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A HIGH-FREQUENCY, HIGH-COST PRECISION ENGINEERING RISK
Why CNC Programming & Calibration Errors Are So Costly
Precision engineering environments are unforgiving. A minor error in a CNC program, incorrect tool offset, wrong fixture setup, or mis-calibrated probe can destroy tools, scrap high-value materials and produce non-conforming parts — sometimes across an entire batch.
The financial impact is often bigger than the scrap itself: lost machine time, expediting, customer disruption, re-qualification, and (in worst cases) downstream product liability claims. This page explains how insurance typically responds, where cover gaps can arise, and what you can do to reduce both incidents and premiums.
Common CNC Error Scenarios
Underwriters and claims teams will often ask “what went wrong?” and “what was damaged?” because the answer affects whether the loss is treated as physical damage, workmanship, or a contractual quality issue.
Programming & Parameter Errors
- Incorrect feed/speed values causing tool breakage and part damage
- Wrong tool length offsets or radius compensation settings
- Incorrect coordinate system / datum selection
- Post-processor errors and CAM output mismatch
- Wrong material assumptions or missing process steps
Setup, Fixturing & Calibration Errors
- Incorrect clamping/fixturing causing movement and scrap
- Probe mis-calibration leading to cumulative dimensional errors
- Tool wear not monitored resulting in out-of-tolerance production
- Incorrect first-off inspection sign-off
- CMM calibration drift or measurement system error
How Insurance Typically Responds
Whether a CNC programming or calibration loss is insurable depends on what was damaged and how the policy is structured. In many cases, insurers distinguish between physical damage and faulty workmanship.
When Property / Engineering Cover May Apply
- Physical damage to the CNC machine from an insured event or insured breakdown (policy dependent)
- Sudden failure of machine components that leads to damage (machinery breakdown)
- Consequential physical damage if your policy includes it
- Downtime cover under machinery BI extensions (where arranged)
Note: Pure “scrap due to an operator/programming mistake” is often treated as a workmanship issue and may be excluded. This is why policy wording and extensions matter.
When Liability Cover May Apply
- A non-conforming part causes third-party property damage or bodily injury
- Products liability claims from customers (subject to policy terms)
- Recall/rectification extensions (if purchased and triggered)
- Legal defence costs for allegations and investigations
Most liability policies won’t cover the cost of simply remaking your own work (“your product” / “your work” exclusions), but they can respond if defects cause damage beyond the part itself.
How to Reduce CNC Error Losses (and Improve Insurance Terms)
Insurers like to see structured quality control because it reduces frequency and severity. Strong controls also help you negotiate better deductibles and broader cover options.
Operational Controls
- First-off inspection and sign-off process
- Independent program verification for new parts
- Tool management and wear monitoring
- Controlled revision management for CAM and CNC files
- Setup sheets and standardised offset procedures
Calibration & Metrology Controls
- Documented calibration schedules for probes and CMMs
- Gauge R&R and measurement system checks
- Environmental control for inspection areas
- Training and competency records for inspectors
- Batch traceability and non-conformance reporting
A single setup error scrapped a high-value batch and cost days of production. Insure24 helped us tighten our insurance wording around breakdown and downtime, and improve controls so underwriters were comfortable.
Operations Lead, UK Precision Engineering ManufacturerFREQUENTLY ASKED QUESTIONS
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Does insurance cover scrap caused by a CNC programming mistake?
Often, pure scrap or rework due solely to an operator/programming error is treated as faulty workmanship
and may be excluded. Cover depends on what was damaged and the policy wording (including any extensions).
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What if the CNC machine is damaged during a crash?
If there is physical damage to the machine, machinery breakdown or engineering cover may respond,
depending on the cause of the crash and the policy terms and exclusions.
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Can products liability cover a defective part?
Products liability typically responds if a defect causes third-party property damage or injury.
It usually does not cover the cost of remaking the defective part itself (“your product” exclusions),
but recall/rectification extensions may be available for certain scenarios.
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What information do insurers want to see?
Insurers commonly look for quality controls, first-off inspection processes, calibration schedules,
traceability, staff competence and non-conformance reporting procedures.
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Can Insure24 help structure cover around these risks?
Yes. We can help you structure manufacturing, engineering and liability policies to reduce gaps,
and guide you on presenting controls so underwriters can offer better terms.