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OEM & CONTRACT MEDICAL DEVICE INSURANCE THAT HELPS YOU SCALE
Why OEM & Contract Manufacturing Insurance Matters
Contract manufacturing is at the heart of modern medtech. OEMs outsource machining, cleanroom assembly, moulding, packaging, sterilisation, and even full turnkey production to specialist partners. This accelerates product development and reduces fixed costs — but it also creates complex insurance and liability challenges when something goes wrong.
In medical devices, “who is responsible” is rarely simple. The legal responsibility may sit with the brand owner or legal manufacturer, while the operational failure may sit with the contract manufacturer, subcontractor, sterilisation provider, or component supplier. A single error can trigger product recalls, regulatory investigation, and high-severity injury claims — with indemnities, warranties, and limitation clauses tested in real time.
Insure24 arranges specialist insurance programmes for OEMs and contract medical device manufacturers, tailored to your activities, supply chain model, territories, and contractual obligations.
Who This Insurance Is Designed For
“Contract manufacturing” means different things across the sector. Some businesses manufacture one precision component. Others provide end-to-end production including validated cleanrooms, packaging, labelling, and post-market support. We commonly insure:
- Medical device OEMs outsourcing production (brand owners / legal manufacturers)
- Contract manufacturers (CMOs) and contract development & manufacturing organisations (CDMOs)
- Cleanroom assembly and sterile packing facilities
- Precision machining, turning, milling, laser cutting, and micro-manufacturing suppliers
- Injection moulding and polymer processing for medical-grade components
- Electronics sub-assembly and PCB integration for medical devices
- Sterilisation subcontractors and validated process partners
- Private label manufacturers producing devices for multiple brands
Product Liability When You Manufacture for Someone Else
If you manufacture devices or components that are used in patient care, you can be pulled into liability claims even if your name is not on the packaging. This is particularly true where a defect is traced to manufacturing, assembly, sterilisation, packaging, or traceability failures.
The reality is that OEMs, distributors, hospitals, and patients often claim against multiple parties at once. Your insurance needs to respond even when liability is alleged rather than proven — and it must cope with the long-tail nature of medical device claims, where issues can emerge years later.
- Third-party bodily injury and property damage claims
- Coverage for products supplied under OEM/private label arrangements
- Worldwide territory options (including USA/Canada where required)
- Legal defence costs and expert witness support
- Long-tail exposure consideration (extended reporting / retroactive structures where appropriate)
- Completed operations exposure (post-delivery harm)
- Vendor endorsements and additional insured requirements (subject to insurer agreement)
Contractual Liability, Indemnities & “Flow-Down” Risk
OEM and contract manufacturing agreements are often heavily negotiated and can include broad indemnities, hold-harmless clauses, liquidated damages, warranty obligations, and quality-related penalties. Some agreements attempt to “flow down” the OEM’s risk to the manufacturer, even where the OEM controls design, specifications, and labelling.
Insurance cannot replace good contracts — but a properly structured insurance programme can support your business when a dispute becomes a claim. We focus on aligning policy wordings with how you actually trade, including: whether you are the legal manufacturer, whether you design anything, and what you accept responsibility for.
- Cover structured around your role: OEM, CMO, CDMO, assembler, steriliser, component manufacturer
- Clarity on contractual liability vs. assumed liability (and what is / isn’t insurable)
- Support for additional insured and waiver of subrogation requests (where possible)
- Consideration of warranty exposure and “fit for purpose” allegations
- Alignment with limitation of liability clauses and caps
- Multi-client manufacturing exposure (multiple brands using the same facility/process)
- Dispute and defence cost considerations where allegations arise from quality systems
Product Recall, Field Safety Corrective Action & Customer Costs
For OEMs and contract manufacturers, recalls are not just about retrieving products. You may also face: expedited rework, replacement production, third-party logistics, and contractual reimbursement demands from OEM customers. In high-throughput manufacturing, a single process deviation can affect multiple lots and multiple clients.
Recall/FSCA cover is designed to help fund the cost of a recall or corrective action when a product presents a safety risk or regulatory issue. Depending on the policy and circumstance, it may cover investigation, notification, shipping, disposal, and crisis communications.
- Recall logistics, retrieval, and disposal costs
- Customer notification (hospitals, distributors, end users as required)
- Root cause investigation and quality remediation support (where covered)
- Replacement manufacturing / expedited production (where covered)
- Rework and relabelling programmes
- Crisis PR and reputation protection
- Multi-territory recall considerations for exporters
- Options for including third-party recall expense exposure
Cleanroom Contamination, Sterility & Process Validation Risk
Many OEM and contract manufacturers operate validated processes: sterile barrier systems, cleanroom assembly, controlled environments, and validated sterilisation partners. Where products are intended for invasive use, sterility failures and contamination events can create high-severity patient harm exposure and immediate regulatory attention.
Beyond injury claims, contamination events can create significant first-party losses: scrapped WIP, destroyed finished goods, decontamination costs, and prolonged shutdown while cleanrooms are recertified.
- Contamination events impacting WIP and finished goods
- Cleanroom shutdown and recertification costs (where insured)
- Sterilisation process failure exposure and subcontractor dependency
- Environmental control failures (HVAC, humidity, particulate control)
- Validation errors and documentation issues leading to batch quarantine
- Traceability breakdown and lot-mixing risk
- Packaging integrity failures (sterile barrier issues)
- Temperature excursions affecting sterile products and adhesives/materials
Property, Stock & Business Interruption for High-Value Production
Medical device contract manufacturing often involves expensive equipment, high-value raw materials, and time-critical production commitments. A fire, flood, machinery breakdown, or contamination event can halt manufacturing and trigger contractual consequences with OEM customers.
Business interruption needs to reflect your reality: extended lead times, specialist machinery, validation requirements, and supply chain dependencies. It’s not just about “reopening” — it’s about producing validated product again, to the right specification, with the right records, under audit.
- Buildings and contents cover (owned or leased sites)
- High-value stock, WIP, and finished goods (including customer goods where applicable)
- Machinery breakdown and specialist equipment cover
- Business interruption and increased cost of working
- Loss of revenue following insured damage or breakdown
- Supplier / customer dependency options (contingent BI)
- Alternative manufacturing arrangements and rapid outsourcing support
- Consideration of validation/recertification delays
Professional Indemnity, Design Responsibility & Technical Advice
Many contract manufacturers don’t just “make to print.” They provide technical advice, DFM (design for manufacture), process engineering, validation support, and sometimes design changes to improve yields or compliance. The moment you advise, specify, validate, or provide design input, you may create professional exposure.
Professional indemnity (PI) can help where claims arise from negligent advice, specification errors, validation failures, or documentation mistakes that lead to losses. This is particularly relevant in: process validation, sterilisation validation, packaging validation, and design change control.
- Professional indemnity for technical advice and specification input
- Coverage aligned to validation and documentation responsibilities
- Claims arising from design modification, DFM guidance, or process change
- Defence costs for allegations of negligent advice
- Contractual requirements for PI limits (where relevant)
- Options for worldwide cover and exports
- Support for multi-client risk where advice impacts multiple OEM programmes
Cyber, Data & Operational Technology Risks in Medtech Manufacturing
OEM and contract manufacturing depends on digital design files, controlled documents, ERP/MRP systems, QMS platforms, batch records, device master records, and traceability databases. Cyber incidents can compromise IP, disrupt production, and trigger contractual disputes if production or release documentation is unavailable.
A ransomware attack doesn’t just slow you down — it can stop shipments, invalidate release records, and create urgent audit questions around data integrity. For some manufacturers, the biggest loss is business interruption and recovery time, not just data breach costs.
- Cyber business interruption cover (where available)
- Incident response, forensic support and recovery costs
- Coverage for extortion and ransomware events
- Data restoration and system rebuild expenses
- Third-party liability where customer data is impacted
- Supply chain cyber disruption considerations
- Support for contractual notification obligations after incidents
- Risk management and insurer-required controls guidance
We manufacture and pack sterile devices for multiple OEM customers. Insure24 structured liability, recall, and property cover around our cleanroom and validation exposures and helped us satisfy demanding contract requirements.
General Manager, UK Contract ManufacturerPROTECT YOUR BUSINESS
- Your legal defence costs if an OEM, distributor, or patient alleges a defect
- Claims arising from manufacturing or assembly errors
- Recall logistics and corrective action costs (where arranged)
- Loss of stock, WIP, and finished goods following insured events
- Business interruption and increased cost of working
- Contract requirements for limits and coverage evidence
- Protection for multiple clients and programme-based manufacturing
Compliance & Regulations
OEM and contract medical device manufacturers typically operate under strict quality and regulatory requirements. Insurance should reflect how you work and what you are responsible for, including:
- UK Medical Devices Regulations and MHRA expectations
- UKCA and CE marking support processes
- EU MDR supply chain and post-market surveillance expectations
- ISO 13485 quality management systems
- Cleanroom validation and environmental controls
- Sterilisation validation and process documentation
- UDI / traceability and batch record integrity
- Supplier controls and subcontractor oversight
FREQUENTLY ASKED QUESTIONS
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What is OEM & contract medical device manufacturing insurance?
It’s a tailored insurance programme for medical device OEMs and contract manufacturers, designed to address product liability, recall exposure, contractual obligations, cleanroom/process risks, and business interruption. The right structure depends on whether you are the legal manufacturer, a subcontractor, or provide design/validation input.
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If my name isn’t on the product, can I still be sued?
Yes. If a defect is linked to your manufacturing, assembly, packaging, sterilisation, or documentation processes, you can be brought into claims by OEM customers, insurers, and sometimes directly by claimants. OEMs may also pursue recovery from you via contractual indemnities.
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Does product liability cover recall costs?
Not usually. Product liability is aimed at third-party injury/property damage claims. Product recall/FSCA cover is typically required to fund recall logistics, notifications, and corrective action costs (subject to policy terms and triggers).
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Do I need professional indemnity as a contract manufacturer?
If you provide technical advice, DFM input, validation support, specification recommendations, or design modifications, professional indemnity may be important. Even documentation or validation errors can create financial losses and disputes.
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Can insurance help with contractual indemnities and additional insured requests?
Often, yes — but it depends on the insurer and wording. Some contracts require additional insured status, waivers of subrogation, or evidence of specific limits. We structure programmes to satisfy common requirements where insurers agree.
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What’s the biggest risk for cleanroom and sterile manufacturing?
Contamination and sterility failures can create high-severity patient harm exposure and immediate regulatory attention. They can also trigger major first-party losses such as scrapped WIP, quarantined batches, shutdown, and recertification costs.
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How much liability cover do OEMs and contract manufacturers typically buy?
Many programmes start at £2m–£5m and scale to £10m+ depending on product risk class, territories (especially USA), turnover split, and customer contract requirements. We’ll recommend limits based on your exposure profile.
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What information do you need to quote?
We’ll typically ask what you manufacture (risk class), what you are responsible for (design vs make-to-print), territories of sale, turnover split by client/region, key processes (cleanroom, sterilisation, packaging), quality standards (e.g. ISO 13485), claims history, and main contract requirements (limits and endorsements).