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PRECISION ENGINEERING INSURANCE FOR ZERO-DEFECT EXPECTATIONS
Why High-Tolerance & Micro-Precision Insurance Is Different
Precision manufacturing is not “standard engineering.” When you work to micron-level tolerances, produce parts for high-spec assemblies, or supply into critical supply chains, the financial impact of a single defect, a calibration error, or a machine drift issue can be disproportionate. Rejection, rework, scrap, expedited remake, and downstream disruption can quickly turn a small dimensional variance into a costly contractual dispute.
Insure24 arranges specialist manufacturing insurance that reflects the realities of micro-precision work: metrology-heavy QA, high-value machining centres, sensitive tooling, traceability, controlled environments, and the risk of consequential loss claims.
Who This Insurance Is For
This cover is designed for UK-based precision engineering and micro-manufacturing businesses whose work relies on tight tolerances, quality assurance, controlled processes and specialist machinery. Typical operations include:
- CNC machining (milling, turning, multi-axis) with tight tolerance requirements
- Micro-machining, miniature components and intricate assemblies
- Precision grinding, honing, lapping and surface finishing
- Toolmaking, dies, jigs, fixtures and precision gauges
- Metrology and inspection-led manufacturing environments
- Prototype and low-volume, high-spec manufacture
- Subcontract precision components supplied into OEM supply chains
Core Covers for High-Tolerance Manufacturers
Most precision engineering businesses need a core insurance programme that protects people, premises, products and cashflow. We’ll tailor limits and extensions to your work, contracts and customer requirements.
Liability Protection
- Employers’ Liability – legally required in most UK cases if you employ staff; protects against workplace injury/illness claims.
- Public Liability – protection if your activities cause injury or property damage (on premises, client visits, deliveries, loading/unloading).
- Products Liability – protection if a precision component you manufacture causes injury or damage after supply (subject to policy terms).
- Defence Costs – legal costs associated with defending covered claims.
Property & Income Protection
- Buildings / Contents – cover for workshop/factory premises (if required) and contents, fixtures and fittings.
- Stock & Materials – raw materials, WIP and finished goods (important where high-value metals are stored).
- Business Interruption – protects gross profit and ongoing costs if an insured event stops production.
- Theft & Malicious Damage – particularly relevant for high-value tooling and metals.
Precision Engineering Extensions (Often Essential)
Ultra-tight tolerances and specialist production environments often require additional cover beyond standard packages. These extensions help protect the areas that typically create large losses in micro-precision manufacturing.
- Machinery Breakdown – covers sudden mechanical/electrical failure of key machine tools (separate to property perils like fire/flood).
- Tooling & Engineering Equipment – high-value tools, cutters, holders, probes, fixtures, and portable kit (including off-site where applicable).
- Electronic Equipment – cover for CNC controls, servers, CAD/CAM workstations, measurement systems and electronics.
- Goods in Transit – parts and assemblies during transport (especially important for time-critical deliveries).
- Professional Indemnity – recommended if you design, advise, prototype, or modify specifications/drawings (claims often present as “financial loss” disputes).
- Cyber & Data – protects CAD/CAM files, ransomware disruption, invoice fraud and business interruption from cyber incidents.
- Increased Cost of Working – helps fund overtime, outsourcing, hire equipment and expedited shipping after an insured loss.
- Contract Works – if you install/commission precision assemblies at client sites.
Key Risks Unique to High-Tolerance Manufacturing
Precision businesses often manage risks that look small but carry big consequences. Insurers (and customers) focus on how you control drift, measurement uncertainty, traceability and rework risk. These are the issues we build into your insurance conversation and risk presentation.
- Tolerance drift & calibration – machine movement, thermal effects, probe errors, gauge drift and incorrect offsets.
- Batch traceability – materials certification, heat numbers, inspection records and the ability to isolate affected batches quickly.
- Scrap and rework costs – high-cost materials and long cycle times can make scrap extremely expensive.
- Downstream disruption – a single non-conforming component can stop an assembly line or cause a wider quality hold.
- Tooling failure – breakage or wear causing dimensional deviation, poor surface finish, or hidden defects.
- Contamination and handling damage – small parts can be easily damaged in packing/handling; contamination can affect finishes.
- Single-point-of-failure machinery – one 5-axis machine may be critical to revenue; breakdown exposure is high.
- Cyber disruption – CAD/CAM file loss, ERP scheduling disruption or payment fraud can halt operations.
How Insurers Underwrite Precision Engineering Risks
Underwriters price precision manufacturing by looking at the likelihood of claims and the potential severity. If you can evidence strong QA and risk controls, you’ll usually see better appetite and more competitive terms. Here’s what insurers commonly care about.
Quality & Control
- Inspection regime (in-process checks, first-off approval, final inspection, sampling frequency)
- Calibration controls (records, frequency, external calibration, gauge R&R where relevant)
- Traceability (material certs, heat numbers, batch IDs, retention of inspection records)
- Non-conformance process (containment, root cause, corrective action, customer notification)
- Controlled environment processes where needed (temperature control, cleanliness, handling)
Process, Premises & Dependencies
- Key processes (machining, grinding, finishing, deburr, coating, assembly, testing)
- Hot works and fire controls (if welding/cutting present)
- Machinery schedule and maintenance approach (planned maintenance, critical spares)
- Security (CCTV, alarms, access control) for high-value tooling and metals
- Business continuity (outsourcing options, alternative machines, overtime, supplier resilience)
We supply micro-tolerance components and needed insurance that matched our QA controls and machinery exposure. Insure24 helped position our risk properly and secure terms that reflected how we actually manage quality and traceability.
Managing Director, Precision Engineering Firm (UK)PROTECT YOUR BUSINESS
- Legal defence costs and damages from liability claims
- Financial impact of a major premises loss (fire/flood/theft) and the downtime that follows
- Machinery breakdown exposures affecting critical production capability
- High-value tools, fixtures and metrology equipment essential to your QA processes
- Risk improvements to support better underwriting outcomes at renewal
What We Need to Quote (Precision Manufacturers)
To get the right cover and pricing, we’ll ask for a clear picture of your operation. This helps us match you to the right insurer appetite and avoid gaps that commonly appear in high-spec supply chains.
- Turnover split by activity (manufacture / assembly / design / installation)
- Key products and sectors supplied (and whether components are safety-critical)
- Premises details, construction, neighbours, fire and security protections
- Machinery and equipment schedule (replacement values)
- Tools, fixtures and metrology equipment totals
- Stock/materials average and peak values (including high-value metals)
- QA/traceability approach and claims history
- Any contractual insurance requirements (limits, wording expectations)
FREQUENTLY ASKED QUESTIONS
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What makes high-tolerance manufacturing insurance different from standard manufacturing cover?
Precision manufacturing often has higher severity exposures: rejection, rework and downstream disruption can be expensive, and claims may arise from tolerance drift, calibration issues or traceability disputes. Insurance needs to reflect machinery dependency, QA processes, and product liability exposure — not just turnover.
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Do I need Products Liability if I only manufacture to customer drawings?
Usually, yes. Even when you work to customer specs, allegations can involve workmanship, material handling, finishing, inspection, packaging or batch control. Products Liability helps protect you if a component you supplied causes injury or damage after it leaves your control, subject to policy terms and exclusions.
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Does insurance cover rejected parts, scrap and rework?
Rejected parts and rework are not typically covered under standard liability policies. Some policies may respond where there is resulting injury/property damage or where specific extensions apply, but “cost of redoing your own work” is commonly excluded. We’ll help you understand where the boundaries are and structure cover around your real exposures.
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Do precision manufacturers need Professional Indemnity?
If you design parts, advise on tolerances, prototype, provide technical guidance, or modify specifications, Professional Indemnity is strongly recommended. Many disputes in precision supply chains present as “financial loss” rather than physical damage, which is where PI can be relevant (subject to policy terms).
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Can you insure CNC machines, metrology equipment and specialist tooling?
Yes. We can arrange cover for machinery and equipment against insured events (property perils) and, where appropriate, machinery breakdown for sudden mechanical/electrical failure. Specialist tools and metrology equipment can also be included (subject to underwriting and valuation).
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How can I reduce premiums for high-tolerance manufacturing insurance?
The biggest improvements usually come from better risk presentation and documented controls: clear QA procedures, calibration records, traceability, housekeeping, fire and security protections, and maintenance schedules for critical machines. We’ll help you package this information for underwriters to achieve better terms.