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OEM & Contract Fabrication Insurance That Helps You Win Better Work
Why OEM & Contract Manufacturing Insurance Matters
If you supply fabricated metal parts to OEMs (Original Equipment Manufacturers), tier suppliers, or principal contractors, you are often operating under tight tolerances, strict delivery schedules, and demanding contractual terms. A single defect, late delivery, specification mismatch, or documentation issue can trigger costly rework, rejected batches, project delays, and legal disputes.
OEM and contract fabrication work is different from one-off fabrication. You may be producing repeat runs, batch manufacturing, or providing capacity for customers who outsource parts of their production line. That brings additional exposures: product traceability, quality assurance obligations, design responsibility creep, contractual penalties, and greater “knock-on” losses when your part is integrated into a larger system.
Insure24 arranges tailored insurance for contract fabricators, welding and assembly shops, laser/plasma cutting operations, sheet metal and press-brake specialists, CNC machining and turning subcontractors, and heavy fabrication facilities supplying OEM production chains across the UK.
CORE COVERS FOR OEM & CONTRACT FABRICATORS
Whether you’re supplying parts into automotive, construction products, agricultural machinery, materials handling, energy, rail, marine, or industrial equipment, we’ll help you build an insurance package that aligns with your contracts, your quality system, and the real-world risks on your shop floor.
What Does OEM & Contract Metal Fabrication Insurance Cover?
Your policy should do more than “tick the box” for certificates. OEM supply chains can expose you to large downstream costs, strict audit requirements, and high-value contractual obligations. The right cover is designed around your role in the supply chain - whether you’re a tier supplier, a subcontractor, or a specialist shop providing laser cutting, folding, welding, finishing, assembly, or machining.
- Public Liability – Protection if your business activities cause third-party injury or property damage (including visitor and contractor risks on your premises).
- Products Liability – Cover for injury or property damage arising from parts you manufacture, supply, or assemble (including components integrated into larger systems).
- Employers’ Liability – A legal requirement in most cases if you employ staff, covering workplace injury and illness claims.
- Professional Indemnity – Important where you provide drawings, tolerances, specs, QA sign-off, or where design responsibility can be alleged via contracts and correspondence.
- Property & Contents – Cover for workshop buildings (if owned), tenant improvements, tools, stock, jigs, fixtures, dies, and office contents.
- Machinery Breakdown – Protection for sudden mechanical/electrical failure of CNC machines, press brakes, compressors, extraction systems, welding sets, lasers/plasma cutters and more.
- Business Interruption – Helps protect your gross profit and increased costs of working after an insured event interrupts production.
- Goods in Transit – Cover for customer goods and your products while being transported (own vehicles or couriers, subject to terms).
- Contract Works – If you undertake installation/fit-out or supply-and-fix work, contract works cover can protect materials and work in progress off-site.
- Cyber & Data – Protection against email compromise, ransomware, and data incidents that can halt operations and disrupt supply chains.
Common OEM & Contract Fabrication Risks
OEM supply work is often governed by strict standards, inspection plans, and delivery KPIs. Below are the risks we see most often in claims, disputes, and “near miss” scenarios for contract fabricators.
Rejected Batches, Rework & Rectification
Minor deviations can become expensive fast. A tolerance drift, material grade mismatch, incorrect hole spacing, weld porosity, missing deburr, wrong finish thickness, or incorrect assembly can cause batch rejection. Even if the end customer’s product isn’t physically damaged, the cost of rework, remanufacture, expedited freight, and line stoppages can escalate.
- Dimensional errors and tolerance stack issues
- Weld defects and QA failures
- Wrong material, wrong finish, wrong process
- Incorrect labelling, traceability or documentation
Contractual Penalties, Delay & Line-Stoppage Allegations
OEM customers may claim for delays, liquidated damages, or “line stoppage” costs if your parts arrive late or cannot be used. Many policies exclude pure contractual penalties unless there is an insured trigger, so it’s important to structure your cover and risk management around how your contracts allocate responsibility.
- Late deliveries and missed milestones
- Expedited transport and emergency production
- Alleged “knock-on” losses in supply chains
- Framework / call-off contract disputes
Product Liability for Integrated Components
Contract fabricators are often one link in a larger assembly. If a bracket, frame, housing, platform, guard, or fabricated sub-assembly fails in service, liability can extend along the chain - especially where multiple parties contribute to design, manufacturing, finishing, or installation.
- Claims for injury or third-party property damage
- Allegations of faulty manufacturing or finishing
- Component failure causing system damage
- Quality documentation and traceability issues
Design Responsibility Creep (PI Exposure)
Even if you “only fabricate to drawing”, you may still be exposed if you provide advice on tolerances, materials, weld procedures, load ratings, finishing, fitment, or DFM improvements. Emails, quotations, and technical discussions can create allegations of professional negligence.
- Advice on materials, coatings and corrosion protection
- Weld procedures and suitability for end use
- Fitment guidance and assembly adjustments
- Drawing amendments and “as built” documentation
Machinery Breakdown & Production Downtime
A failed spindle, servo drive, laser source, compressor, extraction unit, or press-brake hydraulic system can halt production. With OEM schedules, downtime can mean missed call-off windows, premium freight, outsourcing costs, and damaged customer relationships.
- CNC breakdown and electrical failure
- Laser/plasma cutting downtime
- Compressed air and extraction interruptions
- Emergency repair and expedited parts costs
Fire, Theft, Flood & Workshop Catastrophe
Fabrication shops store combustible materials (packaging, oils, solvents), have hot works exposures, and operate high-power equipment. A serious fire or flood can destroy plant, stock, tooling, and WIP - and disrupt business for months.
- Hot works and electrical fire risks
- Theft of tools, copper, and high-value stock
- Flood damage to machinery and electrics
- Smoke damage and contamination of finished goods
Who Needs OEM & Contract Metal Fabrication Insurance?
This cover is designed for UK manufacturing businesses supplying parts, assemblies, and fabricated components under contract - whether you’re a long-term OEM supplier or you win work through subcontract packages and call-off orders.
Typical Businesses We Insure
- OEM suppliers and tier supply chain manufacturers
- Contract sheet metal and fabrication workshops
- Laser cutting, plasma cutting and folding specialists
- Welding, MIG/TIG, coded welders and structural welding shops
- CNC machining and turning subcontractors
- Fabrication + assembly operations (guards, housings, frames)
- Powder coating, finishing, blasting and surface prep businesses
- Prototype-to-production contract manufacturing
Common OEM/Contract Sectors
- Automotive & commercial vehicles
- Construction products and building systems
- Industrial machinery, conveyors and materials handling
- Agricultural and forestry machinery
- Energy, renewables and power equipment
- Rail, marine and specialist transport
- Medical equipment frames and enclosures (where applicable)
- Defence and aerospace supply chains (subject to insurer appetite)
Compliance, Audits & Quality Systems
OEM customers often require evidence of quality systems, inspection regimes, and documented processes. Insurers also look for controls that reduce defect frequency and improve traceability. Strong compliance can support better terms and a smoother claims process.
Common Standards & Expectations
- ISO 9001 quality management (and documented inspection plans)
- Welding procedures, welder qualifications & records
- Material certification, batch control and traceability
- Calibration of measuring equipment and QA sign-off
- Non-conformance reporting, corrective actions and continuous improvement
- Supplier control for outsourced processes (e.g., heat treatment, coating)
Documentation That Helps Underwriting
- Turnover split by activity (fabrication vs assembly vs site work)
- Highest contract value and typical batch sizes
- Inspection and test plans (ITPs) / QA procedures
- Contracts/terms (especially limitations of liability)
- Claims history and near-miss records
- Plant list: CNC, laser/plasma, press brakes, welding equipment
Note: You don’t need “perfect” documentation to get insured - but the more clarity we can provide to underwriters on your controls and processes, the more likely we can secure competitive terms with appropriate extensions.
“Our OEM customer required higher products liability and evidence of quality controls. Insure24 arranged the cover quickly and helped us present our risk information clearly to insurers.”
Operations Manager, UK Contract FabricatorWhy Choose Insure24
Contract manufacturing insurance isn’t “one size fits all”. We focus on aligning cover with your real exposures: your contracts, your production processes, your customer requirements, and your supply chain profile.
- Specialist underwriting access for fabrication, engineering and manufacturing risks.
- Policy design around contracts (limits, indemnities, extensions, and realistic exposures).
- Support with risk presentation so insurers understand your controls and quality system.
- Fast, practical advice - talk to a human who understands manufacturing.
- Claims support that helps you respond quickly and protect customer relationships.
How to Get OEM & Contract Fabrication Insurance
We keep the process simple - while ensuring the insurer has enough detail to quote accurately. Most delays come from missing information about contract values, activities, and quality systems, so we help you gather the essentials quickly.
- 1. Quick fact-find – Activities, turnover split, customers, and contract profile.
- 2. Risk & quality overview – QA processes, traceability, welding qualifications and inspection.
- 3. Build the right package – Choose limits, excesses, and key extensions based on contracts.
- 4. Place cover – Receive docs and certificates, with ongoing support through the year.
FREQUENTLY ASKED QUESTIONS
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What is OEM & contract metal fabrication insurance?
It’s a tailored commercial insurance package designed for businesses supplying fabricated metal parts under contract or as part of an OEM supply chain. It typically combines public/products liability, employers’ liability, property, machinery breakdown and business interruption, with optional professional indemnity, transit and cyber cover depending on your activities and contracts.
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Do I need products liability if I “only manufacture to drawing”?
In most cases, yes. If your fabricated component causes injury or property damage after supply, products liability can respond. Even when you follow customer drawings, claims can still allege manufacturing defects, incorrect materials, finishing issues, or a failure to warn about limitations.
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When do contract fabricators need professional indemnity (PI)?
PI is important if you provide advice, drawings, tolerances, specifications, QA sign-off, or “design for manufacture” input. Even informal guidance in emails or on quotes can create allegations of professional negligence, particularly where a customer claims your advice contributed to a failure or a costly redesign.
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Does insurance cover rejected batches, rework, or “pure” rectification?
Many liability policies focus on third-party injury or property damage and may exclude the cost of redoing your own work. Depending on your risk profile, extensions may be available for rectification, rework or product recall-type scenarios - but terms vary, so it’s important to structure the policy around your contracts and typical failure modes.
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What limits do OEM customers usually require?
Requirements vary by sector and customer, but it’s common to see £5m products/public liability and, for some frameworks, £10m or higher. Employers’ liability is typically £10m in the UK. PI limits depend on the level of design responsibility, contract values and downstream exposure.
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Is machinery breakdown worth it for fabrication workshops?
If a key machine going down stops production, machinery breakdown can be crucial. It can help with repair costs for sudden failure and, when packaged correctly, can work alongside business interruption to protect your income during downtime caused by an insured event.
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Do you cover goods in transit and customer items on site?
Yes, cover can often be arranged for goods in transit (subject to limits and conditions) and for customer goods on your premises (bailee’s risk). This can be important if you hold customer-owned materials, tooling, jigs, fixtures, or high-value parts awaiting processing.
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What do you need to quote OEM & contract fabrication insurance?
We typically need your activities and turnover split, highest contract value, typical batch sizes, customer sectors, any on-site work, claims history, quality controls (inspection, traceability, calibration), and property/plant details (sum insured, key machines, and business interruption needs). If you have specific customer insurance requirements, send those too.