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WHAT “MANUFACTURING INSURANCE” REALLY MEANS (AND WHY MOST GAPS HAPPEN BETWEEN POLICIES)
Manufacturing businesses rarely have one single policy that “covers everything”. The reality is a programme made up of multiple sections that respond to different triggers: physical damage, liability allegations, professional negligence, transit events, cyber incidents, or engineering breakdown. The goal is to make sure the programme matches how you actually operate.
Why This Guide Matters
Most unpleasant surprises come from assumptions: “BI covers all downtime”, “PI covers our warranties”, “contract works covers delay”, “products liability covers rectification”, or “cyber is only for online businesses”. In reality, cover is highly dependent on definitions, exclusions, triggers, and how your contracts allocate responsibility.
This page explains the core building blocks of a typical industrial manufacturing insurance programme, the common gaps, and the information insurers need to quote properly. Insure24 helps you structure cover that matches your processes: design control, QA, commissioning, change management and recovery planning.
The Core Policies Most Industrial Manufacturers Need
The “right” programme depends on your operations (design responsibility, installation/commissioning scope, export, hazardous processes, contractual LD exposure, reliance on key machines, and OT connectivity). These are the most common building blocks.
Cover is always subject to underwriting, policy terms, conditions, limits and exclusions.
1) Employers’ Liability (EL)
- What it’s for: injury/illness allegations from employees (including labour-only arrangements in some scenarios).
- Common issues: labour supply chain clarity, claims reporting, and ensuring correct business description.
- Manufacturing angle: manual handling, machinery guarding, noise, dust/fume and occupational disease exposures.
2) Public & Products Liability (PL / Products)
- What it’s for: third-party injury or property damage from your premises/operations (PL) and supplied products (Products).
- Not designed for: pure financial loss, late delivery penalties, or your own rework/rectification costs (often excluded).
- Manufacturing angle: component failure allegations, exported goods, contractual indemnities and traceability/QA.
3) Property Insurance
- What it’s for: buildings, contents, plant, stock and sometimes patterns/tools (as scheduled), following insured perils.
- Common issues: underinsurance, incorrect reinstatement values, inadequate theft protections, and unaddressed flood exposure.
- Manufacturing angle: heat work, combustible loading, battery charging, spray booths, and segregation of high-risk areas.
4) Business Interruption (BI)
- What it’s for: loss of gross profit/revenue following an insured trigger (often linked to property damage).
- Key decisions: indemnity period, sums insured, increased cost of working, and dependencies (customers/suppliers/utilities).
- Common gap: assuming “downtime” is covered when there is no insured damage trigger (wording dependent).
5) Engineering / Machinery Breakdown
- What it’s for: sudden and accidental breakdown of insured plant (mechanical/electrical), subject to definitions/exclusions.
- Common exclusions: wear and tear, gradual deterioration, poor maintenance, and known defects.
- Manufacturing angle: key CNCs, compressors, drives, switchgear, control panels and single-point-of-failure exposure.
6) Professional Indemnity (PI)
- What it’s for: negligence allegations in professional services: design/specification/advice/programming/commissioning.
- Claims-made: retroactive date, continuity and notification discipline are crucial.
- Common gap: assuming PI covers warranties/fitness-for-purpose or LDs — many policies restrict liability assumed under contract.
7) Goods in Transit / Marine Cargo
- What it’s for: loss/damage to goods whilst in transit (own vehicles, carriers, exports), depending on wording.
- Manufacturing angle: high-value components, fragile equipment, packaging standards and Incoterms responsibilities.
- Common gap: relying on courier/carrier limits that don’t match the real value.
8) Cyber & OT (Operational Technology)
- What it’s for: incident response, data restoration, extortion, and (in some cases) business interruption.
- Manufacturing angle: ransomware, remote access, backups of PLC/SCADA configs, and supplier compromise risks.
- Common gap: OT disruption not fitting traditional property/BI triggers unless arranged appropriately.
Common Gaps & Misunderstandings (Where Claims Get Messy)
The biggest manufacturing losses are often “between” policies: rework, delay, performance remediation, uninsured downtime, and contract-driven exposures. These examples help you spot the typical traps early.
Typical gaps we see
- Uninsured rework/rectification: fixing your own work is often excluded unless a specific extension applies.
- Delay and LD assumptions: penalties and agreed damages are often not insured unless carefully structured.
- BI trigger mismatch: downtime without insured damage may not activate BI (wording dependent).
- Contractual liability: “liability assumed under contract” can be restricted in PI/PL wordings.
- Legacy retrofit exposure: damage to the existing plant and ownership/insurable interest can be unclear.
- Inadequate indemnity periods: specialist equipment lead-times can be months, not weeks.
- Cyber/OT blind spots: operational disruption doesn’t always map neatly to property policies.
What “good” looks like
- Clear scope split: what you design vs supply vs install vs commission, and who signs off.
- Contract discipline: caps, exclusions, acceptance criteria and change control documented and enforced.
- Quote-ready information: asset schedules, values, QA, maintenance records, testing plans and claims history narrative.
- Recovery planning: spares strategy, alternative suppliers, and tested business continuity plans.
- Aligned limits: liability limits and BI sums insured matched to worst-case realistic scenarios.
- Clean policy architecture: extensions where needed (engineering BI, tools/patterns, transit, cyber BI, etc.).
What Insurers Need to Quote (and Why It Affects Price)
Underwriters price on “likelihood x severity” and want evidence you can prevent losses and recover quickly. The list below helps you become quote-ready and improves outcomes.
Operational & premises information
- Business description: processes, materials, heat work, hazardous substances and subcontracting.
- Turnover split: manufacturing vs design vs installation/commissioning vs service/maintenance.
- Premises: construction, protections, housekeeping, fire separation and security controls.
- Claims history: what happened and what changed afterwards (controls implemented).
- Risk management: ISO/QA approach, training, inspections and contractor management.
Assets, downtime and contract drivers
- Asset schedule: key machines, values, age/condition, maintenance and inspection evidence.
- Downtime profile: single points of failure, lead times, spares strategy and recovery time objectives.
- Contracts: liability caps, warranties, LD exposure, acceptance testing (FAT/SAT) and change control.
- Export/territory: jurisdictions, customer sectors, high-hazard end uses and any US/Canada exposure.
- Cyber/OT controls: backups, remote access governance, segmentation and incident response readiness.
“We thought ‘manufacturing insurance’ was one policy. The reality was several covers with different triggers. Insure24 helped us map our real risks — downtime, contract obligations and design responsibility — and close the gaps.”
Operations Director, Industrial Equipment ManufacturerMAKE YOUR PROGRAMME “CLAIM-READY”
- Structured cover across property/BI, liabilities, PI, engineering breakdown, transit and cyber/OT (policy dependent)
- Help aligning contracts, acceptance tests and change control to insurable triggers
- Support evidencing maintenance, QA, inspections and recovery planning to underwriters
- Guidance on limits, indemnity periods, asset values and “single point of failure” exposures
- Fast, specialist broking for complex industrial and engineering-led businesses
FREQUENTLY ASKED QUESTIONS
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What insurance does an industrial manufacturer typically need?
Most industrial manufacturers need employers’ liability, public/products liability, property and business interruption. Depending on your operations you may also need PI (if you design/specify/advise), engineering breakdown, goods in transit, contract works for installation/commissioning, and cyber/OT cover. All cover is policy dependent.
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What’s the difference between products liability and professional indemnity?
Products liability usually relates to third-party injury or property damage caused by a product after supply. Professional indemnity is typically for allegations of negligence in professional services such as design/specification/advice/programming/commissioning (claims-made; wording dependent). Many businesses need both.
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Will business interruption cover downtime without physical damage?
Often BI is linked to an insured physical damage trigger under the property section. Some insurers offer extensions (e.g., engineering breakdown BI or specific non-damage triggers), but these must be arranged explicitly. Always check wording and triggers.
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What are the most common gaps in manufacturing insurance programmes?
Common gaps include: underinsured BI/short indemnity periods, exclusions for wear and tear/gradual deterioration, uninsured rework/rectification costs, contractual liabilities assumed under contract, and OT/cyber disruption that doesn’t fit property triggers unless structured appropriately (policy dependent).
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What information helps insurers quote quickly and accurately?
Insurers typically want a clear business description, turnover split, claims history, premises protections, reinstatement values, BI basis/indemnity period, key asset schedules and maintenance evidence, and (where relevant) contracts, acceptance testing (FAT/SAT), change control, transit exposure and cyber/OT controls.
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How can Insure24 help reduce premium and improve terms?
By making you “quote-ready” and evidence-led: improving presentation of risk controls, matching limits/indemnity periods to realistic loss scenarios, tightening contracts and acceptance criteria, and aligning policy triggers across property/BI, engineering, liability, PI and cyber/OT where needed (policy dependent).