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PROTECT AGAINST ESD LOSSES THAT CAN HIDE UNTIL IT’S TOO LATE
ESD & Component Damage Risk in PCB Assembly
Electrostatic discharge (ESD) is one of the most frustrating risks in electronics manufacturing because the damage isn’t always obvious. A component can be catastrophically failed on the spot — or it can be “weakened” and fail later in the field. For PCB assembly (PCBA/SMT) businesses, the financial exposure can be significant: high-value ICs and modules, customer-supplied parts on consignment, and contract penalties triggered by late deliveries.
Insurance won’t stop ESD events — but it can help protect your business against the financial impact of insured losses and liability allegations, subject to policy terms and exclusions. The most important step is structuring your insurance programme around how ESD losses actually manifest: stock/WIP values, customer goods responsibility, quality containment, and the downstream consequences if defective assemblies cause third-party damage.
Insure24 helps PCB manufacturers arrange cover that reflects ESD and component damage risk realistically — while presenting your controls clearly so underwriters can understand your exposure and price it sensibly.
Why ESD & Component Damage Happens
ESD is usually a control-system problem rather than a single “mistake”. It can be triggered by inadequate grounding, worn wrist straps, missing mats, poor humidity control, inappropriate packaging, or gaps in training and compliance. In a high-mix PCB environment, the risk increases as more hands touch more parts across more workstations.
Underwriters want to see two things: (1) that you have an ESD control framework in place, and (2) that you have containment and traceability so if a suspected incident occurs you can isolate product and limit batch severity.
Common ESD Failure Points
- Wrist strap / heel strap compliance failures (no testing, worn straps)
- Inadequate grounding of benches, tools, trolleys and conveyors
- Humidity too low (especially winter months) increasing static build-up
- Non-ESD safe packaging, bins or handling materials introduced to the line
- Poor segregation between ESD safe areas and general warehouse/dispatch zones
- Inadequate training or non-compliance culture under production pressure
- Rework stations not controlled to the same standard as the main line
- Visitors/contractors entering controlled areas without proper ESD precautions
Severity Drivers (Why ESD Becomes Expensive)
- High-value components (GPUs, FPGAs, power modules, automotive-grade ICs)
- Customer-supplied consignment stock (you may be liable under contract)
- Delayed detection (latent failures found at customer or in-field)
- High-volume runs or multiple lots affected before issue identified
- Tight delivery windows driving overtime and rushed handling
- Downstream rework, strip-down and re-test costs
- Potential third-party property damage if failure causes equipment issues
How Insurance Can Respond to ESD & Component Damage Events
ESD-related losses can be tricky because many are classed as “process losses” rather than losses caused by an external insured peril. Standard property policies typically respond to loss/damage caused by insured events (fire, flood, escape of water, theft etc.) subject to terms and exclusions. Pure process scrap, quality drift or latent damage can fall outside standard cover.
That doesn’t mean you can’t protect your business. The practical approach is to map your likely ESD loss scenarios and structure your programme around: property/stock exposure for insured perils, liability for third-party damage/injury allegations, and (where available) specialist extensions that better fit the way electronics failures happen.
Cover Areas That May Be Relevant
- Customers’ Goods – customer-owned components/tooling held on site (limits set to peak exposure)
- Property / Stock & WIP – damage from insured events; ensure WIP and compact high-value parts are declared
- Products Liability – legal liability if defective boards cause third-party property damage or injury
- Professional Indemnity – if allegations relate to design/specification advice (where relevant)
- Business Interruption – loss of gross profit after insured interruption; consider downtime drivers
- Equipment Breakdown – if utilities or equipment failure triggers production disruption (where arranged)
- Goods in Transit – protect high-value consignments in transit to customers/subcontractors
- Cyber/IT – where traceability/ERP disruption causes operational shutdown (where arranged)
Common Pitfalls to Avoid
- Assuming latent ESD “quality loss” is covered under stock without an insured peril trigger
- Customers’ goods not declared even though consignment stock is held
- Peak values not reflected (small volume, big value — easy to understate)
- No clear traceability/containment plan — increases severity and dispute risk
- Territories/jurisdiction mismatch on products liability (e.g., exports, USA/Canada)
- Unclear contract terms regarding responsibility for customer components
- BI structured around fire/flood only when downtime is more commonly breakdown-driven
ESD Controls Underwriters Like to See
The strongest underwriting submissions show disciplined, repeatable ESD controls: documented procedures, testing and calibration records, training, audits, and traceability. Underwriters don’t need perfection — they need confidence that you can prevent incidents and rapidly contain any suspected exposure.
Prevention Controls
- ESD policy aligned to recognised standards (training, signage, controlled zones)
- Wrist strap / footwear testing regime with records and enforcement
- Grounding checks for benches, mats, tools, conveyors and trolleys
- Humidity monitoring and environmental controls in ESD areas
- ESD-safe packaging and material handling discipline across stores and production
- ESD controls for rework/repair areas (often a weak spot)
- Visitor/contractor control procedures for entry into ESD areas
Detection & Containment Controls
- Traceability: lot tracking from goods-in to shipment
- Quarantine process and escalation path for suspected ESD events
- Defined retest/inspection steps (AOI, functional test, burn-in where relevant)
- Nonconformance reporting and CAPA process with evidence
- Sampling plans aligned to product risk and end market
- Controlled rework documentation (who, what, when, why)
- Clear customer communication protocol if incident is suspected
Our biggest exposure wasn’t the boards — it was the customer-supplied components and the time it would take to contain a suspected ESD incident. Insure24 helped us set realistic customer goods limits and present our ESD controls clearly.
GM, UK PCBA & SMT ManufacturerPROTECT HIGH-VALUE COMPONENTS & CUSTOMER TRUST
- Set realistic limits for customers’ goods (consignment components) based on peak exposure
- Protect stock/WIP values and reduce underinsurance risk for compact high-value parts
- Align products liability and territories to your contracts and export profile
- Structure BI and equipment cover around real downtime drivers and bottlenecks
- Present ESD controls and traceability clearly to improve underwriting confidence
- Reduce coverage gaps by aligning property, BI and liability wordings in one programme
FREQUENTLY ASKED QUESTIONS
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Does insurance cover ESD damage to components?
It depends on the policy wording and the cause of loss. Standard property/stock cover usually responds to insured events (fire, flood, theft, etc.)
subject to terms and exclusions. Pure process or quality losses — including latent ESD damage without an insured peril trigger — may not be covered under
standard wordings. We can help you structure cover around your real loss scenarios.
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Can customer-supplied components be insured under customers’ goods?
Often, yes. If you hold customer-owned consignment components or tooling, we can arrange customers’ goods cover with realistic limits based on your
average and peak exposure, subject to underwriting and policy terms.
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What are the biggest ESD risk points in a PCBA/SMT operation?
Common weak points include rework stations, goods-in/stores handling, poor wrist strap compliance testing, low humidity periods, non-ESD packaging,
and visitors/contractors entering controlled areas. A strong ESD culture and consistent auditing are key controls.
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Can ESD-related defects lead to products liability claims?
Potentially, yes. If a defective assembly causes third-party property damage or injury and you are found legally liable, products liability may respond
subject to policy terms, exclusions and jurisdiction/territory. If claims relate to design/spec advice, PI may also be relevant.
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How do insurers assess ESD risk?
Insurers typically look at your ESD control framework (training, testing, grounding, humidity control), audit discipline, traceability, and your
ability to contain suspected incidents quickly. High values, customer consignment exposure and export territories also influence underwriting.
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What information do you need to quote ESD/component damage exposure?
Processes and end markets, values for stock/WIP and customers’ goods (average and peak), ESD control framework, QA/testing and traceability approach,
territories supplied, contract requirements, and claims/quality incident history.