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INSURANCE FOR COMPONENTS THAT CAN’T FAIL
Why High-Reliability Component Manufacturers Need Specialist Cover
High-reliability electrical and electronic components sit at the heart of modern industry. They control motion, manage power, protect people, and keep production lines, vehicles and infrastructure running. When your products are used in automotive systems, industrial automation, rail signalling, safety circuits, energy storage, charging infrastructure, robotics or heavy plant, the consequences of failure can be severe.
A minor tolerance issue, batch contamination, solder joint defect, insulation breakdown or firmware mismatch can cause downstream damage, emergency shutdowns, warranty claims, recall activity and contractual penalties. Standard “off-the-shelf” insurance often misses the complexity of OEM supply chains, safety-critical exposures, export jurisdictions and the strict contractual obligations commonly imposed by Tier 1 and Tier 2 customers. Insure24 arranges manufacturing insurance that reflects the reality of high-reliability production—quality, traceability, testing, compliance and contractual risk.
High-Reliability Components Insurance — What It’s Designed to Protect
This specialist manufacturing insurance is built for businesses supplying components where performance is mission-critical. That includes (but is not limited to) manufacturers of control modules, PCB assemblies, sensors, relays, contactors, switchgear, power distribution components, wiring harnesses, high-voltage connectors, industrial power supplies, battery management subsystems, motor drives, safety interlocks, encoders and electrical sub-assemblies integrated into larger systems.
The goal is simple: protect your balance sheet, your contracts, and your ability to continue trading if a problem occurs—whether that is a product defect allegation, a supply chain disruption, a fire at your premises, a machinery breakdown event, or a major OEM recall.
Core Risks We Arrange Cover For
- Product liability claims (property damage / bodily injury) arising from component failure
- Product recall / rectification costs and traceability driven withdrawal programmes
- Design & specification liability (where you design, modify or advise on component selection)
- Contractual penalty exposure (liquidated damages, chargebacks and performance clauses)
- Business interruption following insured events (fire, flood, breakdown) and contingent supply chain triggers
- Stock, materials and work-in-progress losses including high-value electronic inventory
- Transit / export risk for sensitive components and global distribution channels
Typical High-Reliability Use Cases
- Automotive: safety systems, EV charging, in-vehicle power distribution, sensors and control electronics
- Industrial automation: PLC interfacing, motor control, robotics safety and machine guarding circuits
- Energy & renewables: inverters, switchgear, HV connectors, monitoring and protection systems
- Rail & infrastructure: signalling components, power control, interlocks and critical monitoring devices
- Heavy industry: factory electrical panels, control systems, high-power assemblies and distribution hardware
- OEM / Tier supply chains: contract manufacturing and production for brand-name customers
Product Liability & Recall Cover for Safety-Critical Components
Product liability is often the cornerstone cover for high-reliability manufacturing. Where your components are integrated into vehicles, machinery or infrastructure, a defect allegation can escalate quickly—especially if the customer claims you triggered a shutdown, damaged equipment, caused fire, or created a safety risk. In these scenarios, you need the right combination of limits, territories, contract conditions and evidence requirements.
Product recall cover is equally important for businesses supplying automotive and industrial chains. In the real world, a “recall” can mean far more than public consumer products—OEMs often initiate controlled withdrawals, rectification programmes, quarantine actions, rework campaigns, dealer bulletins, or batch swap-outs. The right policy structure can help protect against the cost of locating affected units, communicating with customers, shipping replacements, and handling disposal or rework.
Common Claim Triggers We See
- Overheating / thermal runaway allegations involving power electronics or connectors
- Insulation breakdown, arcing or short circuits causing damage to customer machinery
- Solder joint fractures and intermittent faults leading to control system instability
- Ingress protection failure (moisture/dust) in harsh industrial environments
- Tolerance and fitment issues causing vibration damage or premature wear in assemblies
- Firmware / configuration mismatch claims on smart components and sensor arrays
- Counterfeit or sub-tier material discovery leading to quarantine and rework costs
Recall / Rectification Costs That Matter
- Traceability exercises, batch identification and customer notification activity
- Shipping / logistics for controlled returns and replacement parts
- Rework, sorting, inspection and re-testing programmes
- Third-party engineering support to isolate root cause and verify corrective actions
- Disposal costs for scrapped components and contaminated raw material
- Crisis management support where reputational harm is likely
- OEM chargebacks (where insurable and subject to policy wording)
Why Limits and Territories Matter
High-reliability supply chains often have global distribution. Even if you manufacture in the UK, your components may be shipped into EU plants, US assembly facilities, or global OEM networks. You may also face contractual requirements for high liability limits (for example, £5m, £10m or more), and strict terms around vendor liability. We help you align policy territories, jurisdiction clauses and limits with the reality of where your products end up—and what your contracts actually demand.
Importantly, insurers want clear information about your quality systems and testing regime. The strongest underwriting outcomes usually come from a well-presented risk: documented QC checks, traceability, end-of-line testing, environmental testing (where applicable), supplier controls, and an incident response plan for defect allegations.
Design, Specification & Contractual Penalty Risk
Many component manufacturers do more than “make to print”. You may advise customers on component selection, create bespoke assemblies, modify standard products, recommend substitutions during shortages, or collaborate on design validation and testing. When you influence design or specification, you can take on a form of professional exposure. If a customer alleges your design input contributed to failure, you may need Professional Indemnity (PI) or design liability protection alongside product liability.
Contractual risk is also a defining feature of automotive and industrial supply chains. OEM and Tier 1 contracts commonly include clauses for chargebacks, liquidated damages, expedited shipping costs, field service costs, warranty cost sharing, and penalties for late delivery. Insurance cannot always cover every contractual loss, but the right structure can help address insurable elements and support defence costs where liability is alleged.
Design / Spec Exposures (Where PI Helps)
- Bespoke electrical panel design or modified assemblies for machinery integration
- Engineering advice on power distribution, thermal performance, load ratings or IP protection
- Component substitution recommendations during shortages
- Testing sign-off documentation supplied to customers
- Failure mode analysis and “fitness for purpose” allegations
- Documentation, drawings and specifications used downstream
Contract Clauses We Review With You
- Chargebacks and OEM “back-to-back” warranty clauses
- Liquidated damages for late delivery or line stoppage
- Quality escape and corrective action cost allocation
- Supplier responsibility for field service / removal & refit costs
- Fitness for purpose warranties and indemnity provisions
- Jurisdiction and choice-of-law wording affecting claim exposure
Practical Underwriting Tip
If you supply into automotive or safety-critical industrial markets, insurers will ask about your contractual terms, your change-control process, and the limits of your responsibility. Being able to demonstrate documented engineering sign-off, deviation controls, concession processes, and clear product documentation helps improve underwriting confidence.
Property, Plant & Machinery Breakdown — Keeping Production Running
High-reliability manufacturing often depends on specialist equipment and controlled processes. A single failure—compressed air, extraction, ESD controls, test equipment, ovens, potting lines, conformal coating systems, SMT placement machines, wave soldering, selective soldering, AOI systems, ICT fixtures, calibration rigs—can cause immediate downtime and costly requalification work. The correct combination of property insurance, machinery breakdown (engineering) extensions and business interruption cover is critical.
We help ensure your sums insured reflect replacement costs, lead times, and the reality that specialist machines can take months to source and commission. Business interruption can then protect profit and continuing expenses while you recover.
Property & Stock Cover Considerations
- High-value component stock (chips, semiconductors, copper, connectors and assemblies)
- Work-in-progress, sub-assemblies and quarantined batches
- Fire risk from power testing, charging rigs, burn-in procedures and electrical loads
- ESD-controlled environments and clean / controlled areas
- Specialist tooling, test jigs and fixtures (often underestimated)
- Theft / security requirements for high-value inventory
Machinery Breakdown & BI Enhancements
- Electrical / mechanical breakdown of SMT, solder, coating and inspection systems
- Sudden and unforeseen failure of compressors, chillers and critical plant
- Deterioration of stock (where applicable) from power loss or environment failure
- Increased cost of working (outsourcing production, expedited logistics)
- Contingent supply chain options (dependent on policy and underwriting)
- Longer indemnity periods aligned to requalification timelines
Why Indemnity Periods Matter for High-Reliability
When you supply automotive or industrial customers, recovery is not always just “replace the machine and start again”. You may need to revalidate processes, requalify batches, repeat environmental testing, and satisfy customer audit requirements before shipments resume. That can extend downtime significantly—so the indemnity period and the “increased cost of working” allowance should be aligned to the real time it takes to recover, not the optimistic time it takes to buy a replacement asset.
Quality Systems, Traceability & Underwriter Expectations
High-reliability underwriting is heavily influenced by quality management and traceability. Insurers want to know how you prevent defects, how you detect issues early, and how you respond if a problem arises. Strong quality systems don’t just reduce claims—they can materially improve terms, reduce premiums, and broaden available cover.
We help you present your quality framework clearly to underwriters, focusing on what matters: process controls, supplier management, testing regime, documentation, and the ability to isolate affected batches quickly.
What Insurers Commonly Ask About
- Quality management certifications (e.g., ISO 9001, IATF 16949 where applicable)
- Traceability (lot/batch control, serialisation, barcoding, ERP controls)
- End-of-line testing (functional tests, burn-in, electrical safety testing)
- Environmental / stress testing (thermal cycling, vibration, ingress testing where relevant)
- Supplier qualification and incoming inspection controls
- Deviation / concession process and engineering change control
- Corrective action procedures and incident management process
Automotive & Industrial Documentation Examples
- Control plans and inspection records (where used)
- Production test logs and calibration certificates
- Supplier certificates of conformity and material declarations
- Non-conformance reports and corrective action evidence
- Engineering change requests and revision management
- Packaging and handling procedures for sensitive components (ESD, moisture control)
Good Insurance Starts With a Good Presentation
Many businesses lose time and pay more than necessary because the insurance submission is vague or generic. High-reliability manufacturing submissions should clearly explain what you make, where it goes, what “failure” means in the context of your product, and what controls exist to prevent quality escapes. Insure24 specialises in presenting manufacturing risk properly, so underwriters can quote accurately and confidently.
Our customer required higher limits and proof of robust recall planning. Insure24 understood our testing and traceability, presented it clearly, and secured cover that satisfied a Tier 1 audit without overpaying.
Quality Manager, UK Automotive Electronics SupplierWhy Choose Insure24 for High-Reliability Component Insurance?
You don’t need a generalist policy—you need a broker who understands OEM supply chains, contract requirements, technical exposure, and how underwriters view high-reliability manufacturing. Our focus is to get you the right cover, with the right limits and wording, at a competitive premium, by presenting your risk accurately.
- Manufacturing-focused broking with specialist insurer access
- Clear submissions that reflect testing, QC and traceability
- Support with contract requirements (limits, territories, wording)
- Claims-aware advice—cover that responds when it matters
- Fast, practical service—speak to a specialist on 0330 127 2333
How We Help You Reduce Premiums
- Align sums insured and BI indemnity periods to real exposure
- Highlight strong quality controls and incident response planning
- Clarify export territories and remove unnecessary assumptions
- Explain your product application and “failure impact” clearly
- Help structure deductibles sensibly without creating coverage gaps
Compliance & Regulations for High-Reliability Components
High-reliability components frequently sit within regulated environments. Your insurance submission should reference the compliance frameworks you work to, because insurers view robust compliance as a risk reducer. Depending on your product and market, that can include electrical safety compliance, EMC, material declarations, environmental controls, functional safety obligations, and OEM-specific requirements.
We tailor cover around your compliance landscape, including export considerations where EU and non-EU regulations apply.
Common Standards & Obligations
- UKCA / CE marking (where applicable)
- EMC and electrical safety compliance (product dependent)
- RoHS, REACH and material declarations
- ISO 9001 quality management; ISO 14001 environmental (where held)
- Automotive quality expectations (e.g., IATF 16949 where required)
- Functional safety considerations for safety-critical applications (application dependent)
Documentation That Helps in Claims & Underwriting
- Certificates of conformity and test certification records
- Calibration logs for test equipment and inspection tools
- Traceability reports showing affected batch isolation capability
- Corrective action reports and preventative action evidence
- Supplier audit records and incoming inspection data
- Incident response plan for defect notifications / alleged failures
How to Get High-Reliability Components Insurance
High-reliability manufacturing is underwritten on detail. The better we understand your products, markets and controls, the better the terms we can obtain. The process below is designed to gather the key underwriting information efficiently, without slowing you down.
- 1. Outline your products: what you manufacture, typical applications, key customers and sectors
- 2. Confirm territories: UK only or export (EU/USA/Worldwide) and any contract-required limits
- 3. Explain quality controls: testing regime, traceability, supplier controls and incident handling
- 4. Review your cover: select the right mix of liability, recall, PI, property, BI and breakdown
- 5. Bind and support: policy issued with documentation for customer compliance requirements
Information That Speeds Up Quoting
- Turnover split by product type and territory
- Any automotive/OEM contract requirements (limits, wording, territories)
- Claims history (including near-misses and quality escapes)
- Details of testing and batch traceability controls
- Premises and plant values, key machines and critical dependencies
- Business interruption gross profit and desired indemnity period
Risk Reduction Best Practices (That Insurers Like to See)
The strongest high-reliability insurance outcomes come from risk-aware manufacturers. Insurers price risk based on severity potential and the likelihood of quality escapes. Demonstrating practical controls can unlock better terms and reduce the probability of catastrophic claims. Below are examples of controls that commonly strengthen underwriting confidence.
Technical & Process Controls
- Documented end-of-line functional testing and retention of test logs
- Calibration and maintenance schedules for critical test equipment
- ESD controls and handling procedures for sensitive components
- Incoming inspection and supplier qualification controls
- Batch traceability and rapid quarantine capability
- Environmental testing where product use warrants it (heat, vibration, ingress)
- Change control process (engineering changes, concessions, substitutions)
Commercial & Contractual Controls
- Clear contract review process (limits of liability, warranties, jurisdictions)
- Documented customer complaint handling and escalation process
- Incident response plan for defect allegations and customer notification
- Supplier agreements that support recovery / recourse where appropriate
- Defined acceptance criteria and sign-off documentation with customers
- Cyber and data controls for design files, firmware and production data (where relevant)
Claims Readiness
When a defect allegation arises, speed and documentation matter. Insurers and customers want clear evidence: what batch is affected, how it was tested, what the root cause is, and what corrective actions are in place. Keeping test logs, calibration records, supplier CoCs, traceability reports and corrective action documentation can make the difference between a contained incident and a prolonged dispute.
FREQUENTLY ASKED QUESTIONS
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What counts as “high-reliability” components for insurance?
Typically this refers to components used in mission-critical or safety-critical applications where failure can cause major
downtime, damage or safety risk. Examples include automotive control electronics, industrial automation safety circuits,
high-voltage connectors, switchgear and power distribution components, sensors in critical systems, and assemblies used in
infrastructure or heavy industry. Insurers look at both the product type and the downstream consequence of failure.
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Do I need product recall cover if I don’t sell to consumers?
Often yes. In B2B supply chains, “recall” can mean controlled withdrawals, quarantine, rework, swap-outs, rectification programmes,
or OEM campaigns. These can be costly even without public consumer involvement. Recall/rectification cover can help with
notification, logistics, rework and replacement costs (subject to policy terms and triggers).
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What liability limits do automotive and industrial customers usually require?
Requirements vary by customer and territory. Many contracts specify £2m–£10m product liability as a baseline, with higher limits
sometimes required for export jurisdictions or safety-critical applications. We’ll review your contracts and align limits and territories
to what you actually need, avoiding unnecessary cost where possible.
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Do I need Professional Indemnity (PI) as well as product liability?
If you provide design input, modify specifications, advise on substitutions, supply drawings, or sign off testing documentation,
PI (design/specification liability) can be important. Product liability typically focuses on damage/injury from products, while PI
addresses allegations of negligent advice, design error or specification failures. Many high-reliability manufacturers benefit from both.
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How do insurers assess my quality controls?
Insurers look for evidence of traceability, testing, calibration, supplier controls, change management, and corrective action
procedures. Certifications such as ISO 9001 (and automotive-specific expectations where relevant) can help, but underwriters
also want to understand practical controls: what you test, how you record it, and how quickly you can isolate affected batches.
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How quickly can I get a quote?
In many cases we can obtain an initial market response quickly, but high-reliability manufacturing usually benefits from a proper
underwriting presentation. As a guide, allow 1–2 working days while we present your risk and negotiate terms with specialist insurers.
UNIQUE INSURANCE
TAILORED FOR YOU
If you manufacture high-reliability automotive or industrial electrical components, talk to Insure24. We’ll help you put the right structure in place—product liability, recall, PI, property, breakdown and business interruption—so you can meet OEM requirements and protect your business when the unexpected happens.
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