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PCBA & SMT INSURANCE THAT HELPS YOU TAKE OFF
PCB Assembly & SMT Insurance Explained
PCB Assembly (PCBA) and surface-mount technology (SMT) manufacturing looks simple from the outside: components go in, boards come out. In reality, it’s a precision process with tight tolerances, specialist equipment and high-value materials that can become scrap in seconds if something goes wrong. A single line stoppage can derail delivery schedules and trigger customer pressure. A small process drift can create large batches of defective boards.
PCBA & SMT businesses also face unique “care, custody and control” exposures. Many contract electronics manufacturers assemble using customer-supplied components, consignment stock, or customer-owned tooling. That means your insurance needs to reflect not only what you own, but what you are responsible for. Add in ESD risks, solder paste storage, moisture-sensitive devices (MSDs), contamination sensitivity and compliance documentation, and it’s easy for standard “generic manufacturing insurance” to miss the detail.
Insure24 helps UK PCBA manufacturers and SMT operations structure insurance programmes that protect the factory, stock, WIP, customer-owned goods, downtime, and liability exposures — while also meeting customer contract requirements and tender expectations.
Who Needs PCBA & SMT Insurance?
This cover guidance is designed for UK businesses assembling PCBs — from prototype houses to volume contract manufacturers and full box-build operations. Your risk profile depends on your production complexity, customer mix and whether you also offer design and engineering support.
- SMT assembly manufacturers – pick-and-place, reflow, AOI, X-ray inspection, rework and repair
- Through-hole and mixed-technology builds – wave solder, selective solder, hand solder and cable integration
- Prototype and quick-turn PCBA – high mix/low volume with rapid changeovers
- Contract electronics manufacturing (CEM) – build-to-print, managed supply chain, and customer audits
- Box-build operations – enclosure assembly, wiring, final test, packaging and dispatch
- Assembly with consignment stock – customer-owned components held on-site
- High-reliability markets – industrial controls, automotive, rail, marine, power/renewables, medical (where applicable)
Key Risks in PCB Assembly & SMT
SMT production combines high-value inputs with fast processes. That creates a distinct “severity profile”: a single contamination event can scrap reels of components, boards and solder paste; a machine fault can damage large batches; and a fire or smoke incident can contaminate stock that is otherwise physically undamaged.
The other defining risk is responsibility for customer goods. Many PCBA businesses work with customer-owned components, custom PCBs, and tooling. If those are damaged by an insured event, the financial exposure can be substantial — but policies often need the right extensions to cover “customers’ goods” and define the basis of settlement clearly.
Operational & Property Risks
- Fire and smoke contamination (reflow ovens, electrical faults, extraction issues, hot works)
- Escape of water / roof leaks impacting moisture-sensitive stock and WIP
- Theft of compact, high-value components and boards
- ESD events damaging components and creating latent defects
- Solder paste and chemical storage risks (temperature control and handling)
- Equipment breakdown causing immediate output loss (pick-and-place, AOI, reflow, compressors)
- Contamination risk and yield loss (dust, residues, humidity control failures)
- Power quality issues damaging sensitive equipment and test rigs
Quality, Liability & Contract Risks
- Defective boards causing downstream equipment damage (products liability exposures)
- Batch failures from process drift (paste, placement, reflow profile, component mix-ups)
- Rework, scrap and expedited re-manufacture to meet delivery deadlines
- Customer chargebacks, debits and contractual penalties (not always insurable; contract review matters)
- Audit findings or traceability gaps causing shipment holds and corrective action costs
- Export territories and higher-jurisdiction risk (worldwide supply; USA/Canada where applicable)
- Design/specification allegations if you provide engineering advice (PI considerations)
- Cyber/IT interruption affecting scheduling, traceability, labels and goods-out
What Does PCBA & SMT Insurance Typically Include?
A good insurance programme is built around the way you operate: what you own, what you hold for customers, and how you would recover after a major disruption. Below is a typical structure (your final cover depends on underwriting, policy terms and your individual risk profile).
Core Covers
- Property / Contents – premises improvements, racking, benches, offices and general contents
- Plant & Equipment – SMT lines, feeders, reflow ovens, AOI/X-ray, compressors, extraction and test equipment
- Stock & WIP – your stock plus WIP values (set to realistic peak levels)
- Customers’ Goods – consignment components, customer PCBs, customer tooling (where held)
- Business Interruption – loss of gross profit after an insured event; increased costs of working options
- Employers’ Liability – statutory cover for employee injury/illness claims
- Public & Products Liability – liability for injury or third-party property damage arising from operations/products
Common Add-ons for SMT Operations
- Equipment Breakdown – sudden and unforeseen breakdown of insured plant (useful where downtime is machine-driven)
- Goods in Transit – for inbound/outbound shipments and customer deliveries
- Professional Indemnity – if you advise on design/specification or provide engineering consultancy
- Cyber / OT – to address system interruption and ransomware-driven downtime risk
- Recall / Rectification – where available, for controlled withdrawal/repair/replace costs after faults
- Legal Expenses – for dispute support (scope varies)
Customer-Owned Components, Boards & Consignment Stock
If you assemble with customer-supplied parts, you may be holding significant value that doesn’t show in your own stock figures. From an insurance perspective, this is often where the “gap” appears: the policy covers your stock, but not the customers’ components you’re responsible for, or it includes them but the limit is too low or the basis of settlement is unclear.
We typically ask you to estimate the average and peak values of customer-owned goods on site, the storage conditions, and how they are tracked. This helps insurers set appropriate limits and avoids disputes after a loss.
Checklist: Customer Goods Values
- Maximum value of customer-supplied components held at any one time (peak)
- Value of customer PCBs, panels and specialist substrates on site
- Customer-owned tooling, jigs and fixtures (if applicable)
- How stock is segregated and tracked (lot/batch, MRP system, bin locations)
- Storage conditions (humidity control, secure cages, access restrictions)
- Contract wording: are you “liable for loss/damage” and on what basis?
Common Policy Details to Get Right
- Define customers’ goods cover clearly (including whilst being worked on)
- Make sure the limit matches realistic peak values (not just average)
- Confirm whether “care, custody and control” is included under liability or property extensions
- Clarify the settlement basis (replacement cost vs contract value)
- Ensure security conditions align with the way you store and access stock
- Confirm whether off-site storage or transit of customer goods is relevant
Downtime, Equipment Breakdown & BI for SMT Lines
Many PCBA businesses are more likely to face downtime from machine failure than from a major building loss. If one pick-and-place machine fails, feeder banks are damaged, or a reflow oven fault stops the line, output can drop instantly. Equipment breakdown cover can be arranged for sudden and unforeseen breakdown of insured plant (subject to policy terms), and it is often paired with BI so both repair costs and downtime impacts are addressed.
BI becomes critical if a major incident forces you to outsource output, run overtime, pay premium freight, or temporarily rent alternative space. A realistic indemnity period is important: recovery can be slowed by lead times for specialist parts, re-commissioning, and customer re-approval cycles.
What Underwriters Want to Know
- What are your key bottlenecks (single machine or single capability)?
- Do you have critical spares for compressors, extraction, feeders, motors, PLCs?
- Can you outsource production or share capacity with another site?
- How long would it take to replace a pick-and-place or AOI machine?
- What is your maximum tolerable downtime before contracts are lost?
- How will you maintain traceability, labels, QA records and customer reporting during disruption?
Practical Continuity Actions
- Maintain documented maintenance schedules and keep service records
- Hold critical spares and identify rapid-response engineers
- Define an outsourcing plan for urgent production if the line stops
- Back up build files, programmes and QA templates securely (offline/immutable where possible)
- Keep an updated equipment schedule with replacement costs
- Review BI gross profit and indemnity period annually
Our biggest exposure wasn’t the building — it was customer-supplied components and the cost of line stoppage. Insure24 helped us structure cover for customers’ goods and downtime so our contracts were protected.
General Manager, UK SMT Contract Electronics ManufacturerWhat Affects PCBA & SMT Insurance Premiums?
Premiums are influenced by values (stock and customer goods), premises protections, process hazards, claims history, and how critical downtime is to your cash flow. A clear submission and good evidence can materially improve insurer appetite and terms.
Key Rating Factors
- Your turnover, end markets, and whether products are safety-critical
- Territories supplied (UK/EU/worldwide) and any USA/Canada exposure
- Sums insured for plant/equipment, your stock and customer goods (peak values)
- Fire protection (alarm, compartmentation, housekeeping, electrical inspection)
- Security and theft controls for compact high-value components
- Claims history and any quality incidents
- BI setup: gross profit accuracy and indemnity period
- Machine criticality: likelihood and severity of breakdown-driven downtime
How to Improve Terms
- Document QA/testing controls, traceability and change control
- Maintain service logs and planned maintenance records for critical machines
- Provide photos of stock storage, production areas and protections
- Set customer goods limits realistically (average and peak) and explain tracking
- Review BI figures annually and align indemnity period to real recovery time
- Use a combined programme approach to reduce policy gaps and duplication
PROTECT YOURSELF
- Protect SMT lines, AOI/X-ray, reflow ovens, compressors, extraction and test rigs
- Insure your stock and WIP realistically — including moisture-sensitive and high-value components
- Include customers’ goods where you hold consignment stock or customer-owned components
- Safeguard cashflow with BI and increased costs of working options
- Align liability limits and territories to customer contracts and tender requirements
- Add equipment breakdown where downtime is a key severity driver
Compliance, Traceability & Contract Requirements
PCBA manufacturers are frequently audited. Your ability to provide traceability, process evidence and corrective actions can be a key part of customer confidence. Insurance can’t replace QA, but it can support resilience when incidents create financial pressure.
- Customer audit requirements and approved supplier status expectations
- Traceability expectations (lot control, serialisation where used, record retention)
- Contract review for penalties, chargebacks, warranties and indemnities
- Insurance limits and territories required by OEM customers
- Cyber controls where QA records and ERP tools are business-critical
FREQUENTLY ASKED QUESTIONS
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What’s the difference between PCB manufacturing insurance and PCBA/SMT insurance?
“PCB manufacturing insurance” can cover both fabrication and assembly. PCBA/SMT insurance focuses specifically on assembly risks: high-value components,
WIP, customer-supplied parts, ESD controls, machine-driven downtime, and the liability exposures linked to defective assemblies.
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Can you insure customer-supplied components held on site?
Often, yes — but it needs to be declared properly with realistic average and peak values and the right policy structure. We’ll look at how you track
customer goods, how they’re stored, and what your contracts say about responsibility so insurers can set suitable terms.
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Does property insurance cover ESD damage or process-related scrap?
Standard property policies typically respond to damage caused by insured events (such as fire, flood, escape of water, storm, theft),
subject to terms and exclusions. Pure process scrap, yield loss, or ESD events without an insured peril may not be covered under standard property
wording. We’ll help you understand where standard cover ends and what options exist for your risk profile.
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Can equipment breakdown cover pick-and-place and AOI machines?
Often, yes. Equipment breakdown can be arranged for sudden and unforeseen breakdown of insured plant (subject to underwriting and policy terms).
It is commonly paired with BI so your programme addresses both repair costs and the income impact of downtime.
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What liability limits do PCBA manufacturers typically need?
It depends on contracts and end markets. Common limits are £2m, £5m or £10m, but higher limits may be required for certain OEM supply chains.
Territories also matter: worldwide including USA/Canada can materially change insurer appetite and pricing.
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How quickly can Insure24 quote PCBA/SMT insurance?
For straightforward risks we can often move quickly. For complex operations (high customer goods values, exports, higher limits, specialist plant,
recall/PI considerations), allow 1–2 working days so we can present the risk properly and approach the most suitable markets.