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DEFECTIVE PCB CLAIMS ARE RARE — UNTIL THEY AREN’T
Why Electrical Failure Claims Can Escalate Fast
PCBs are components, but they sit at the heart of electrical systems. When a PCB fails, the allegation is rarely “the board is faulty” in isolation. It’s usually about the consequences: short circuits, overheating, arcing, intermittent faults, data loss, damage to surrounding components, fire damage, equipment downtime, and expensive investigations. In safety-critical sectors, the severity can be higher, and the contractual environment can be tougher.
A defective board allegation can trigger a chain reaction: containment, line stoppage, urgent testing, replacement and expediting, and legal arguments about responsibility. Standard insurance programmes can become problematic if territories, product descriptions or contractual assumptions are wrong. The goal is to structure your products liability and related covers so they align with real end-use and real distribution (always subject to policy terms).
Insure24 helps PCB manufacturers present risk clearly and obtain liability cover designed for defective board scenarios, including higher limits and wider territories where required. Call 0330 127 2333 or request a quote online.
What “Defective Board Liability” Usually Means in Practice
A PCB can be “defective” in many ways. Some defects are obvious at electrical test. Others only appear in the field after thermal cycling, vibration, humidity exposure, conformal coating interactions, or assembly processes. Defective board allegations tend to cluster into a few categories that insurers and loss adjusters recognise.
Understanding these categories helps you manage risk and ensures you describe your products accurately to insurers. The better the description, the fewer surprises at claim stage.
Electrical & Performance Failures
- Short circuits due to bridging, contamination, or insulation failure
- Open circuits from track breaks, via failure, poor plating or delamination
- Intermittent faults that appear under vibration/thermal cycling
- Impedance and signal integrity issues affecting high-speed designs
- Dielectric breakdown resulting in arcing or flashover
- Thermal issues leading to hotspots and downstream component damage
These failures often trigger expensive investigations because they are hard to reproduce and can appear only under specific field conditions.
Manufacturing & Material Defects
- Delamination from lamination process issues or material inconsistency
- Via reliability failures due to poor plating thickness or voids
- Contamination affecting insulation resistance and leakage
- Warp and twist causing assembly stress and connection failures
- Solderability issues due to surface finish problems
- Incorrect build (stack-up, copper weight, finish, drilling) vs approved spec
“Built to the wrong spec” can be as damaging as a physical defect, particularly in controlled supply chains with strict approval processes.
When Does It Become a Liability Claim?
Not every defect becomes a liability claim. If a board fails internal test, it’s normally a quality and cost issue. Liability exposure usually escalates when a defect causes third-party property damage or injury, or when it triggers contractual disputes and allegations of negligence. Standard products liability insurance is primarily designed for injury/property damage claims arising from your product (subject to policy terms) — it may not automatically pay for all replacement, recall, rework or “pure financial loss” costs.
The key is to structure your programme to reflect where your risk sits: if your boards are used in high-energy systems or safety-critical applications, limits and territories matter much more. If you provide design or specification input, Professional Indemnity may also be relevant.
Common Claim Pathways: How Defective Board Allegations Escalate
Most defective board issues start with a customer report: field failures, increased returns, or a suspected batch issue. The next stage is containment: quarantining stock, urgent testing, and tracing which assemblies used which boards. Then comes the dispute: what caused the failure, and who pays?
The reason these claims escalate is that the cost is not only the PCB. It’s the downstream. In high-value equipment, the “surrounding” components can cost far more than the board itself. And in certain sectors, the cost of investigation and requalification can be significant.
Downstream Damage Scenarios
Downstream damage is one of the biggest severity drivers in PCB claims. Examples include:
- Short circuit causing damage to power electronics, inverters or battery systems
- Overheating damaging enclosure components or adjacent wiring
- Arcing causing fire damage to equipment or property
- Intermittent faults causing operational failure and equipment downtime
- Signal integrity issues causing critical system malfunction
When property damage occurs, products liability is the cover most commonly expected to respond (subject to policy terms, territory and limits).
Containment, Recall and “Pure Financial Loss”
Some of the largest cost categories in the real world are not classic “property damage” claims:
- Quarantine, sorting and retesting of assemblies
- Expediting replacement boards and logistics
- Customer line stoppage costs and contractual disputes
- Requalification and validation processes
These costs may not be fully covered by standard products liability insurance unless they link to covered injury/property damage, and wording varies. Where relevant, specialist recall/remediation solutions may be explored, subject to insurer appetite and controls evidence.
Territories: The Hidden Exposure
PCB manufacturers often sell to a UK or EU customer, but the end equipment may be used worldwide. This matters for liability territory. If the policy territory doesn’t match reality — particularly with US/Canada exposure — you can find yourself in a difficult position.
Insure24 helps you map where products actually end up, not just who you invoice, so your cover aligns to real-world distribution.
Insurance Covers That Typically Matter for Defective Board Liability
Defective board allegations touch multiple insurance sections. The best programme is one where these sections are aligned and the disclosure is accurate. Below is a practical overview of the covers most often relevant for electrical failure and defective PCB claims (subject to policy terms and insurer acceptance).
Products Liability
Products liability is designed to protect against liability for injury or property damage caused by products you manufacture or supply (subject to policy terms). For PCBs, the key drivers are end use, customer profile, territories, and limits.
Underwriters will ask: Are your boards used in automotive/aerospace/safety-critical applications? Are they used in high-energy power electronics? Do products reach the USA/Canada? What limits do your customers require? What is your claims history?
The correct presentation can be the difference between meaningful cover and a policy that looks fine but is misaligned.
Professional Indemnity (Where Design/Advice Is Provided)
If you provide design input, engineering advice, DFM recommendations, stack-up guidance, impedance calculations, or you sign off specifications, allegations can include “negligent advice” or “design error”. These claims may be framed as financial loss rather than property damage.
Professional Indemnity is not needed for every PCB manufacturer — but where your role includes design/specification responsibility, it can be a key part of resilience.
We can help you map your responsibilities so you only buy what you need.
Recall / Remediation Solutions (Where Available)
If your supply chain has high severity exposure, you may explore specialist recall/remediation solutions. These can be designed to address certain costs of withdrawal, replacement or remediation, subject to specific triggers and wording. Insurers usually require strong traceability and quality controls.
This is not a “standard add-on” — it’s a specialist discussion driven by your end use, territories and controls.
Property, BI, Cyber and Engineering Interactions
Some defective board scenarios involve internal damage events: ESD incidents damaging boards, power quality issues damaging test equipment, or fire incidents triggered by electrical failure. Property/BI, cyber and machinery breakdown sections can become relevant depending on the scenario (subject to policy triggers and terms).
The programme should be structured with these interactions in mind, especially for high-reliability and power electronics exposures.
How to Reduce Defective Board Liability Risk (and Improve Insurance Terms)
Liability risk is not only about making fewer defects — it’s about limiting the scope when something goes wrong. Insurers are far more comfortable when you can demonstrate traceability, robust test evidence, and controlled change. These controls reduce severity and help defend claims.
Below are practical measures that often improve both operational outcomes and underwriting acceptance.
Traceability & Containment
- Lot/batch traceability for laminates, prepregs, chemicals and surface finishes
- Link test results to batch/lot IDs and shipment records
- Defined quarantine and containment procedure when issues arise
- Record retention aligned to customer and sector expectations
- Clear supplier approval and incoming inspection controls
Better traceability often reduces recall scope and lowers claim severity.
Testing, Process Control & Change Management
- Appropriate electrical test coverage and documented methods
- Calibration records for test and inspection equipment
- Microsectioning / reliability testing where appropriate to end use
- Controlled change process for materials, suppliers and process parameters
- CAPA discipline: root cause, corrective action, prevention, verification
Controlled change is especially important in aerospace/automotive supply chains where unauthorised changes can trigger immediate disputes.
Contract Clarity: Avoiding the Insurance Mismatch
Many “claim nightmares” come from contracts rather than defects. Unlimited liability, penalty clauses, “all losses” indemnities, and unrealistic warranties can create exposures that insurance is not designed to pay. We can help you identify common friction points and align your insurance narrative to what you actually accept.
Insurance works best when it sits inside a sensible contract approach: capped liabilities, clear responsibilities, and realistic warranty language.
“A customer blamed our boards for a costly field failure. Because we had traceability, test evidence and the right liability cover in place, the dispute stayed contained. Insure24 helped us structure the programme properly.”
Managing Director, UK PCB ManufacturerWhy Choose Insure24 for Defective PCB Liability Insurance?
Defective board claims are complex: end use, territories, evidence, and contracts all matter. Insure24 helps PCB manufacturers build insurer-ready submissions and arrange products liability programmes aligned to real-world distribution and supply chain requirements.
- Manufacturing-focused broking for PCB and electronics supply chains
- Support aligning policy territory and limits to customer/OEM requirements
- Advice on traceability and evidence themes that underwriters care about
- Guidance on where recall/remediation and PI may be relevant
- Clear documentation to support procurement and onboarding
Get a Quote for Defective Board & Electrical Failure Liability Cover
To quote accurately, insurers need a clear picture of where your boards end up and what they do. If you can provide the details below, we can usually approach the market quickly and with fewer follow-up questions.
- 1. Product types (rigid/flex/multilayer, high-voltage, controlled impedance, etc.)
- 2. End uses and sectors (automotive, aerospace, industrial, consumer, power electronics)
- 3. Territories (UK/EU/worldwide; any US/Canada exposure)
- 4. Required liability limits from customers/OEMs
- 5. Quality controls: test methods, calibration, traceability and change control
- 6. Claims/returns history and any known incidents/near misses
- 7. Whether you provide design/spec advice (PI discussion)
Call 0330 127 2333 or use our online form to start.
FREQUENTLY ASKED QUESTIONS
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Does products liability cover defective PCB boards?
Products liability is designed to cover liability for injury or property damage caused by your product, subject to policy terms, limits and territory.
It may not automatically cover all replacement, rework, recall or “pure financial loss” costs. We help structure cover and expectations to match real exposures.
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What is the biggest severity driver in defective board claims?
Downstream damage and containment costs. If a PCB failure damages high-value equipment (power electronics, industrial systems, vehicles) or triggers large-scale
quarantine/testing and expediting, the claim can escalate quickly. Traceability and clear territories/limits are key risk reducers.
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Do we need worldwide cover if we only sell in the UK?
Possibly. If your boards are integrated into equipment exported by OEMs, your liability exposure can follow the end product. Territory should reflect where the
finished equipment is sold or operated, not only where your customer address is. US/Canada exposure should be identified early.
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When should a PCB manufacturer consider Professional Indemnity?
If you provide design/specification advice, sign off stack-ups/impedance, provide engineering recommendations, or are responsible for technical decisions,
allegations can be framed as negligent advice or financial loss. Professional Indemnity may be relevant depending on your role and contracts.
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What controls help reduce defective board liability risk?
Strong traceability, clear test evidence, calibrated equipment, controlled change management, CAPA discipline, supplier approval controls and robust
quarantine/containment procedures. These reduce claim severity and improve underwriting confidence.
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How quickly can Insure24 obtain terms for PCB products liability?
With clear information on end use, territories, required limits, quality controls and claims history, indicative terms can often be obtained quickly.
High-reliability and worldwide exposures may take longer for specialist underwriting review.