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CONTRACT MANUFACTURING COVER THAT HELPS YOU TAKE OFF
Why OEM & Contract Plastic Manufacturing Is Different
Contract plastic manufacturing is rarely “just making parts”. OEM suppliers and contract manufacturers often operate inside tight supply chains with demanding quality requirements, delivery penalties, audit rights, and customer-owned tooling. You may also be assembling sub-components, providing kitting, labelling, packaging, or holding buffer stock to support just-in-time delivery.
That reality changes insurance needs. You need to protect against product liability and recall exposures, but also against operational risks like machinery breakdown and production stoppages. And because customer contracts often specify insurance limits and wording, your programme must be contract-aligned — not just “generally adequate”.
Insure24 helps OEM suppliers and contract plastic manufacturers across the UK arrange insurance programmes that reflect real contractual and operational exposure, including cover for customer tools and stock, breakdown-triggered downtime, and supply chain pressure.
What Insurers Need to Understand About Your OEM / Contract Operation
Underwriters price contract manufacturing risk based on a few core questions: What do you make? Who is it for? What happens if it fails? How quickly can you detect defects and contain them? How dependent are you on a small set of machines, tools or customers? And what does your contract say you must pay for if there’s a defect or delivery failure?
The better you communicate these points, the more accurately insurers can price the risk — and the more likely you are to avoid exclusions that don’t fit your operation. This is especially important if you supply into automotive, medical devices, food contact packaging, electronics, or other regulated end markets.
We help you prepare submissions that explain materials, processes and quality controls in plain terms — translating manufacturing reality into insurer language.
- Processes: injection moulding, extrusion, thermoforming, blow moulding, assembly
- Materials and additives (including recycled content and fire retardants)
- End markets and safety criticality (automotive/medical/food contact/industrial)
- Customer-owned tools, dies and moulds: values, storage and responsibility
- Quality controls: inspection, traceability, sampling, SPC, containment actions
- Contractual terms: indemnities, penalties, warranty, chargebacks and recall clauses
- Bottlenecks: single points of failure in machines, tools and utilities
Most disputes during claims come down to misalignment between what you do and what the insurer thought you did. Good disclosure avoids this.
What Insurance Covers Do OEM & Contract Plastic Manufacturers Typically Need?
Most OEM and contract plastic manufacturers need a combination of liability, property/stock, tools, breakdown and business interruption cover. The “right” mix depends on your contracts, your end markets, and how your supply chain works (JIT delivery, customer consignment stock, multi-site tooling, etc.).
Below is a practical overview of covers commonly arranged for UK OEM/contract plastics operations.
Liability & Contract-Driven Covers
- Employers’ Liability (usually required if you employ staff)
- Public Liability (premises/operations)
- Product Liability (supplied parts/assemblies)
- Product Recall/Withdrawal (where chargebacks/withdrawal costs are realistic)
- Professional Indemnity (if you provide design/specification advice)
If you supply into regulated or safety-critical end markets, customers may require higher product liability limits and strict notification obligations after incidents.
Assets, Tools & Operational Resilience
- Property Damage (buildings/contents/plant)
- Stock (raw materials, WIP, finished goods and packaging)
- Tools, Dies & Moulds (including customer-owned tools where required)
- Machinery Breakdown (moulding machines, extruders, robots, chillers, compressors)
- Business Interruption (loss of gross profit and extra expense)
For many contract manufacturers, downtime is the biggest cashflow threat. Aligning breakdown and BI is often key to resilience.
Customer-Owned Tooling, Dies & Moulds: A Common Hidden Exposure
Customer-owned tooling is one of the biggest “quiet” risks in contract plastic manufacturing. Tools can be high-value, long lead-time assets, and contracts often make you responsible for loss or damage while the tool is on your premises — even if you don’t own it.
This exposure is often underinsured because standard property policies focus on your own property. To protect customer tools properly, you may need a dedicated tools and dies section or a customers’ goods extension, with correct sums insured and clear wording on what is included.
Insurers will typically want to understand tool values, storage conditions, fire protection, whether tools move between sites, and whether you hold any consignment stock.
What to Check in Your Policy
- Are customer-owned tools specifically included?
- Is the sum insured realistic for peak tool values on site?
- Are tools covered while in transit between sites?
- Does the policy cover damage during use, or only fire/flood perils?
- Are there sub-limits for “tools, dies and moulds”?
We can help you map contractual responsibility for tools and align cover so you’re not relying on assumptions.
Risk Controls That Improve Insurability
- Tool register with ownership, values and locations
- Controlled storage areas and handling procedures
- Planned maintenance and condition checks
- Fire protection and housekeeping (especially around plastic storage)
- Clear contract clauses on responsibility and limits of liability
Better controls reduce loss probability and help insurers offer broader tool cover — and sometimes better premiums.
“Our contract required us to insure customer-owned tools and meet specific liability limits. Getting the wording right helped us win work — and removed uncertainty if a tool is damaged.”
Operations Director, UK Contract Plastics ManufacturerPROTECT YOURSELF
- Contract-aligned product liability limits and wording
- Tooling & dies cover including customer-owned assets
- Machinery breakdown and BI for bottleneck downtime
- Property & stock sums insured set to realistic peak values
- Recall/withdrawal options where supply chain chargebacks are realistic
Insure24 helps OEM suppliers and contract plastic manufacturers structure insurance programmes that match both contract requirements and operational reality. We’ll review your activities and key exposures, then compare quotes from insurers that understand plastics manufacturing and supply chain risk.
Call 0330 127 2333 for advice, or start a quote online.
FREQUENTLY ASKED QUESTIONS
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What is OEM and contract plastic manufacturing insurance?
It’s an insurance programme designed for contract plastic manufacturers supplying OEMs and supply chains. It typically includes employers’ and public liability, product liability, property/stock, tools and dies (including customer-owned tooling), machinery breakdown and business interruption to protect against defects, contract exposure and production stoppages.
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Can insurers cover customer-owned tooling and dies?
Yes, but it must be arranged correctly. Customer-owned tools may need a specific tools and dies section or a customers’ goods extension with appropriate sums insured. Insurers often want a tool register, storage arrangements, transit exposure and contract responsibility clauses.
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Do contract manufacturers need product recall/withdrawal cover?
If your contracts include chargebacks, warranty claims, or responsibilities to remove parts from the supply chain, recall/withdrawal cover can be worth considering. Product liability mainly covers third-party injury or damage, while recall covers first-party logistics costs of retrieving and disposing of defective products.
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What’s the biggest operational risk in contract plastic manufacturing?
For many businesses it’s downtime on a bottleneck line or a critical tool. A breakdown, tooling damage or utility failure can stop output and trigger contract penalties or lost orders. Machinery breakdown and business interruption cover (including extra expense) are often central to resilience.
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How do I get a quote for OEM and contract plastics insurance?
Call 0330 127 2333 or request a quote online. We’ll ask about your processes (moulding/extrusion/forming/assembly), materials, end markets, turnover, key customers, tooling values (including customer-owned), stock values, quality controls, and claims history to approach suitable insurers.
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Do we need professional indemnity if we don’t “design” the product?
Maybe. If you provide design input, specification advice, DFM feedback, material selection recommendations or tooling design responsibility, PI can be relevant. If you strictly manufacture to customer drawings with no advisory responsibility, PI may be less critical — but it depends on contract wording and actual scope.