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COVER THAT KEEPS YOUR PRODUCTION LINE MOVING
Why Downtime & Production Delay Is a Major Manufacturing Risk
In engineering and manufacturing, profit is made through output. When a critical machine fails, production can stop instantly — and the impact is rarely limited to a repair invoice. Downtime can create missed delivery dates, customer penalties, urgent outsourcing, wasted materials, overtime costs, and reputational harm. For some manufacturers, a single “single point of failure” machine can be the difference between hitting contractual targets and facing a cashflow crisis.
Machinery Failure, Downtime & Production Delay Insurance (UK)
“Downtime and delay” protection for manufacturers is usually built from a combination of covers — because production stoppage can be triggered by different events and insurers treat them differently. In practice, engineering and manufacturing businesses typically need: Machinery Breakdown (for sudden mechanical/electrical failure), Business Interruption (for lost gross profit/standing charges following insured damage), and often Increased Cost of Working (to help you keep delivering when your normal process is disrupted).
This page explains what those covers do, how they fit together, and how Insure24 structures protection for manufacturers that rely on production plant, CNC machinery, process equipment, compressed air systems, power distribution, automation and controls. Whether you manufacture components, fabricate assemblies, run a production line, or operate a process-based facility, the goal is the same: protect your business from the financial shock of unplanned downtime.
- Machinery Breakdown – pays for sudden mechanical/electrical failure repairs (motors, drives, controls, compressors, CNC, etc.).
- Business Interruption – covers loss of gross profit and standing charges after insured damage (e.g. fire/flood) halts production.
- Increased Cost of Working – helps fund overtime, outsourcing, hire equipment, temporary premises, or expedited shipping to maintain output.
- Stock/WIP protection – covers raw materials, work in progress and finished stock where an event causes damage or spoilage.
- Utilities failure considerations – power/air/water interruptions can be a downtime driver and should be discussed during placement.
- Single point of failure review – identify the assets that can stop your entire operation and insure appropriately.
Common Causes of Machinery Downtime in Manufacturing
Downtime events aren’t always dramatic. Many start with a small fault that escalates: a bearing failure causes heat build-up, an electrical surge damages a drive, a coolant system fails and damages tooling, or a compressed air system collapses and shuts down pneumatic controls. In modern manufacturing environments, digital controls and automation mean electrical faults can stop output just as effectively as mechanical damage.
Insurers generally want a clear view of what machinery you rely on, maintenance practices, housekeeping, and whether there is any redundancy. The better the risk is described, the easier it is to secure strong breakdown and interruption terms.
Operational Downtime Drivers
- Mechanical failure – bearings, gears, spindles, hydraulic faults, pumps, and wear-driven breakdown.
- Electrical failure – control panels, drives, PLC faults, motor burn-out, wiring issues, and power quality problems.
- Compressed air failure – compressor breakdown, air dryer faults, leaks, or contamination causing line stoppage.
- Cooling / lubrication issues – coolant failures, oil contamination, filtration problems and overheating.
- Automation / controls – sensors, interlocks, safety systems, and software/logic failures.
- Utilities interruption – power outages, water issues, gas supply interruption, or telecoms disruptions.
- Fire/flood/escape of water – physical damage events that can stop production for weeks or months.
Why “One Machine Down” Can Mean “Whole Factory Down”
- Single points of failure – one CNC, one furnace, one press, one line controller, one compressor.
- Process dependency – if stage one stops, stage two has nothing to work on.
- Specialist tooling – bespoke tooling may have long lead times or limited repair options.
- Calibration/qualification – repairs may need validation, QA sign-off, and re-qualification.
- Customer delivery windows – missed schedules can trigger urgent costs to catch up.
- Knock-on waste – damaged WIP, scrapped materials, failed batches, or missed curing/temperature windows.
The best insurance outcomes happen when downtime is treated like a measurable operational exposure — not an abstract worry. We recommend identifying your critical assets, mapping maximum tolerable downtime for each, and setting indemnity periods and cover limits that reflect the real time required to repair/replace and return to normal output.
How Manufacturers Structure Cover for Downtime & Delay
There isn’t one single policy called “downtime insurance” that solves everything. Instead, manufacturers typically combine covers that respond to different triggers: breakdown events, property damage events, and the costs of maintaining delivery performance under pressure. The sections below explain the practical differences.
Machinery Breakdown (Engineering Insurance)
Machinery Breakdown cover (also known as engineering insurance) is designed for sudden and unforeseen mechanical or electrical failure of insured plant. This can be particularly important where the “cause” of downtime is a breakdown rather than a fire or flood.
- Typical response: repair/replacement of damaged parts, specialist labour, and associated costs (subject to policy terms).
- Critical detail: ensure key equipment (CNC, compressors, drives, process machinery) is declared and valued correctly.
- Maintenance: insurers may expect reasonable maintenance regimes; documentation supports stronger terms.
- Extensions: discuss cover for resultant damage and whether hire equipment is included.
Business Interruption (Loss of Gross Profit)
Business Interruption (BI) is often the most important financial protection for manufacturers — but it usually responds to interruption caused by insured property damage (for example, fire, flood, escape of water, storm, malicious damage).
- Typical response: covers loss of gross profit and standing charges while you recover.
- Indemnity period: choose a realistic period (12/24/36 months) based on lead times and re-qualification needs.
- Increased cost of working: funds extra costs to reduce downtime, where cost-effective.
- Accuracy matters: underinsurance can reduce claim payouts; sums insured should match your real exposure.
Increased Cost of Working (Keeping Deliveries Moving)
Even if your production capacity is reduced, you may still be able to meet customer deadlines by changing how you operate — at a cost. Increased Cost of Working (ICOW) can be one of the most valuable features for manufacturers that operate on tight delivery schedules. This can include overtime, hiring temporary machinery, outsourcing specific processes, expedited shipping, additional shifts, or temporary premises.
The key is aligning the policy wording to the realities of manufacturing: you want cover that helps you keep output moving where it makes economic sense, not cover that only pays once you have stopped entirely. Insure24 will discuss your workflow, what can be outsourced, what cannot, and where the “pinch points” are.
“A breakdown on a key machine stopped our line overnight. The difference was having cover that helped with the repair and funded the extra costs to keep customer deliveries moving while we recovered.”
Production Manager, UK Manufacturing BusinessWhat Downtime Really Costs (And Why Insurers Ask So Many Questions)
A downtime event impacts more than revenue. Manufacturers can face contractual pressure, customer relationship damage, and operational knock-on losses. Underwriters want to understand your resilience: maintenance regimes, spare parts availability, contingency plans, and whether you can re-route production. The better this story is presented, the better the terms you can achieve.
Typical Downtime Cost Categories
- Lost gross profit – output reduction and delayed invoicing.
- Standing charges – wages, rent, finance, utilities, and fixed overheads continue.
- Overtime / extra shifts – to catch up when the line returns.
- Outsourcing – subcontracting machining, fabrication, coating, or assembly.
- Scrap / wasted materials – failed batches, damaged WIP, and rework.
- Expedited shipping – urgent courier, air freight, or special haulage.
- Penalties / disputes – contractual disputes and negotiations (insurance is not a substitute for contract management).
What Insurers Typically Ask
- Critical machinery list – what can stop production and what redundancy exists.
- Maintenance schedules – planned maintenance, inspections, and service records.
- Spare parts strategy – holding critical spares and supplier lead times.
- Housekeeping & fire protection – particularly for fabrication/hot works environments.
- Utilities resilience – power quality, backup, and protection against surges.
- Contingency plans – ability to outsource or re-route steps during an outage.
Insure24 helps you present downtime risk in a way that makes sense to underwriters: clear critical asset mapping, practical mitigation measures, and realistic recovery timelines. This improves pricing, reduces exclusions, and supports stronger business interruption and engineering cover.
PROTECT YOUR BUSINESS
- Sudden machinery breakdown and costly repairs
- Unplanned downtime and loss of gross profit
- Extra costs to keep deliveries on track
- Single-point-of-failure exposure on critical plant
- Damage to WIP and materials following an incident
- A structured approach aligned to your production risks
FREQUENTLY ASKED QUESTIONS
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Is there a single “downtime insurance” policy for manufacturers?
Downtime protection is usually built from multiple covers. Manufacturers commonly combine Machinery Breakdown (for sudden mechanical/electrical failure),
Business Interruption (for lost gross profit/standing charges following insured damage), and Increased Cost of Working (to fund extra costs to maintain output).
The right structure depends on what can realistically stop your production and how you recover.
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What does Machinery Breakdown insurance cover?
Machinery Breakdown (engineering insurance) typically covers sudden and unforeseen mechanical or electrical failure of insured plant, such as motors,
drives, CNC machinery, compressors, control panels and production equipment. Cover is subject to policy terms, declared equipment and values, and may
require reasonable maintenance practices.
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Does Business Interruption cover downtime caused by breakdown?
Business Interruption cover often responds to interruption caused by insured property damage (e.g. fire, flood). Downtime caused purely by breakdown
may need Machinery Breakdown and specific BI extensions depending on the insurer and wording. We help you structure cover around your actual downtime triggers.
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What is “Increased Cost of Working” and why is it useful?
Increased Cost of Working helps fund extra expenses to reduce downtime or maintain output, such as overtime, outsourcing certain processes,
hiring temporary equipment, temporary premises, or expedited shipping. It can be especially valuable where customer deadlines matter and you can keep
delivering by changing how you operate during recovery.
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How do manufacturers choose the right indemnity period?
The indemnity period should reflect how long it would realistically take to repair/replace critical plant and return to normal output. For manufacturers,
this may include machinery lead times, specialist labour availability, commissioning, and re-qualification/QA validation. Many businesses choose 12, 24, or
36 months depending on the complexity of equipment and recovery needs.
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What information do you need to quote downtime & delay cover?
Typically: a description of your manufacturing process, a list of critical machinery and values, maintenance/service arrangements, turnover and gross profit,
premises details and fire/security protections, and any known single points of failure (e.g. one compressor, one CNC). If you have key contracts, sharing
delivery and performance requirements can help structure increased cost of working and BI correctly.
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Can insurance cover penalties or liquidated damages for late delivery?
Insurance typically covers insured losses (repair costs, loss of gross profit, and certain increased costs) rather than pure contractual penalties.
However, the right cover can help you avoid delay costs by funding mitigation (overtime/outsourcing) and protecting cashflow during downtime.
We recommend reviewing contract terms and focusing on resilience and mitigation planning alongside insurance.
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How can manufacturers reduce downtime risk and improve insurance terms?
Insurers respond well to documented maintenance schedules, critical spare parts strategies, housekeeping and fire protection, power protection and surge management,
and clear contingency plans (outsourcing routes, temporary hire options). Identifying and mitigating single points of failure can improve both operational resilience
and insurance outcomes.