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A CLEAR GUIDE TO METAL FABRICATION INSURANCE
Metal fabrication sits at the intersection of workshop risk, site risk, product liability and contract exposure. A single claim can involve property damage, injury, defective work allegations, downtime, contractual penalties and supply chain disputes - so the right insurance programme is about more than just “public liability”.
This guide breaks down the main types of insurance cover metal fabricators and manufacturers typically consider, what each policy is designed to do, and the most common gaps we see in real-world claims.
Who This Guide Is For
“Metal fabrication” covers a wide range of trades and business models. Some companies are workshop-only manufacturers supplying parts to OEMs. Others do supply-and-install work on construction sites, industrial facilities or commercial premises. Many businesses do a mixture of: cutting, forming, welding, machining, assembly, finishing and on-site installation.
This insurance guide is useful for:
- General fabrication workshops (steel, aluminium, stainless)
- CNC machining, turning, milling and precision components
- Laser / plasma / waterjet cutting businesses
- Architectural metalwork and balustrades
- Stairs, mezzanines, platforms, handrails and safety barriers
- On-site installation, assembly and maintenance fabrication
- OEM and supply chain component manufacturing
- Sheet metal, ducting and bespoke enclosures
The right cover depends on what you make, where it ends up, and what you agree to in contracts - not just your SIC code.
1) Public Liability & Products Liability Insurance
Most fabrication businesses start with Public Liability (PL). This is designed to cover your legal liability for injury to third parties or damage to third-party property arising from your business activities.
Products Liability is closely related. It is designed to cover liability for injury or damage caused by products you have supplied, manufactured or fabricated after they leave your control (or after completion), subject to policy terms.
This is critical for fabricators because your products often become part of a bigger system: machinery, structures, vehicles or public spaces. A small defect can create a large downstream loss.
Public Liability: Typical Fabrication Scenarios
- Hot works causing accidental fire damage on-site
- Damage to client property during installation or repair work
- Third-party injury from tools, plant or working at height
- Trip hazards, falling objects or site safety incidents
- Accidental damage to existing services (pipes, electrics) during fixing
PL is generally triggered by an event causing injury/property damage and a legal liability to pay damages.
Products Liability: Typical Fabrication Scenarios
- Weld failure leading to collapse and injury
- Incorrect material grade causing cracking or premature failure
- Tolerance error causing machinery failure and property damage
- Sharp edge/burr causing injury to end users
- Batch defects from tooling wear or calibration drift
Products liability is vital for workshops that supply parts even if they never visit site.
The Most Common Liability Gap: “Putting Your Own Work Right”
A major misconception is that product liability pays for the cost of replacing your own defective product or reworking a faulty batch. Often, liability policies respond to injury or third-party property damage caused by the defect - not the cost to remake your own product. Extensions such as recall/rectification may be available in some cases, but they are specialist and not automatic.
2) Employers’ Liability Insurance
If you employ staff (including labour-only subcontractors under your control), Employers’ Liability (EL) is typically a legal requirement in the UK. Fabrication work involves hot works, heavy materials, lifting, machinery, noise, fumes, manual handling and working at height - all of which can lead to injury or long-tail illness claims.
EL is designed to cover your legal liability for injury or illness suffered by employees arising out of their work. It can also include defence costs. Common EL claim drivers in fabrication include manual handling injuries, accidents with machinery, burns, eye injuries, hearing damage, and respiratory exposure depending on materials and processes.
3) Property, Workshop, Stock & Business Contents Insurance
Your workshop is the heart of your business. Property insurance is designed to protect buildings (if you own them), tenant improvements (if you rent), tools, contents, raw materials, work in progress and finished goods against insured perils such as fire, theft, storm, flood and escape of water (subject to policy terms).
Fabrication businesses often have high values concentrated in one location: machines, materials, stock, jigs/fixtures, specialist tooling and customer-owned items. A single fire or flood can be catastrophic without adequate cover.
What to Consider When Insuring a Fabrication Workshop
- Building sum insured – rebuild cost (not market value)
- Contents sum insured – tools, benches, compressors, IT, racking
- Stock/materials – steel, stainless, aluminium, fasteners, consumables
- Work in progress – part-finished jobs and assemblies
- Customer goods – items you hold or work on (needs correct wording)
- Hot works controls – insurers may require welding/cutting precautions
Common Property Pitfalls
- Underinsuring machinery and specialist tooling
- Not declaring high-risk processes or storage (gas cylinders, flammables)
- Inadequate security details (alarms, shutters, CCTV)
- No cover for customer goods / hired-in equipment
- Wrong basis for business interruption cover
- Assuming property insurance covers internal mechanical breakdown (often it doesn’t)
A good risk presentation and accurate sums insured can materially improve terms.
4) Business Interruption (BI) Insurance
Business interruption is designed to protect your trading position after an insured event (often linked to property damage). For fabricators, BI can be the difference between surviving a fire or flood and losing key customers.
BI cover can include loss of gross profit and/or increased cost of working (ICOW) - to help fund measures like outsourcing, temporary premises, overtime, expedited shipping and hire of replacement equipment.
The key BI questions are: how long would it take to return to normal output, and what dependencies would slow you down (lead times on machines, specialist parts, approvals, skilled labour, customer requalification)?
5) Machinery, CNC & Equipment Breakdown Insurance
Fabrication output often depends on a small number of critical machines: CNC mills/turning centres, lasers, press brakes, compressors, saws, welding sets, extraction systems and material handling plant. If a key machine fails internally (mechanical or electrical breakdown), property insurance may not respond because there is no external peril like fire or flood.
Machinery breakdown insurance is designed to cover repair/replacement costs following sudden and unforeseen breakdown events, subject to policy wording. It can often be extended to include downtime protection via business interruption and increased cost of working for insured breakdown events.
What Insurers Often Want to Know
- Machine schedule with values and ages
- Maintenance routines and service contracts
- Operating hours and criticality to production
- Claims history and known issues
- Spare parts availability and supplier support
- Whether CNC controls/PLCs are included
Why This Cover Matters
- High repair costs for spindles, drives, motors and control systems
- Long lead times for OEM parts and specialist engineers
- Downtime affects delivery, reputation and customer retention
- Outsourcing work at short notice can be expensive
- Some contracts impose penalties for late delivery
6) Goods in Transit, Components Transit & Delivery Risk
Fabricators often transport high-value components, finished assemblies and bespoke items to customers or sites. Transit risks include theft, accidental damage, load shift, and damage during loading/unloading.
Goods in Transit (GIT) insurance can protect items while in transit, whether you deliver using your own vehicles or via couriers/hauliers (wording matters). It can also be relevant for customer collections and for imported parts.
7) Contractual Risk, Professional Indemnity & Cyber
Modern fabrication risk is not only physical. Many disputes are driven by contracts, drawings, CAD files, specifications and project communications. Three covers often come into play:
Contractual Risk
Contracts can include fitness for purpose clauses, broad indemnities, removal/reinstallation obligations, and liquidated damages. Many of these exposures are not covered by standard liability policies.
- Penalties and liquidated damages are usually uninsured
- Warranties can create breach-of-contract claims without damage
- Removal/reinstallation costs may be excluded as “making good”
Professional Indemnity (PI)
If you provide drawings, design input, calculations, specifications or tolerancing advice, PI can protect against allegations of negligence in professional services - which may not be covered by public/products liability.
- Useful for “paper” disputes (drawings/specs)
- Can help with defence costs for technical disputes
- Important where you accept design responsibility
Cyber & Data Risk (Including CAD/CAM and Production Systems)
Fabricators increasingly rely on CAD/CAM files, CNC programmes, ERP/MRP systems, email and cloud storage. A cyber incident can cause downtime, corrupted designs, ransomware disruption, or data breaches involving client drawings. Cyber cover can help with incident response, business interruption (cyber-triggered), data recovery and liability, subject to policy terms and risk controls.
How to Build the Right Insurance Programme for Your Fabrication Business
The best insurance programme is built around your workflow and failure points: how materials arrive, how you cut/form/weld/machine, where you store work in progress, how you transport goods, whether you install, and what contracts you sign.
When you speak to Insure24, we’ll typically walk through:
- Your activities (fabrication only vs supply-and-install)
- Product end use (public-facing, safety-critical, industrial)
- Workshop risk (hot works, storage, security, housekeeping)
- Machinery schedule and production dependencies
- Quality assurance and traceability (inspection/testing records)
- Contractual requirements (limits, warranties, penalties, indemnities)
- Claims history, near misses and key lessons learned
That approach helps avoid a “cheap policy that doesn’t respond when it matters”.
FREQUENTLY ASKED QUESTIONS
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What insurance does a metal fabrication business typically need?
Most businesses consider Public Liability, Employers’ Liability (if you employ staff), Products Liability, and Property/Contents cover for the workshop. Many also add Business Interruption, Machinery Breakdown (for CNC/critical equipment), Goods in Transit, and Professional Indemnity if they provide design input or drawings.
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Is product liability necessary if I only supply to other businesses?
Often yes. A defective component can cause injury or property damage once integrated into a larger system. OEM and supply chain contracts commonly require products liability with specified limits and sometimes worldwide territories.
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Does liability insurance cover the cost of reworking my defective batch?
Not usually. Liability insurance is typically designed to respond to injury or third-party property damage caused by the defect, not the cost of replacing your own defective product or reworking a batch. Specialist extensions such as recall/rectification may be available in some cases, subject to underwriting.
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Will property insurance cover internal CNC breakdown?
Often not. Property insurance commonly covers external perils like fire, flood and theft. Internal mechanical or electrical failure is usually addressed by Machinery / Equipment Breakdown cover, which can often be extended to include downtime protection.
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When do I need Professional Indemnity as a fabricator?
If you produce drawings, provide design input, calculations, specifications, tolerancing advice, fixing recommendations, or value engineering, Professional Indemnity may be important. It is designed to respond to allegations of negligence in professional services which may not be covered under public/products liability.
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Can insurance cover contractual penalties and liquidated damages?
Usually not. Penalties and liquidated damages are typically contractual/commercial exposures rather than insured liability triggers. The best protection is often contract negotiation (caps, exclusions) and strong project controls (variations, documented dependencies, acceptance sign-offs).
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How quickly can Insure24 arrange metal fabrication insurance?
Once we have your activities, turnover split, claims history, contract requirements, and key details about your workshop and products, we can usually progress quotes quickly. If you need urgent documentation for a contract or tender, call us and we’ll prioritise your request.