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UNDERSTAND WHAT DRIVES YOUR PREMIUM (AND HOW TO REDUCE IT)
Why This Guide Exists
Engineering and manufacturing insurance isn’t priced with a simple “one-size-fits-all” calculator. Two businesses with the same turnover can pay very different premiums depending on their processes (e.g. welding/hot works vs assembly), the value of machinery and stock on site, their claims history, and how well risks are controlled.
This page shows you how insurers typically assess cost in the UK, what information they need, and how you can estimate a realistic budget before you request a quote. We also explain how to set sensible limits (so you’re not underinsured) and practical ways to improve terms.
Step 1: List the Covers You Actually Need
“Engineering manufacturing insurance” is usually a package of covers. Your premium is the sum of multiple sections, each priced on different rating factors. Start by identifying which sections apply to your operation and contracts.
- Employers’ Liability (EL) – typically required if you employ staff.
- Public Liability (PL) – for injury/property damage arising from your operations.
- Products Liability – for claims arising from components/products after supply.
- Property (Buildings/Contents/Stock) – to protect premises and assets from events like fire, flood, theft.
- Business Interruption (BI) – protects gross profit if an insured event stops production.
- Engineering / Machinery Breakdown – for sudden mechanical/electrical breakdown of machinery (separate to property perils).
- Tools / Portable Equipment – for hand tools, calibration gear, portable kit.
- Goods in Transit – for raw materials/components/finished goods in transport.
- Professional Indemnity (PI) – if you design, specify, prototype, or alter drawings.
- Cyber – if you rely on CAD/CAM files, production networks, ERP, email payments.
Step 2: Gather the Rating Information Insurers Use
To estimate cost, you need the same core data insurers rate on. If you can provide this clearly, you’ll typically get faster quotes and better terms (because the underwriter can price accurately rather than guessing).
Business Profile
- Turnover (annual) and an honest split by activity (manufacture / fabrication / installation / design / servicing).
- Payroll / wage roll (often used in EL rating), plus number of employees and use of labour-only subcontractors.
- Years trading, ownership, and any accreditations or quality systems.
- Claims history (typically 3–5 years) and improvements made since any incidents.
- Products / sectors you supply (OEM, automotive, aerospace, construction, food machinery, etc.).
Premises, Assets & Controls
- Premises type (factory unit/workshop/warehouse), construction, size, security and fire protections.
- Machinery schedule (CNCs, lathes, presses, lasers, compressors) with replacement values.
- Stock & materials values (average and peak), including high-value metals.
- Hot works (welding/cutting) procedures, extraction, housekeeping and storage of flammables.
- Business continuity (critical spares, alternative suppliers, outsourcing options).
Step 3: Understand the Biggest Premium Drivers
Premium is driven by frequency (how likely a claim is) and severity (how large a claim could be). In manufacturing, insurers focus heavily on process hazards and the potential impact of product failure or production downtime.
- Process risk – welding/hot works, dust/extraction, solvents/paints, pressure systems, heavy lifting, forklift traffic.
- Product risk – safety-critical components vs non-critical parts; likelihood a defect can cause injury/damage downstream.
- Contract requirements – higher limits or unusual indemnities can increase cost.
- Machinery value & dependency – a single “critical” CNC can drive BI and breakdown considerations.
- Premises risk – construction type, previous losses in area, security, fire protections, neighbouring occupancies.
- Claims history – even small repeated claims can affect rating; one large loss can shift insurer appetite.
- Risk management – documented controls can materially improve terms.
Step 4: Build a Simple Cost Estimate (A Practical Method)
While only an insurer can give an accurate premium, you can build a “ballpark” estimate by splitting your programme into sections and assigning a realistic budget range for each. This helps you plan cashflow and decide where to focus on improving terms.
Use this method:
- 1) Liability core: Employers’ Liability + Public/Products Liability
- 2) Property core: Buildings/contents/stock (if applicable)
- 3) Downtime protection: Business Interruption + Machinery Breakdown (if relevant)
- 4) Specialist add-ons: PI, transit, tools, cyber, management liability
If you’re unsure what applies, start with liability + property (if you have assets on site) and add BI/breakdown if production downtime would be financially painful.
Example: Small Workshop (Illustrative Only)
A small machining workshop with modest turnover, low product criticality, strong housekeeping, and good security may see a programme made up of:
- EL + PL/Products
- Contents/tools and limited stock
- Optional BI and breakdown if reliant on one key machine
The biggest driver is usually the nature of processes (hot works, dust, pressure systems) and the potential severity of products exposure. Even in small firms, product liability and BI can dominate if the operation supplies into high-risk sectors or relies on a single critical machine.
Example: Multi-Unit Manufacturer (Illustrative Only)
A larger manufacturer with high machinery values and high stock may see costs driven by:
- Property sums insured (buildings/contents/stock)
- Business interruption sums insured and indemnity period
- Breakdown exposure and machinery schedule
- Products exposure, recalls, contractual requirements
Here, improving fire protections, compartmentation, extraction controls, and documenting maintenance can materially improve premiums and insurer appetite.
Insure24 helped us understand what was driving our premium and where our sums insured were too low. We improved our fire and security information and achieved better terms with clearer cover.
Operations Manager, UK Engineering ManufacturerHOW TO REDUCE YOUR INSURANCE COSTS
- Improve your presentation – clear activity split, machinery schedule, stock values, and site photos can speed underwriting and reduce uncertainty.
- Document hot works controls – permits, extraction maintenance, fire watch, and flammables storage.
- Strengthen security – monitored alarm, CCTV, shutters, access control, keyholder procedures.
- Reduce fire severity – housekeeping, compartmentation, racking layout, ignition source controls, extinguisher servicing.
- Maintenance records – planned maintenance and breakdown prevention (especially for critical machines).
- Review limits sensibly – avoid paying for unnecessary limits, but don’t underinsure assets or BI.
- Claims strategy – consider excess levels and avoid frequent low-value claims where practical.
Cost Checklist (Use This Before Requesting a Quote)
If you want the fastest and most accurate quote, have these ready. This reduces back-and-forth and helps insurers price your risk properly (often leading to better outcomes).
- Annual turnover and activity split
- Number of employees + payroll estimate
- Premises address, construction, security and fire protections
- Buildings sum insured (if owned) and contents sum insured
- Stock/materials average and peak values
- Machinery schedule (replacement values, key/critical machines)
- Desired liability limits (often driven by customers/contracts)
- Business interruption sum insured + indemnity period (6/12/18/24 months)
- Claims history (3–5 years)
- Any design responsibility (PI consideration)
FREQUENTLY ASKED QUESTIONS
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What is the biggest factor affecting engineering manufacturing insurance cost?
Typically it’s the combination of your processes (e.g. hot works, pressure systems, heavy machinery), the potential severity of product liability exposures, and the value/criticality of your assets (machinery, stock and business interruption). Premises risk and claims history also strongly influence premiums.
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How can I estimate the right business interruption level?
Business interruption is usually based on gross profit (turnover minus uninsured variable costs) plus certain standing charges. A practical approach is to estimate the profit/overheads you’d still need to cover during downtime and choose an indemnity period that reflects realistic rebuild/repair and catch-up time (often 12–24 months for manufacturers).
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Does increasing the excess reduce the premium?
Often yes, particularly on property, theft and certain machinery-related covers. However, the impact depends on the insurer and your risk profile. The best balance is an excess you can comfortably absorb without harming cashflow after a loss.
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Why do two manufacturers with the same turnover pay different premiums?
Turnover is only one rating factor. Insurers also consider process hazards, premises risk, fire and security protections, claims history, product criticality, contract requirements, machinery and stock values, and the potential size of a loss. Better controls and clearer information can lead to materially improved terms.
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What information should I provide to get the most accurate quote quickly?
Provide turnover split by activity, employee count and payroll, a clear description of processes (including welding/hot works), claims history, premises details (construction, security, fire protections), sums insured for property/stock, a machinery schedule, and any contractual insurance requirements. This reduces underwriting uncertainty and speeds up decisions.
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Can Insure24 help reduce my premium at renewal?
Yes. We can help by improving how your risk is presented, highlighting positive controls, reviewing sums insured for accuracy, exploring insurer markets suited to your activity, and advising practical risk improvements that underwriters care about (security, fire controls, hot works procedures and maintenance).