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DISASTER RISK COVER THAT HELPS YOU RECOVER FAST
Why Fire & Explosion Is a Top Manufacturing Risk
For engineering and manufacturing firms, a major fire or explosion event is one of the most severe losses possible. It can destroy buildings, machinery, tooling, stock and critical production capacity in minutes. The financial impact often continues for months: lost revenue, delayed contracts, expediting costs, customer penalties and damaged relationships.
The right insurance programme is more than “property cover”. It must be structured around your maximum values at risk, production dependencies, and the time you would realistically need to rebuild and recover. Insure24 arranges specialist manufacturing insurance with strong fire and catastrophe protection, plus business interruption that reflects your operational reality.
What Factory Disaster Risk Insurance Can Cover
“Factory disaster risk” typically refers to major loss events such as fire, explosion, electrical failure, hot works incidents, dust explosions, chemical reactions, and catastrophic damage that stops production. The cover is usually achieved through a combination of sections within a manufacturing insurance policy.
Below are the key elements most engineering manufacturers should consider when structuring fire and catastrophe protection.
- Buildings Insurance – Rebuild costs for owned premises (including professional fees, debris removal and reinstatement).
- Contents, Plant & Machinery – Tools, equipment, fixtures and production machinery damaged by fire or insured perils.
- Stock, Materials & WIP – Raw materials, work-in-progress and finished goods (including peak stock exposures).
- Business Interruption – Loss of gross profit and increased cost of working following insured damage.
- Engineering/Machinery Extensions – Cover for electrical/mechanical breakdown and consequential damage where arranged.
- Debris Removal – Clear and dispose of damaged stock, waste and building materials (limits apply).
- Alternative Premises – Additional costs to operate from temporary premises (where covered).
- Expediting Expenses – Overtime, rush freight, temporary equipment or outsourcing to keep deliveries moving.
High-Risk Triggers Insurers Look At
Fire and explosion underwriting for factories is heavily influenced by process risk, housekeeping, detection, compartmentation, electrical safety and how you manage ignition sources. If you can demonstrate strong controls, insurers are often more comfortable — and terms can improve.
Common Fire & Explosion Sources
- Hot works: welding, cutting, grinding and torch work
- Electrical faults: wiring, control panels, batteries, chargers
- Dust and fine particulates: combustible dust accumulation (sector-dependent)
- Flammable liquids, solvents and chemicals (storage and handling)
- Compressed gases and pressure systems
- Cooking/heating processes in manufacturing environments
- Poor housekeeping: waste, packaging and blocked exits
Risk Controls That Can Improve Terms
- Fire detection and alarm systems tested and maintained
- Compartmentation and fire doors (including racking/storage separation)
- Sprinklers or suppression systems (where installed)
- Electrical inspection/testing regimes and documented maintenance
- Hot works permits and contractor controls
- Housekeeping standards and waste management processes
- Security controls (arson prevention) and CCTV
Business Interruption: The Most Underestimated Part
After a fire, many manufacturers discover the biggest loss isn’t the building — it’s the time. Machinery lead times, permitting, specialist contractors, re-commissioning, tooling replacement and customer requalification can take months. That’s why your business interruption cover and indemnity period must be realistic.
We help clients model production downtime risk, choose suitable indemnity periods (often 12–24 months, sometimes more), and set gross profit sums insured that reflect worst-case shutdown scenarios.
BI Cover Elements to Review
- Indemnity period aligned to rebuild and requalification timelines
- Gross profit calculations and seasonality/peak periods
- Increased cost of working (ICOW) to maintain deliveries
- Customers/suppliers and dependencies (extensions where available)
- Claims preparation costs (often overlooked)
Practical Continuity Planning
- Document critical machines and lead times for replacement
- Identify backup suppliers and outsourcing options
- Store critical tooling/design data securely off-site
- Plan temporary premises and alternative routing of deliveries
- Maintain accurate stock and WIP reporting
We realised after a near-miss that business interruption was the real risk. Insure24 helped us structure realistic BI cover and improve our fire protections.
Factory Manager, UK Engineering ManufacturerHow to Arrange Fire & Factory Disaster Risk Insurance
Fire and catastrophe insurance for factories is underwriting-led. The best outcomes come from accurate values at risk, clear process descriptions, and evidence of risk management. We’ll help you present the risk properly to specialist insurers.
- 1. Confirm values at risk – buildings, machinery, stock and maximum WIP exposure.
- 2. Explain processes – hot works, chemicals, dust risk, heat sources and ignition controls.
- 3. Review protection – alarms, detection, compartmentation, sprinklers, security and maintenance.
- 4. Structure business interruption – realistic indemnity period and gross profit calculations.
- 5. Compare specialist insurers – markets aligned to engineering and manufacturing risks.
FREQUENTLY ASKED QUESTIONS
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What is factory disaster risk insurance?
“Factory disaster risk” typically refers to insurance structured to protect against catastrophic events
such as fire, explosion and major damage that stops production. It usually includes property (buildings,
machinery, stock) and business interruption cover to protect income during recovery.
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Does insurance cover explosion risk?
Explosion can be covered under property insurance as part of standard insured perils, subject to policy terms.
Underwriters will review process risks such as dust, gases, pressure systems and chemicals to confirm
acceptability and conditions.
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Is business interruption included?
Business interruption is often added to protect loss of gross profit following insured damage, but it
must be selected and structured correctly. The indemnity period should reflect realistic rebuild and
re-commissioning timelines.
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How are sums insured calculated for factories?
Buildings sums insured are typically based on rebuild costs, not market value. Contents/machinery are
usually replacement cost, and stock/WIP should reflect maximum values at risk (including seasonal peaks).
We can help you structure values so cover matches real exposures.
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What risk controls help reduce premiums?
Controls such as fire detection, compartmentation, sprinklers/suppression, electrical inspection regimes,
hot works permits, housekeeping standards and security can improve insurer confidence and lead to better
terms, depending on the business and insurer appetite.
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How quickly can you arrange cover?
Timescales depend on complexity. Simple manufacturing risks can be quoted quickly, while higher-risk
processes or large values may need underwriter review. Provide details of processes, values and protection
and we’ll progress quotes efficiently.