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Understanding Exclusions & Policy Gaps
Insurance for industrial equipment manufacturers is critical, but every policy has its limits. Exclusions and policy gaps can leave your business exposed if not properly understood and managed.
This page highlights typical exclusions across product liability, professional indemnity, property, business interruption, transit, export, and overseas coverage, helping you make informed decisions.
Common Exclusions to Watch For
While policies vary, industrial equipment insurance commonly excludes the following:
- Wear & Tear – Damage from normal usage or gradual deterioration.
- Own Product Defects – Costs to repair or replace your faulty equipment are often excluded.
- Contractual Penalties – Liquidated damages, fines, or contractual breach costs.
- Cyber Incidents – Losses due to hacking, ransomware, or software failure unless specifically endorsed.
- Unapproved Subcontractors – Work performed overseas or by third parties not notified to the insurer.
- Design / Specification Failures – Often excluded unless Professional Indemnity cover is in place.
- Consequential Financial Loss – Loss of profits not arising from covered property damage or liability events.
- Territorial & Jurisdiction Limits – Overseas claims may require extensions.
- Pre-existing Damage – Losses existing prior to policy inception.
- Unapproved Maintenance – Failures caused by unauthorised repairs or adjustments.
Why Policy Gaps Matter
Exclusions and gaps can create serious vulnerabilities. Even with multiple policies, mismatched wording can leave exposures unprotected. Common examples include:
- Transit and export coverage that doesn’t match your Incoterms
- Professional indemnity and product liability overlap gaps
- Property and business interruption exclusions during overseas installations
- Uncovered risks from new technologies or modifications to existing equipment
Understanding these gaps allows you to implement endorsements, additional covers, or policy amendments to ensure comprehensive protection.
Frequently Asked Questions
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What are common exclusions in industrial equipment insurance?
Common exclusions include wear and tear, inherent product defects, gradual deterioration, consequential financial loss, cyber incidents, and unapproved subcontractors or overseas work not declared.
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Do professional indemnity claims always apply?
No. Standard policies may exclude design/specification failures, advice outside the agreed scope, or services performed internationally unless endorsed.
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Does product liability cover every defect?
Product liability typically covers third-party injury or property damage caused by a product defect, but not the cost to repair/replace your own faulty product or contractual penalties.
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Are transit and export risks always fully covered?
Not automatically. Marine cargo and goods-in-transit may have territorial limits, maximum consignment values, and exclusions for inadequate packing or unapproved transport.
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Who can help identify and close policy gaps?
Brokers like Insure24 review all policies, highlight exclusions, advise on gaps, and recommend endorsements or additional covers tailored to your business.