How to Choose the Right Manufacturing Insurance Policy

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A practical UK guide covering policy limits, deductibles, machinery values and common underinsurance pitfalls

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Helping manufacturers select the right level of insurance cover

  • Allianz
  • Aviva
  • QBE
  • RSA
  • Zurich
  • NIG

CHOOSING THE RIGHT MANUFACTURING INSURANCE

Why Many Manufacturers Are Underinsured

Manufacturing insurance is often purchased once and left unchanged for years. As machinery values increase, production processes change and supply-chains become more complex, many businesses unknowingly carry inadequate limits or incorrect policy structures.

1. Setting the Right Policy Limits

Limits should reflect worst-case loss, not minimum premium.


  • Property & rebuild costs (not book value)
  • Machinery replacement at current market cost
  • Adequate product & public liability limits
  • Business interruption gross profit values
  • Supplier & contingent BI exposure

2. Understanding Deductibles & Excesses

Lower premiums often mean higher retained risk.


  • Property and machinery excess levels
  • Separate excesses for breakdown or BI
  • Waiting periods for business interruption
  • Cash-flow impact of large deductibles
  • Balancing premium savings vs claims exposure

3. Valuing Machinery & Equipment Correctly

Incorrect machinery values are a leading cause of underinsurance.


  • Replacement cost vs depreciated value
  • Imported or specialist machinery lead times
  • Installation and commissioning costs
  • Critical spares and tooling
  • Automation and control system values

Common Mistakes to Avoid


  • Relying on outdated asset values
  • Ignoring supply-chain dependency
  • Choosing minimum indemnity periods
  • Assuming all breakdown is covered
  • Failing to disclose process changes

FREQUENTLY ASKED QUESTIONS

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How often should manufacturing insurance be reviewed?

Manufacturing insurance should be reviewed annually and whenever there are significant changes to machinery, production output or supply-chain structure.

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Can underinsurance reduce a claim payment?

Yes. If assets or income are undervalued, insurers may apply average, reducing claim payments proportionally.

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