost
The easiest way to estimate your insurance spend is to break it down into the major cover sections and calculate each one using the key rating variables. Most manufacturers buy either a combined policy (liability + property + BI) or a programme made up of separate policies. Either way, the rating logic is broadly similar.
Start by building a single-page “underwriting snapshot” with the data insurers need. This not only helps you estimate premium — it also makes quotes quicker and more competitive.
Your Underwriting Snapshot (The Inputs)
- Turnover (UK, EU, Worldwide, and any US/Canada exposure)
- Headcount and wages (manual vs clerical where requested)
- Products (types, end use, sectors supplied, safety-critical applications)
- Processes (SMT/THT, rework, high voltage test, solvents/COSHH, warehouse)
- Premises (construction, sprinklers/alarm, security, storage, housekeeping)
- Stock values (raw materials, WIP, finished goods, peak values)
- Plant & equipment (critical machines, values, lead times)
- Claims history (liability claims, property losses, near-miss recalls)
- Contracts (required limits, special clauses, penalties, indemnities)
- Controls (QA/testing/traceability, ESD programme, cyber security controls)
Then Estimate by Section (The Outputs)
- Employers’ Liability (EL) – wages × rate (adjusted for process hazards and claims)
- Public & Products Liability – turnover × hazard/territory rating + required limits
- Property/Stock – sums insured × peril rating (fire/theft/flood) + protections
- Business Interruption – gross profit × indemnity period + dependency risk
- Goods in Transit – annual sendings, max consignment, territories, packaging
- Cyber – turnover/data profile × security control score + BI requirements
- Optional add-ons – PI, recall/remediation, engineering breakdown, D&O, etc.
Each insurer uses its own model, but if you understand these drivers you can estimate why one quote is higher than another and where improvements will have the biggest impact.
Employers’ Liability (EL): The Wage-Based Cost Driver
Employers’ Liability is often one of the more predictable sections because it is commonly rated against your wage roll and the nature of your operations. Insurers consider how manual your work is, whether you use forklifts, whether you do site work, and whether there are higher-risk tasks such as high voltage testing, heavy lifting, solvents and repetitive hand work.
To estimate EL cost, gather your annual wage roll and split it into categories if needed (for example clerical vs manual). The insurer applies rates to each category, then adjusts based on claims experience and risk management. If your wage roll changes significantly mid-year, the premium can adjust at audit.
What Increases EL Premium?
- Higher manual wage proportion (more shop-floor exposure)
- Forklifts / shared warehouse pedestrian interface
- Poor housekeeping or slip/trip history
- Frequent rework/hot tools (burn and cut exposure)
- Solvent/chemical use without strong COSHH controls
- Work at customer sites, installation or commissioning work
- Previous claims or incident patterns
What Reduces EL Premium?
- Clear risk assessments, training records, PPE and supervision
- Forklift segregation, marked walkways and loading bay controls
- Strong housekeeping / 5S style processes
- Ergonomic workstations and task rotation to reduce RSI
- Documented COSHH and ventilation extraction controls
- Good incident reporting and corrective action tracking
Tip: Accurate wage declarations help avoid surprises. Understating wages may lead to audit adjustments; overstating can overcharge you.
Public & Products Liability: Turnover, Product Hazard and Territories
Liability pricing for manufacturers is driven by what you make, where it goes, and what it can damage. A low-voltage cable harness used in non-critical applications is usually a different risk to a power electronics assembly used in EV charging or industrial control systems. Insurers also consider whether your products are safety-critical, whether you supply regulated sectors, and whether you export — especially to the USA/Canada.
To estimate cost, start with your turnover split by territory (UK/EU/Worldwide) and understand your product exposure. Higher limits and broader territories typically increase premium. Claims history and quality controls can materially influence the result.
Big Premium Drivers
- Safety-critical end uses (power systems, medical, rail, aerospace, EV, renewables)
- Worldwide / US/Canada exposure
- High volume distribution (more units = more opportunities for defects)
- Poor traceability or weak QA/testing evidence
- Customer contracts requiring high limits and broad indemnities
- Previous claims, near recalls, or product quality disputes
What Helps Lower Costs
- Clear product specifications and controlled change management
- Robust testing regimes, calibration and inspection records
- Traceability (batch/lot/serialisation) and record retention
- Supplier approval and counterfeit component controls
- Practical contract controls (reasonable limits, controlled penalties)
Tip: If you export indirectly via an OEM, you still need the territory to reflect where the end product is sold, not just where your invoice address sits.
Property, Stock & Business Interruption: Sums Insured and Fire/Security Protections
Property/stock pricing is strongly influenced by sums insured and peril exposure — particularly fire and theft. For electrical components manufacturers, insurers will focus on ignition sources (reflow ovens, soldering, battery storage, charging stations), housekeeping, storage arrangements, and whether you have sprinklers, alarms and compartmentation.
Business interruption cost relates to your gross profit and the time you would realistically need to recover. If you rely on specialist machinery or if you have strict OEM delivery obligations, your indemnity period may need to be longer — which can affect premium.
How to Estimate Property/Stock
- Buildings sum insured (if owned) – reinstatement cost, not market value
- Contents & plant – replacement value of equipment, test rigs, tools
- Stock – raw materials, WIP and finished goods (including peak values)
- Protections – alarms, CCTV, access control, sprinklers, fire separation
- Perils – flood zone, theft exposure, and any prior losses
Tip: Stock is often under-declared. If component prices spike or you hold buffer stock, ensure your peak value is covered.
How to Estimate Business Interruption
- Gross profit – turnover minus uninsured variable costs (accounting definition)
- Indemnity period – realistic recovery time (12/18/24 months common)
- Dependencies – single-source suppliers, key customers, specialist equipment lead times
- Increased cost of working – overtime, temporary premises, subcontracting
Tip: Short indemnity periods can create a false sense of security. Recovery often takes longer than expected when you add requalification and supply chain delays.
Other Covers That Affect Total Cost: Transit, Cyber, PI, Recall & Breakdown
After core covers, the next layer of premium usually comes from optional policies that address specialist risks. These are often the policies that protect your contracts and reduce commercial shock after a defect event or a cyber incident — but they also need to be structured properly so you’re paying for value.
Goods in Transit
Transit premium depends on annual sendings, max consignment value, territories, theft exposure, and packaging. If you ship high-value boards or power electronics, the “max any one shipment” value is a key rating driver. Export shipments and premium couriers can change the risk profile.
- Annual sendings and maximum consignment value
- UK-only vs international territories
- Carrier controls and packaging/ESD standards
- Claims history (loss, damage, theft)
Cyber, IP & Data Liability
Cyber premium is heavily influenced by security controls (MFA, backups, patching, endpoint protection), your turnover, and your data profile. Manufacturers with heavy reliance on ERP/MRP and cloud systems may also want cyber business interruption and dependent BI — which can affect cost.
- MFA on email/VPN/admin accounts
- Backups with tested restores (offline/immutable copies)
- Patch management and endpoint protection
- Incident response plan and staff training
Professional Indemnity (PI)
PI cost depends on how much design/specification responsibility you carry and the contractual environment. “Build-to-print” operations may pay less than businesses providing engineering advice, firmware/configuration, DFM/DFT, test method sign-off or documentation responsibility.
Key drivers: fee/turnover for design services, contract terms, and any historic disputes or allegations.
Recall/Remediation and Engineering Breakdown
Recall/remediation (where available) is driven by product hazard, volumes, territories and QA/traceability. Engineering breakdown is driven by machinery values, age/condition, maintenance and criticality to output.
These policies can materially improve your risk posture, but you should select realistic limits and triggers to avoid paying for cover you can’t practically use.
How to Reduce Electrical Manufacturing Insurance Premiums (Without Creating Gaps)
The cheapest policy is rarely the best value if it leaves you exposed to contract disputes or uninsured losses. The goal is to reduce premium by improving underwriting confidence and removing unnecessary uncertainty — not by stripping out cover you genuinely need.
Fast Wins That Underwriters Like
- Improve housekeeping and document it (audits, 5S, corrective actions)
- Strengthen QA evidence: calibration logs, test records, traceability
- Formalise ESD controls and maintain audit trails
- Review contracts: cap penalties and avoid unlimited indemnities where possible
- Install or evidence protections: alarms, CCTV, fire separation, extraction
- Cyber basics: MFA + backups with tested restore procedures
Structure & Limit Optimisation
- Choose limits based on real contracts, not worst-case guesses
- Align territories to where products actually go
- Set realistic deductibles/excesses you can comfortably absorb
- Review BI indemnity period and gross profit calculation for accuracy
- Avoid underinsurance (it can reduce claim payouts)
Insure24 can help you balance premium against risk, highlighting where a small increase in spend buys a large reduction in exposure.
“Once we understood what was driving the premium — exports, limits, stock peaks and BI — we could fix the weak points and get better terms. Insure24 helped us present the risk properly.”
Finance Director, UK Electrical Components ManufacturerWhy Choose Insure24
Manufacturers don’t just need a price — they need terms that stand up to real contract and claim scenarios. We help you build a clear underwriting story, avoid the most common gaps, and compare insurers properly so you can make an informed decision.
- Specialist manufacturing insurance broking
- Clear data-led submissions to underwriters
- Help aligning limits/territories to OEM requirements
- Practical guidance to reduce premium via better controls
- Support with policy structure and renewal strategy
Get a Quote (Fast)
If you can provide turnover split, wage roll, product profile, territories, stock values and a short overview of your controls, we can obtain terms quickly. For complex operations or higher limits, allow 1–2 business days for specialist underwriting.
- 1. Submit your details online
- 2. We structure the underwriting presentation
- 3. We compare insurers and negotiate terms
- 4. You choose cover with confidence
- 5. Evidence issued for customers/OEM onboarding
FREQUENTLY ASKED QUESTIONS
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What are the biggest drivers of electrical manufacturing insurance cost?
The main drivers are turnover (especially export split), products and end use (hazard), required liability limits, wage roll and workforce risk,
stock values, premises protections (fire/security), business interruption exposure, and claims history. Cyber cost is strongly influenced by your security controls.
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How do insurers calculate Employers’ Liability premiums?
EL is commonly rated against wage roll and the nature of the work (manual vs clerical), adjusted for hazards (forklifts, site work, chemicals)
and claims history. Accurate wage declarations help avoid audit surprises.
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Why do exports and US/Canada exposure increase product liability cost?
Liability environments differ by territory. Worldwide and US/Canada exposure can increase claim severity and legal costs, and insurers often price this differently.
If your products end up overseas through OEMs, your policy territory should still reflect where the end product is sold.
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How do stock values affect premium?
Property and stock premiums are linked to the sums insured and the peril exposure (fire, theft, flood). Higher stock concentrations increase
potential loss size. Underinsurance can reduce claim settlements, so it’s important to insure peak values, not just average holdings.
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What’s the best way to reduce premium without creating gaps?
Improve underwriting confidence: strengthen QA/traceability, formalise ESD controls, improve housekeeping and fire/security protections,
review contract clauses, and implement cyber basics (MFA + tested backups). Then optimise limits, territories and deductibles based on real exposures.
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Can Insure24 provide an indicative cost quickly?
Yes. If you can provide turnover split, wage roll, product profile, territories, stock values and a short overview of your controls,
we can often obtain indicative terms quickly. More complex risks or higher limits may take 1–2 business days for specialist underwriting.