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COVER BUILT FOR INSTALLATION, TESTING & COMMISSIONING RISK
Why Installation & Commissioning Is a Different Kind of Risk
For industrial equipment manufacturers, the highest-value and most disruption-heavy losses often occur after the build leaves the workshop. Delivery damage, lifting incidents, incorrect connections, energisation faults, software/controls issues, and failed testing can cause expensive rework, replacement parts, delay, and disputes — even when no third party is injured.
Standard policies can leave “grey areas” at the project stage: public liability is aimed at third-party injury/property damage; products liability is typically aimed at the product once in use; and property insurance won’t usually follow the machine to a customer site. That’s why OEMs often consider a mix of contract works/erection all risks, transit and testing/commissioning extensions — structured around how you deliver projects.
Installation, Commissioning & Testing Risk Insurance for Industrial Equipment Manufacturing (UK)
This page explains the most common insurance solutions UK industrial equipment manufacturers, OEMs and machinery builders use to protect equipment and project exposures during delivery, installation, testing and commissioning — including how cover differs between contract works, erection all risks, transit, and specialist testing/commissioning extensions.
Insure24 helps you map cover to your real delivery model (supply-only vs install/commission), reduce gaps between sections, and present project controls to underwriters — so insurers can offer broader terms with fewer restrictive conditions.
- Protection for contract works / erection exposures (where arranged)
- Transit and delivery cover for high-value equipment and components
- Testing & commissioning extensions (FAT/SAT/energisation), wording dependent
- Installation risks: lifting, connections, damage to the works and rework costs
- Contract clarity: acceptance criteria, handover, LDs and liability allocation
- Underwriter-ready information: values, durations, controls, subcontractors
What Insurance Covers the Installation, Testing & Commissioning Phase?
There isn’t one single “installation risk” policy — the solution is usually a structured programme. Most OEMs combine (1) transit cover, (2) contract works / erection all risks to protect the works on site, and (3) liability covers for third-party injury/property damage — with optional testing/commissioning extensions where the wording supports it.
Why the wording matters
Testing and commissioning is where insurers often apply strict conditions: defined test periods, specific triggers (sudden and accidental), exclusions for wear/tear, defect rectification, and limitations around performance guarantees. Getting the details right up front avoids claims disputes later.
- Contract works / erection all risks: physical loss/damage to the works during install
- Transit: loss/damage in carriage (own vehicles/hauliers/specialist transport)
- Testing & commissioning extensions: energisation/FAT/SAT triggers (wording dependent)
- Public liability: third-party injury/property damage arising from site operations
- Products liability: third-party injury/property damage caused by product once in use
- PI (where relevant): design/spec/software/control logic issues causing financial loss
Common Loss Points During Delivery, Install & Commissioning
Insurers and loss adjusters see the same patterns across industrial projects: lifting and movement, energisation, incorrect connections, temporary storage on site, and rushed commissioning under deadline pressure. Understanding these triggers helps you structure both controls and the right insurance response.
Examples that can turn into expensive disputes
A damaged component during lifting; a miswired drive causing electrical damage on energisation; contamination in hydraulics; dropped loads; incorrect guarding installation leading to rework; or a software/PLC error causing a crash that damages the machine — all can be costly even before any third-party claim arises.
- Lifting incidents and dropped loads (cranes, forklifts, skates, gantries)
- Transit damage: packaging failure, shifting loads, theft, weather exposure
- Incorrect connections: electrics, pneumatics, hydraulics, pipework
- Energisation faults: short circuits, arc damage, drive/motor failures
- Contamination: debris in hydraulics, fluids, filters, cleanliness issues
- Software/controls: PLC logic errors, unsafe states, sensor misconfiguration
Contract Works vs Liability: Avoiding the “Grey Area”
Many OEMs assume public liability will cover “anything that happens on site”. In practice, public liability is aimed at third-party injury and third-party property damage — it does not usually insure the contract works itself. If the machine is damaged during installation or testing, contract works / erection all risks is typically the section designed to respond (subject to definitions and terms).
Practical way to think about it
If the thing you are building/erecting is damaged, think contract works. If a third party is injured or their property is damaged, think public liability (and potentially products liability after handover). Where testing is involved, check for specific testing/commissioning language and conditions.
- Contract works: damage to the works during install/testing (where insured)
- Public liability: third-party injury/property damage from site operations
- Products liability: third-party injury/property damage after handover/in use
- Transit: damage/loss while being transported to site
- Defects rectification: often excluded unless specifically covered/endorsed
What Drives Premium and Insurer Appetite?
Insurers price installation and commissioning exposure based on project values, complexity, durations, site environments, and the controls you can evidence. The biggest swing factors are lifting arrangements, subcontractor management, testing plans, and contractual requirements (particularly liquidated damages and acceptance criteria).
What underwriters usually ask first
Expect questions around maximum project value, typical contract durations, supply-only vs install, percentage of turnover involving site work, overseas work, and any previous installation/testing losses. The clearer the story, the better the terms.
- Max contract value and typical values (including any high-value single shipments)
- Scope: supply-only vs install/commission, and how handover is defined
- Lifting methods, plans, LOLER compliance and competent appointed persons
- Testing regime (FAT/SAT), energisation steps and sign-off controls
- Subcontractor use and how competence/insurance is verified
- Contract terms: acceptance criteria, warranties, LDs and liability caps
Controls Insurers Like to See (and Why)
The best way to improve insurer appetite is to evidence structured project governance: documented lifting plans, clear method statements, commissioning checklists, phased energisation, and sign-off at each milestone. These controls reduce loss frequency and help insurers offer broader testing terms.
Risk management that improves underwriting outcomes
Practical evidence matters: templates, example RAMS, photos of lifting arrangements, commissioning packs, and how you handle changes during install (drawings, software versions, approvals).
- Job-specific RAMS, lifting plans and toolbox talks for installation teams
- Phased energisation / commissioning checklists and permit controls
- FAT/SAT documentation with acceptance criteria and client sign-off
- Cleanliness/contamination controls for hydraulics and critical systems
- Subcontractor onboarding: competence, inductions and insurance verification
- Change control for drawings, software/PLC code and site modifications
What We’ll Ask For to Quote Installation & Commissioning Risk
To approach the right markets, insurers need clarity on project values, scope, durations and controls — plus where the “testing boundary” sits. If you can provide the information below (even as a summary), we can structure the programme quickly and reduce underwriting uncertainty.
- Turnover split: manufacture vs install/commission/service
- Max contract value, typical values and longest project duration
- Transit details: packing, hauliers, storage, routes and overseas shipments
- Testing plan: FAT/SAT steps, energisation sequence and sign-off
- Lifting arrangements: cranes/forklifts, LOLER compliance and plans
- Subcontractor use: scope, vetting, supervision and insurance requirements
- Contract terms: acceptance criteria, LDs, warranties and liability caps
- Claims history and what improved after any incidents
“Our biggest losses were never in the workshop — they were during energisation and commissioning. Insure24 helped align contract works, transit and liability, and the insurer agreed sensible testing terms once we showed our SAT process and sign-off controls.”
Project Director, UK OEM & Automation Machinery BuilderPROTECT YOUR BUSINESS
- Access to specialist markets for contract works and testing exposures
- Help aligning transit, erection and liability covers to reduce grey areas
- Submission support: project controls, SAT/FAT evidence and contracts
- Programme design for OEMs with frequent site work and commissioning teams
- Claims support and practical incident guidance
FREQUENTLY ASKED QUESTIONS
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Does public liability cover damage to the machine during installation?
Usually not. Public liability is generally aimed at third-party injury and third-party property damage. Damage to the contract works (the
machine/system being installed) is typically addressed under contract works / erection all risks or a project policy, subject to wording.
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Is testing and commissioning automatically covered?
Not always. Many policies apply specific conditions, limits or exclusions during energisation and commissioning. Some offer testing
extensions with defined test periods and triggers. The detail of your FAT/SAT process and sign-off controls can influence the terms offered.
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What’s the difference between contract works and goods in transit?
Transit cover focuses on loss/damage during carriage. Contract works/erection all risks focuses on loss/damage to the works during the
installation/project period (including, in some cases, temporary storage on site) — subject to wording and declared values.
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Do you need separate cover if subcontractors install on your behalf?
Not necessarily, but it must be declared properly. Insurers will ask who installs, how you vet competence, supervision arrangements, and
what insurance you require subcontractors to carry. Contract works and liability wordings need to reflect the actual delivery model.
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What information helps Insure24 get broader testing terms?
Project values/durations, lifting controls, a clear FAT/SAT checklist, energisation sequence, acceptance criteria, and how software/drawing
changes are controlled on site. Examples of commissioning packs and sign-off evidence typically improves insurer confidence.
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Can this be included within a combined manufacturing policy?
Often yes. Many OEMs arrange contract works/transit/testing exposures alongside property/BI and liability covers, either as sections in a
combined programme or via separate specialist policies — structured to avoid gaps between covers.