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SUPPLY CHAIN PROTECTION FOR PCB & EMS BUSINESSES
PCB Manufacturing Runs on Suppliers
PCB manufacturing and EMS operations are built on upstream reliability: laminates, prepreg, copper foil, chemicals, solder mask, surface finish inputs, critical components, and outsourced processes (e.g., specialist drilling, microvia, conformal coat or test work). When a key supplier has a fire, flood, quality shutdown or logistics failure, your factory can be forced into downtime even though your own premises are untouched.
Supply Chain & Contingent Business Interruption (CBI) insurance is designed to protect your gross profit when your business is disrupted by an insured event affecting a key supplier or service provider. Insure24 helps PCB manufacturers structure CBI cover that reflects real dependencies and realistic lead times.
What is Supply Chain & Contingent BI Insurance?
Contingent Business Interruption (CBI) is an extension of business interruption cover that can protect your business when you suffer loss of revenue due to interruption at a third party you depend on. In PCB manufacturing, that third party could be:
- Key suppliers of laminates, copper, chemicals, solder mask or critical components.
- Subcontractors who perform essential processes you rely on.
- Critical service providers (e.g., utilities or specialised testing labs) depending on wording.
- Ports, logistics hubs or transport providers (in some structures), where disruption stops inbound/outbound flow.
Like any BI cover, the trigger and scope depend on policy wording. Many CBI structures are still based on “damage” at the third party’s premises from insured perils (such as fire, storm or flood). Some policies offer broader supply chain solutions, but underwriting and pricing reflect the increased scope.
The key point: CBI is about your loss, caused by their insured disruption.
Why Supply Chain Disruption Hits PCB Manufacturers Hard
PCB production is a sequence of interdependent steps. If you can’t get a critical material, the line doesn’t “slow down” — it often stops. The financial impact is not just lost sales; it can include:
- Overtime and expedited shipping to catch up once supply resumes.
- Lost margin from buying emergency stock at premium pricing.
- Missed delivery windows and customer relationship damage.
- Idle labour and fixed overheads during downtime.
- Knock-on effects on downstream assemblies and customer production schedules.
CBI can help protect gross profit during a covered disruption, but it works best when you understand your true dependencies and present them clearly to underwriters.
Common PCB supply chain pinch points
- Single-source laminate/prepreg for high-Tg, RF or specialist substrates.
- Specialist chemistry where only a small number of suppliers meet your process requirements.
- Outsourced specialist processes that are difficult to replace quickly.
- Long lead-time components for EMS builds (especially where customer designs restrict substitution).
- International logistics and customs delays for imports/exports.
What Can CBI Cover for PCB Manufacturers?
Subject to wording and limits, CBI is typically designed to cover loss of gross profit and increased cost of working when your production or sales are interrupted because a dependent third party suffers an insured event.
Depending on the insurer and structure, cover may include:
- Loss of gross profit while you cannot produce or fulfil orders due to supply disruption.
- Increased cost of working to mitigate loss (e.g., alternative sourcing, expedited freight, temporary outsourcing).
- Customer/supplier extensions where disruption at a key customer location reduces your sales (relevant for contract manufacturers).
- Named supplier schedules for critical dependencies (often required for meaningful cover).
What CBI may not cover
Many policies require “damage” at the supplier’s premises from an insured peril. Pure quality issues, supplier insolvency, and non-damage events may not be covered unless specifically included. This is why policy design is so important.
Insure24 will help you understand what is realistically insurable and structure cover to match your dependencies.
How to Structure Supply Chain & Contingent BI Cover
The most common reason CBI fails is not “bad insurance” — it’s mismatch between what the business thinks it bought and what the wording actually triggers on. Getting value from CBI usually involves:
1) Identify true dependencies (not just biggest spend)
Your most critical supplier might not be the one you spend most with. It could be a niche substrate supplier, a single-source chemistry provider, or a specialist subcontractor you cannot replace quickly.
2) Decide whether you need named suppliers
Many insurers want a schedule of named suppliers (and sometimes key customers). This can make cover more relevant and reduce ambiguity at claim time. It also forces the business to calculate worst-case impacts and lead times.
3) Set realistic indemnity periods
Supply chain disruption can last longer than expected due to shipping delays, re-qualification of new suppliers, and quality approvals. Indemnity periods must reflect how long it would really take to restore stable supply and catch up production.
4) Quantify increased cost of working (ICOW)
PCB manufacturers often mitigate disruption by buying emergency stock, switching suppliers, or outsourcing certain steps. CBI works best when ICOW is considered and correctly structured so you can spend to save (within policy limits).
5) Align with your main BI programme
CBI is usually an extension to BI. The sums insured and basis of settlement need to be consistent with your BI calculations so there is no mismatch in how gross profit is measured.
Example Supply Chain and CBI Scenarios
Scenario 1: Fire at a laminate supplier
A fire at a key laminate supplier stops output for several weeks. Your factory cannot produce boards requiring that substrate and revenue falls. CBI may respond if the supplier is covered (by schedule or definition) and the trigger requirements are met.
Scenario 2: Flood at a specialist subcontractor
A specialist subcontractor performing a critical step is flooded. You can’t easily replace them because your customer requires approval. Your delivery commitments are missed. CBI can protect gross profit during the covered disruption, subject to wording.
Scenario 3: Major port disruption delays imports
A disruption at a major logistics hub delays inbound materials. Depending on policy structure, this may not be covered unless the wording extends to certain transport or port dependencies. This is why understanding triggers matters.
Scenario 4: Single-source component shortage for EMS builds
A shortage of single-source components delays assembly, causing idle labour and missed ship dates. Many standard CBI wordings require damage at the supplier’s premises, so “shortage without damage” may not be covered unless specifically arranged.
Scenario 5: Key customer site incident reduces demand
A major customer suffers a fire and cannot take deliveries, reducing your sales. Some policies can extend to “customer dependent” BI (also called contingent customer cover) subject to underwriting and wording.
What Insurers Need to Quote Supply Chain / CBI for PCB Manufacturers
CBI underwriting is evidence-driven. The clearer your supplier dependencies and mitigation strategy, the better your chance of meaningful cover. We typically ask for:
- Top 5–10 critical suppliers (by dependency, not just spend) and locations where known
- What each supplier provides and why it’s hard to replace
- Lead times and how long you could operate with existing inventory
- Alternate sourcing options and time to qualify replacements
- Turnover and gross profit figures (for BI basis)
- Past disruption events and what changed afterwards
- Any key customers whose disruption would materially reduce your revenue (optional)
If you don’t have a formal dependency map, we can help you build a simple one for underwriting and internal resilience planning.
Why Choose Insure24 for Supply Chain & Contingent BI Insurance?
- Manufacturing specialist – we understand PCB dependencies and lead-time realities
- Help structuring meaningful CBI wordings instead of “tick-box” extensions
- Support building supplier dependency summaries for underwriting
- Access to insurers with appetite for complex supply chain exposures
- FCA-regulated advice with renewal and claims support
A supplier incident stopped our production even though our factory was fine. Insure24 helped us identify the real dependencies and structure contingent BI that actually responds to our risk.
Operations Director, UK PCB ManufacturerHow to Get a Quote
Supply chain cover is only valuable if it matches your real dependencies. We’ll help you define suppliers, triggers and realistic lead times so the programme is clear to insurers and useful to you.
- 1. List your critical suppliers/subcontractors and what they provide.
- 2. Confirm how long you can operate without each supply (inventory cover period).
- 3. Provide alternate sourcing and qualification timelines.
- 4. Provide BI figures: turnover/gross profit and chosen indemnity period.
- 5. We negotiate terms with suitable insurers and align cover to your supply chain reality.
FREQUENTLY ASKED QUESTIONS
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What is contingent business interruption (CBI)?
CBI is an extension of business interruption cover that can protect your gross profit when your business is disrupted by an insured event affecting a dependent third party, such as a key supplier or subcontractor.
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Does CBI cover supplier shortages with no physical damage?
Many CBI wordings require physical damage at the supplier’s premises from an insured peril (such as fire or flood). Non-damage events like market shortages or quality holds may not be covered unless specifically arranged. This is why wording and triggers matter.
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Do I need to name my suppliers on the policy?
Often, yes. Many insurers prefer a schedule of named suppliers (and sometimes key customers) so the exposure is clear. This can make cover more meaningful and reduce ambiguity at claim time.
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How do I choose the indemnity period for supply chain cover?
It should reflect realistic disruption and recovery time, including shipping delays, sourcing alternatives, qualifying replacements, and catching up production. PCB manufacturers can require longer periods where approvals or specialist materials are involved.
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What information do insurers need to quote contingent BI?
Insurers typically want your critical supplier list, what each supplier provides, how quickly you can switch or qualify alternatives, lead times, and your BI/gross profit figures. A clear dependency summary usually improves appetite and pricing.
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Can CBI cover disruption at a key customer site?
Sometimes. Some insurers offer extensions for dependent customers where disruption at a key customer location reduces your sales. This is subject to underwriting, wording and often requires named customer schedules.