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BUSINESS INTERRUPTION COVER THAT HELPS YOU TAKE OFF
Business Interruption (BI) Insurance Explained for PCB Manufacturing
A fire, flood, theft, major equipment failure, or even a severe utilities incident can stop PCB production instantly. But the biggest financial damage often isn’t the physical repair — it’s the loss of trading and the cost of getting back to normal. Business interruption (BI) insurance is designed to protect your gross profit (or revenue-based loss, depending on wording) when your business is disrupted by an insured event, subject to policy terms and conditions.
For PCB fabrication and PCBA/SMT operations, recovery can take longer than many businesses expect: specialist machinery lead times, re-commissioning and calibration, ESD environment restoration, re-qualification, and customer re-approval cycles can all extend downtime. BI is the part of the insurance programme that keeps your cashflow alive while you rebuild capacity, protect customer relationships, and prevent temporary disruption turning into permanent loss.
Insure24 helps you structure BI in a way that matches your real operation — the bottlenecks, the outsourced capacity (if any), the supply chain constraints, and the time it takes to restore quality systems and delivery performance.
Why Business Interruption Matters in PCB Fabrication & PCBA/SMT
Manufacturing businesses tend to be resilient — until they’re not. PCB operations often run with tight schedules and thin contingency. A line stoppage can mean: missed deliveries, urgent outsourcing, premium freight, overtime, and customer escalation. If you supply into high-reliability markets, the commercial impact can extend beyond the disruption itself: re-approval, heightened inspection, and lost supplier status.
BI cover is built to address the financial consequences of downtime. It is typically triggered by a material damage event (e.g., fire, flood, escape of water, storm, theft) but can be extended in some programmes to tie in with equipment breakdown or other triggers (subject to insurer appetite and wording).
The single most common BI mistake is choosing an indemnity period that is too short. The second common issue is not updating the gross profit basis when turnover grows or margins change. Both can cause underinsurance when a claim happens.
Typical “Hidden” Recovery Time in PCB
- Long lead times for specialist machinery and critical spares
- Re-commissioning, calibration and validation after repairs
- Restoring ESD and environmental controls (humidity/cleanliness)
- WIP rebuild and backlog clearance (capacity ramp-up)
- Customer re-approval cycles and additional inspection demands
- Supplier constraints (components and substrates) limiting recovery speed
- IT/ERP restoration and traceability evidence rebuilding
BI Helps You Fund Recovery Actions
- Overtime and additional shifts to recover production
- Temporary outsourcing or alternative capacity to meet key deliveries
- Premium freight and expedited shipping to protect customer relationships
- Temporary premises or storage to stabilise operations
- Hiring temporary skilled labour during catch-up periods
- Extra QA/testing efforts during restart and ramp-up
- Maintaining fixed costs while output is reduced
Choosing the Right Indemnity Period
The indemnity period is the maximum time your BI policy will respond (subject to policy terms). In manufacturing, short indemnity periods can be a false economy. A building can be repaired in months, but production may still be recovering long after: commissioning, qualification, backlog clearance and customer confidence can take time.
Many PCB businesses consider 12–24 months, and some consider longer depending on complexity, reliance on specialist plant, and the time required to regain approved supplier status after a major disruption. The “right” choice comes from mapping your realistic worst-case recovery timeline.
Questions to Answer
- How long to replace your most critical machine or capability?
- How long to re-commission, calibrate and validate production?
- How long to restore IT/ERP, traceability and labelling systems?
- How long to rebuild WIP and clear backlog without losing key customers?
- How long would customers take to re-approve after an incident?
- Could supplier constraints slow your recovery even if your site is restored?
Common PCB Bottlenecks
- Single pick-and-place machine or AOI/X-ray inspection capability
- Reflow oven, wave/selective solder, or specialist coating/potting line
- Test rigs, calibration equipment and environmental testing capacity
- Extraction and compressed air systems
- Specialist CAM/production programming expertise
- Quality team capacity and documentation systems
Gross Profit, Sums Insured & Underinsurance
BI sums insured are commonly based on gross profit (or gross revenue/gross margin depending on wording). Underinsurance occurs when the declared figure is too low or not updated as the business grows. In a claim, underinsurance can reduce the payout — exactly when you need BI most.
Many PCB businesses also have seasonal peaks (major projects, long-term OEM schedules, component availability-driven stocking). It’s important to reflect realistic peak trading levels and consider how margins may change during a disruption (e.g., outsourcing may reduce margin but keep revenue flowing).
We can help you translate your financials into an underwriting-friendly BI figure and align the policy to how you actually trade.
BI Data Underwriters Ask For
- Annual turnover and gross profit (or gross margin basis, depending on policy)
- Latest accounts or management figures and forecast if growing fast
- Seasonality and peak exposure periods
- Key customer concentration and what happens if deliveries stop
- Outsourcing/alternative capacity options and likely costs
- Desired indemnity period and rationale
Common BI Enhancements (Subject to Wording)
- Increased Cost of Working – extra spending to reduce downtime impact
- Alternative Premises – additional costs to operate elsewhere temporarily
- Supplier / Customer Dependency – contingent BI style extensions (where available)
- Denial of Access – restrictions preventing access to premises after an incident nearby
- Loss of Utilities – interruption of power/water/telecoms impacting production (where offered)
- Equipment Breakdown BI – pairing engineering triggers with BI (where structured)
BI After Equipment Breakdown: The Downtime Reality
In PCB assembly, many real-world disruptions are driven by breakdown rather than fire. If a critical machine fails, you may still have a “material damage” claim only if the policy includes the right engineering triggers. Without that structure, you might have repair cover (or none) but no protection for lost income.
That’s why we often look at BI and equipment breakdown together. The goal is simple: if a critical machine stops your line, you should have a clear policy response path for repair and the income impact — subject to underwriting and policy terms.
Examples of Breakdown-Driven BI Pressure
- Pick-and-place failure stops the whole line
- AOI/X-ray failure creates a QA bottleneck and shipment stops
- Compressor/extraction failure forces production shutdown
- Reflow oven fault disrupts profiles and requires re-validation
- Test system failure halts final acceptance testing
- Power event damages sensitive equipment, causing extended downtime
What We’ll Help You Document
- A clear equipment schedule with replacement values
- Maintenance and service arrangements for critical machinery
- Your downtime “plan B” (outsourcing, alternative capacity, overtime)
- Realistic repair times and spare parts lead times
- How quickly you can restore QA and customer reporting
- The BI structure and indemnity period aligned to worst-case recovery
We thought “the building cover was enough” — until we mapped what a real restart would involve. Insure24 helped us structure BI and downtime cover around our bottlenecks and customer re-approval timeline.
Operations Director, UK PCBA ManufacturerPROTECT YOUR CASHFLOW
- Protect gross profit and trading stability after insured events (subject to policy terms)
- Choose an indemnity period aligned to realistic rebuild and ramp-up timelines
- Include increased cost of working options to protect key customer deliveries
- Align BI with equipment breakdown where machine failure is a key downtime driver
- Reduce underinsurance risk by setting accurate BI sums insured and keeping them updated
- Present your bottlenecks, controls and continuity plan clearly to insurers
FREQUENTLY ASKED QUESTIONS
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What does business interruption insurance cover for PCB manufacturers?
BI is designed to protect your gross profit (or other agreed basis) after an insured event disrupts trading, subject to the policy wording.
It can also include increased costs of working to reduce the impact of downtime, depending on the cover arranged.
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How long should the BI indemnity period be?
It depends on your realistic worst-case recovery timeline. Many manufacturing businesses consider 12–24 months, sometimes longer for complex operations.
For PCB businesses, machine lead times, re-commissioning, QA validation and customer re-approval cycles can extend downtime.
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Is BI triggered by equipment breakdown?
Standard BI is often linked to insured material damage events (like fire or flood). BI triggered by equipment breakdown depends on how the programme is structured
and the policy wording. If breakdown-driven downtime is a key risk for you, it’s important to structure cover accordingly.
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What is underinsurance in BI and why does it matter?
Underinsurance occurs when the declared BI figure (often gross profit-based) is too low compared with actual exposure.
If a claim happens, underinsurance can reduce the payout under average conditions. Keeping figures updated as the business grows helps prevent this.
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What information is needed to quote BI for a PCB business?
Typically: turnover, gross profit (or agreed basis), latest accounts/management figures, seasonality, desired indemnity period, key bottlenecks,
outsourcing options and claims history. Premises protections and equipment schedules can also help underwriters.
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Does BI cover delayed deliveries and contract penalties?
BI covers loss of gross profit (and sometimes increased costs) resulting from insured interruption, subject to policy wording.
Contractual penalties and liquidated damages are often treated differently and may be excluded or not insurable under standard BI wordings.
If contracts are a major concern, it’s worth reviewing them alongside your insurance programme.