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OEM & CONTRACT MANUFACTURING INSURANCE THAT PROTECTS YOUR SUPPLY CHAIN
Why OEM & Contract Manufacturing Insurance Matters
OEM suppliers and contract engineering manufacturers operate in a world of tight margins, strict tolerances, demanding delivery schedules, and complex customer contracts. One failed batch, one specification dispute, or one supplier interruption can quickly become a six-figure problem — especially when your parts sit inside a larger assembly, machine, or safety-critical product.
Insure24 arranges tailored insurance for UK OEM suppliers, build-to-print engineering firms, subcontract machining, contract assembly operations, and specialist manufacturers supplying industries such as automotive, aerospace, defence, rail, marine, medical devices, electronics, energy, industrial machinery and construction plant.
Core Covers for OEM & Contract Engineering Manufacturers
Contract manufacturing insurance is rarely “one size fits all”. Your risk profile depends on whether you are build-to-print, design-and-build, assembling finished products, supplying components, holding customer tooling, importing parts, exporting finished goods, or operating within a regulated quality system (e.g., ISO 9001, AS9100). We help structure cover around your real exposures.
- Product Liability – Covers injury or property damage caused by products/components you manufacture, supply or assemble.
- Public Liability – Protection if a third party is injured or property is damaged at your premises or due to your operations.
- Employers’ Liability – UK legal requirement for most employers; covers employee injury/illness claims and legal costs.
- Professional Indemnity – If you provide design, specification, tolerancing, prototyping, testing, consultancy or sign-off.
- Property (Buildings/Contents/Stock) – Covers premises, tools, jigs, fixtures, materials, WIP and finished stock (subject to sums insured/terms).
- Machinery Breakdown – Sudden mechanical/electrical breakdown cover for production plant, CNC machinery and critical equipment.
- Business Interruption – Protects cashflow if an insured event stops production (loss of gross profit + increased costs of working).
- Goods in Transit – Cover for parts/components/materials while being transported (own vehicles or couriers, depending on policy).
- Tooling & Customer Property – Extensions for customer-supplied tools, dies, moulds, patterns and specialist equipment in your custody.
- Cyber & Data – Particularly relevant where CAD files, ERP/MRP systems, production controls or supplier portals are critical.
Common OEM & Contract Manufacturing Risks
OEM supply chains can magnify small issues. A minor dimensional variance, incorrect material certification, mislabelled batch, or late delivery can trigger disputes and knock-on costs. Insurers and brokers must understand what “good” looks like in your quality system and how risk is managed day to day.
- Specification disputes – build-to-print errors, drawing revisions, tolerance stack-ups, ambiguous instructions.
- Contractual penalties – late delivery charges, liquidated damages, chargebacks and warranty obligations.
- Component failure – parts causing damage or injury when used inside a bigger product or system.
- Batch/lot errors – incorrect heat treatment, coating failure, wrong material grade, poor traceability.
- Recall & rectification – customer demands for sorting, rework, replacement, re-machining or reassembly.
- Customer tooling exposure – loss or damage to moulds, dies, jigs, fixtures, gauges or specialist tooling.
- Fire, flood & contamination – damage to premises, machines, materials, WIP and finished stock.
- Machine breakdown – single-point-of-failure CNC machines causing downtime and missed delivery windows.
- Supplier failure – delays or quality issues in purchased parts/materials impacting your ability to deliver.
- Cyber interruption – ransomware, compromised CAD data, ERP outages, production scheduling disruption.
Who Needs OEM & Contract Engineering Insurance?
This type of cover is designed for businesses that manufacture, assemble or supply parts/products under contract. Whether you operate a single-site CNC machining unit or a multi-process manufacturing operation with welding, finishing, assembly and test, your risks need to be framed correctly to insurers.
Typical Contract Manufacturing Operations
- Build-to-print CNC machining and turning
- Sheet metal fabrication, laser cutting, presswork
- Welding, coded welding and structural fabrication
- Assembly and sub-assembly operations
- Surface finishing, coating, anodising, plating (where applicable)
- Prototyping and small-batch specialist manufacture
- Testing, QA inspection, calibration and validation work
OEM Supplier & Supply Chain Exposures
- Supplying safety-critical parts to OEMs
- Working under framework agreements and long-term supply contracts
- Holding customer tooling and consignment stock
- Just-in-time (JIT) delivery models
- Exporting goods (EU/Worldwide) or importing components
- Traceability, batch control, and quality system obligations
- Intellectual property / confidential CAD file handling
What Insurers Typically Need to Quote OEM & Contract Manufacturing Risks
Strong submissions reduce delays and improve pricing. We’ll help you present your business clearly, focusing on controls, quality assurance, contract terms, and the real-world use of your products. Even if you’re busy on the shop floor, a structured set of information can unlock better terms.
- Turnover split – products/services, UK vs export, key industries served
- Manufacturing processes – machining/fabrication/assembly/testing/finishing, and any higher-hazard steps
- Max contract value – and any single largest customer exposure
- Contractual terms – warranties, indemnities, penalties, fitness-for-purpose clauses
- Quality controls – ISO certifications, inspection stages, calibration, traceability
- Products & end-use – whether components are safety-critical or used in hazardous environments
- Premises & protections – construction, security, fire alarms, sprinklers, housekeeping
- Machinery schedule – major CNCs/plant, values, maintenance regimes, single-point-of-failure equipment
- Claims history – losses and near misses, what’s changed since
- Cyber/IT reliance – CAD, ERP/MRP, CNC controls, backups, MFA and resilience
Insure24 understood our OEM contracts and helped us restructure cover around product liability and business interruption. The process was simple and the policy wording finally made sense.
Operations Manager, UK Contract ManufacturerWhy Choose Insure24 for OEM & Contract Manufacturing Insurance?
Your insurance should support your commercial reality: OEM approvals, audits, tight delivery windows and the need to keep production moving. We focus on clear coverage, realistic limits, sensible excesses and insurer relationships that work for manufacturing risks.
- Specialist UK manufacturing insurance broking
- Understanding of OEM contracts, supply chain responsibilities and product exposures
- Access to insurers familiar with engineering, machining, fabrication and assembly
- Support structuring indemnity limits, territories and policy wordings
- Practical risk management guidance to reduce premiums over time
- Straightforward quote process with expert help when you need it
How to Get a Quote
If you’re supplying OEMs or manufacturing under contract, it’s essential that your broker captures the full picture: what you make, how it’s used, what your contracts demand, and what could happen if something goes wrong. We’ll guide you through the right questions — without drowning you in admin.
- 1. Tell us what you manufacture and who you supply
- 2. Share key contract requirements (limits, territories, indemnities)
- 3. Confirm your machinery, premises and business interruption needs
- 4. We approach specialist insurers and compare terms
- 5. You choose the right cover and we put it on risk quickly
FREQUENTLY ASKED QUESTIONS
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What is OEM & contract engineering manufacturing insurance?
It’s specialist business insurance designed for manufacturers who supply OEMs or produce goods under contract, often within complex supply chains. It typically includes public and product liability, employers’ liability, cover for premises and machinery, business interruption, and professional indemnity where design/specification risk exists.
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Do OEMs require specific liability limits?
Often yes. Many OEM contracts specify minimum public/product liability limits (and sometimes professional indemnity), plus requirements around territorial cover (UK/EU/Worldwide) and inclusion of certain clauses. We help align your policy structure to typical contract requirements while keeping it commercially sensible.
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Does product liability cover faulty components supplied to an OEM?
Product liability generally covers injury or property damage caused by a defective product/component. However, purely financial losses (e.g., rework costs with no injury/damage) may be treated differently depending on the policy wording. We can discuss your typical “failure scenarios” and place cover appropriately.
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Do I need professional indemnity as a contract manufacturer?
If you provide design input, tolerance advice, prototyping sign-off, testing certification, engineering consultancy, or modify customer drawings/specifications, professional indemnity is strongly recommended. If you are strictly build-to-print, PI may still be relevant depending on how responsibilities are defined in your contracts.
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Can I insure customer tooling, dies and jigs kept at my premises?
Yes. Many OEM supply relationships involve customer-owned tools, dies, moulds or fixtures. We can arrange extensions for customer property in your care, custody or control, subject to declared values, security and policy terms.
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Does machinery breakdown cover CNC machines?
Machinery breakdown can cover sudden and unforeseen mechanical or electrical failure of insured plant and machinery, including CNCs (subject to policy terms, maintenance expectations and exclusions). Pairing this with business interruption can help protect cashflow during downtime.
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What affects the cost of OEM & contract manufacturing insurance?
Premiums typically depend on turnover, product type/end use, contract terms, territories, maximum exposure, quality controls, premises protections, machinery values, claims history, and the extent of design/specification responsibility.
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Is employers’ liability mandatory?
In most UK cases, yes. If you employ staff, employers’ liability insurance is generally required by law. It covers compensation and legal costs if an employee is injured or becomes ill as a result of work.
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Can you cover exports for OEM supply chains?
Yes. Exporting often requires wider territorial cover and careful consideration of jurisdiction/claims environment. Tell us where your goods go (UK/EU/Worldwide) and we’ll structure the policy accordingly.
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How quickly can Insure24 arrange cover?
Many contract manufacturing risks can be quoted quickly once we have the key details. More complex exposures (high-value contracts, safety-critical components, extensive exports, bespoke contractual clauses) may require deeper underwriting review — but we aim to progress matters promptly and keep you informed.