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WHAT COVER DOES AN INDUSTRIAL EQUIPMENT MANUFACTURER NEED?
If you design, build, assemble, integrate or commission industrial machinery, your insurance needs are rarely “off the shelf”. A single claim can involve injury, third-party property damage, contractual disputes, overseas jurisdiction, and allegations about design/specification or system performance.
This page explains the typical covers industrial equipment manufacturers buy — what each section is for, common pitfalls (like “own product” gaps), and what underwriters normally want to see. The right mix depends on your products, end-use, territories, installation scope and contracts.
Why Manufacturing Insurance Is About “How Things Fail”
Industrial equipment manufacturing is a severity business. If a machine fails, it can injure people, damage a customer’s plant, contaminate stock, cause a line shutdown, or trigger contract disputes around performance and acceptance tests. The cost of the defective part is often the smallest line item.
The challenge is that different parts of the same incident can sit in different sections: product/public liability, professional indemnity (design/spec), marine cargo for shipments, property/business interruption for your own site, or cyber if software/controls are involved.
Insure24 helps you build a joined-up insurance programme that matches your real-world operating model — including installation/commissioning, exports, subcontractors, and the contract terms you sign (subject to underwriting and policy wording).
The Core Covers Most Equipment Manufacturers Need
Not every business needs every policy — but most industrial equipment manufacturers will need a core “spine” of cover, then add modules for their specific risks. Below is a practical breakdown of what each section is for.
1) Employers’ Liability (EL)
If you employ staff in the UK, employers’ liability is generally a legal requirement. It responds to injury or illness claims from employees arising out of their work (subject to terms and conditions).
- Typical exposures: machine shop injuries, manual handling, welding/hot works, noise/vibration, slips/trips, occupational disease allegations.
- What insurers look for: H&S processes, training, guarding/LOTO procedures, risk assessments, accident history.
- Common pitfall: incorrect wage roll / activities declared (fabrication, machining, site work, overseas work).
2) Public & Product Liability
Public liability covers third-party injury/property damage arising from your business activities. Product liability focuses on injury/property damage caused by products you manufacture/supply (wording dependent). For equipment manufacturers, these are often the “front-line” covers when something goes wrong at a customer site.
- Typical exposures: injury from moving parts, crushing, guarding failure, electrical faults, fires, hydraulic leaks, resultant damage to customer plant/stock.
- What insurers look for: end-use/safety criticality, testing, CE/UKCA approach, traceability and QC.
- Common pitfall: assuming the policy pays to “fix your own product” (often restricted under own product/own work exclusions).
3) Professional Indemnity (Design / Spec / Advice)
If you design, specify, integrate systems, write/modify controls logic, provide engineering advice, or sign off commissioning/acceptance tests, you may face negligence-style allegations and financial loss claims that sit closer to professional indemnity.
- Typical exposures: performance guarantees, tolerance/spec disputes, integration failures, commissioning sign-off arguments, incorrect advice.
- Why it matters: a customer can claim economic loss even without injury/property damage.
- Common pitfall: unclear contract scope and “fitness for purpose” promises creating uninsured obligations.
4) Property Damage & Business Interruption (BI)
If you have premises, machinery, stock and a production schedule, property insurance protects assets against insured perils (e.g. fire, flood, storm), while business interruption can help protect your gross profit / revenue during recovery (policy dependent).
- Typical exposures: fire from hot works, electrical faults, arson/theft, water damage, severe weather.
- BI drivers: long lead-time machinery, specialist tooling, single-site dependency, outsourced bottlenecks.
- Common pitfall: under-declared sums insured, inadequate indemnity period, or no cover for key suppliers/customers (contingent BI options vary).
Specialist Covers Commonly Added for Equipment Manufacturers
These covers are often added depending on the type of machinery you build, the value at risk, and how you deliver projects. Some are “must haves” in certain sectors.
5) Machinery Breakdown / Engineering Inspection
For your own factory equipment, machinery breakdown can help with sudden and unforeseen mechanical/electrical breakdown (wording dependent). It’s particularly relevant where a single key machine is critical to throughput.
- Examples: CNC failure, compressor breakdown, drive/motor failure, electrical arcing, control panel faults.
- Tip: map single points of failure and align limits with replacement/lead-time reality.
6) Goods in Transit / Marine Cargo
If you ship high-value machinery, spares or tools, transit cover is critical. UK goods-in-transit may cover inland movements, while marine cargo is usually structured for international shipments, ports, storage and handling (clauses and extensions vary).
- Key figures: maximum consignment, annual turnover shipped, storage exposures, packing standards.
- Common pitfall: the maximum consignment is set too low for your largest shipment.
- Contract link: Incoterms and risk transfer must align with who insures what and when.
7) Overseas Work & Worldwide Liability Extensions
If engineers travel to install/commission, or you export outside standard territories, you need to ensure the policy territory and jurisdiction match reality. Some insurers exclude certain territories (or require specific underwriting for USA/Canada).
- Examples: commissioning abroad, training operators on site, warranty work overseas, subcontractor coordination.
- Common pitfall: “we export” but the policy only covers UK/EU, or excludes claims brought in certain courts.
8) Cyber & Operational Technology (OT) Risk
Modern equipment increasingly includes controls, remote access, telemetry and software. Cyber cover can help with incidents like ransomware, data breach, and business interruption from a cyber event (policy dependent). OT risk can also become a contractual and reputational issue in industrial sectors.
- Examples: compromised remote access tools, encrypted servers affecting production, email compromise affecting supplier payments.
- Underwriter focus: MFA, backups, patching, segregation, access control, incident response readiness.
The “Own Product” Gap, Contract Risk & Why Wording Matters
A common dispute point in manufacturing claims is the difference between resultant damage and the cost to repair/replace your own faulty product. Many liability wordings respond to injury and third-party property damage, but restrict the cost of rectifying the defective product itself (wording dependent).
Meanwhile, customer contracts can contain warranties, indemnities, liquidated damages and “fitness for purpose” promises that go beyond legal liability at law. If you assume those are insured without checking the wording, you can end up exposed.
- Resultant Damage – damage caused by the failure (often the “insured” part under PL/Product Liability).
- Own Product / Own Work – rectifying your defective part/workmanship (often excluded or restricted).
- Warranties – extended warranties can create uninsured obligations if they exceed legal liability.
- Liquidated Damages – penalties/LDs are commonly excluded or restricted; contract terms matter.
- Jurisdiction – where claims can be brought can be as important as “where you sell”.
- Acceptance Testing – clear sign-off reduces later disputes about “when it failed” and who was responsible.
We were asked to sign a contract with broad indemnities and performance guarantees. Insure24 helped us map what we were agreeing to against our insurance, tighten the wording, and secure cover that matched how the equipment is designed, shipped and commissioned.
Commercial Director, UK Industrial Equipment ManufacturerPROTECT YOUR BUSINESS
- A “cover map” showing which policy sections respond to your real-world failure scenarios
- Advice on territories, exports, overseas work and jurisdiction exposure
- Guidance aligning contracts (warranties/indemnities/LDs) to insurance wording
- Support presenting risk to underwriters: QC, testing, traceability and change control
- Clear options for transit/marine cargo, recall/rectification and PI design/spec exposures
What Underwriters Want to See for “What Cover Do We Need?” Submissions
A strong submission makes it easy for underwriters to understand what you build, where it goes, and what happens if it fails. It also demonstrates control: quality, traceability, change management and contract governance.
- Product list and end-use (including any safety critical / regulated applications)
- Turnover split: UK vs export; key territories; largest contracts/projects
- Installation/commissioning scope and any ongoing service/maintenance contracts
- QC/testing: acceptance tests, calibration, inspection regimes, CE/UKCA approach
- Traceability and supplier management for critical parts
- Contracts: warranties, indemnities, liability caps, jurisdiction, Incoterms and acceptance clauses
FREQUENTLY ASKED QUESTIONS
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What are the “must-have” insurance covers for an equipment manufacturer?
Most UK equipment manufacturers start with Employers’ Liability (if you employ staff), Public & Product Liability, and Property/Business Interruption if you have premises and production exposure. Many also need Professional Indemnity where design/specification, integration or commissioning sign-off is part of the service (policy dependent).
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Does product liability cover the cost to repair or replace our faulty machine?
Often no. Liability policies are usually designed to cover third-party injury or property damage arising from a defect, not the cost of fixing your defective product itself (often restricted under “own product/own work” exclusions). Some businesses add recall/rectification style covers, but triggers vary by wording.
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When do we need professional indemnity as well as product liability?
If you provide design input, approve specifications, integrate systems, write or modify controls/software logic, provide commissioning sign-off, or give advice that customers rely on, you may face negligence-style financial loss allegations. PI can complement product liability, depending on your scope and contracts.
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What insurance do we need for exports and overseas commissioning?
Typically you’ll look at marine cargo / goods-in-transit for shipments, plus liability cover with appropriate territories and (where needed) overseas work/commissioning included. Incoterms and contract terms influence when you’re responsible for loss and who should insure.
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How do we pick the right limits of indemnity?
Limits are usually driven by worst-case severity: the injury/property damage potential if your equipment fails, the customer sites you operate in, contract requirements, export territories, and whether a failure could cause fire, contamination, or large-scale collateral damage. We help model realistic scenarios to avoid underinsurance.
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What information will insurers ask for when quoting?
Typically: what you manufacture and where it’s used, turnover split (UK/export), installation/commissioning scope, QA/testing and traceability, contracts (warranties/indemnities/liability caps/Incoterms), and claims history. Evidence of change control and supplier management for critical components also helps.