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INSURANCE BUILT FOR OEM SUPPLY & CONTRACT MANUFACTURING
Why OEM & Contract Engineering Insurance Is Different
OEM and contract precision engineering manufacturers operate in tightly controlled supply chains where quality, traceability and delivery performance are critical. A single defective component, late delivery, or production stoppage can trigger line shutdowns, rejection costs, contractual disputes, and long-term supplier risk.
Insurance for OEM suppliers needs to reflect downstream exposure, contract-driven liability limits, reliance on key machinery, and the commercial reality of “single-point-of-failure” production lines. Insure24 structures cover specifically for contract and OEM supply environments — not generic manufacturing risks.
Who This Insurance Is Designed For
This cover is suitable for UK-based precision engineering and manufacturing businesses supplying into OEM, Tier 1, Tier 2 and contract manufacturing environments, including:
- OEM component suppliers (mechanical, electromechanical, assemblies)
- Contract precision machining and fabrication businesses
- Tier 1 and Tier 2 supply chain manufacturers
- Build-to-print and specification-led manufacturers
- Framework agreement and long-term contract suppliers
- Low-volume, high-spec contract manufacturing operations
- Export-focused OEM supply businesses
Core Insurance Covers for OEM & Contract Manufacturers
Most OEM and contract engineering businesses require a robust core insurance programme that protects people, products, premises and income — while aligning with customer contract requirements.
Liability & Contract Protection
- Employers’ Liability – legally required in most UK cases for employee injury/illness.
- Public Liability – cover for injury or property damage arising from your operations.
- Products Liability – critical for OEM suppliers; protects against injury or damage caused by supplied components.
- Contractual Liability – extensions aligned to supply contracts (subject to wording and insurer approval).
- Defence Costs – legal costs associated with covered claims and disputes.
Property, Machinery & Income
- Buildings / Contents – workshops, factories, fixtures, fittings and contents.
- Machinery & Equipment – CNC machines and production equipment (insured perils).
- Business Interruption – protects gross profit if an insured event stops production.
- Theft & Malicious Damage – high-value tools, metals and finished components.
Specialist Covers Commonly Needed by OEM Suppliers
OEM and contract supply arrangements often introduce exposures that standard manufacturing policies don’t address well. These extensions are frequently essential in contract-driven environments.
- Professional Indemnity – where you design, advise, prototype or alter specifications.
- Machinery Breakdown – critical where production depends on key CNC machines.
- Tooling & Engineering Equipment – high-value tools, fixtures, jigs and gauges.
- Goods in Transit – components and assemblies during transport to OEM customers.
- Cyber & Data – protects CAD/CAM files, ERP systems, ransomware disruption and invoice fraud.
- Increased Cost of Working – outsourcing, overtime and expedited shipping after an insured loss.
- Contract Works – if installation or commissioning forms part of your supply obligations.
- Management Liability (D&O) – protection for directors facing claims linked to management decisions.
Key Risks in OEM & Contract Precision Engineering
Contract manufacturers face risks that extend beyond their own premises. Insurers and customers expect you to understand and control these exposures.
- Downstream liability – component failure causing damage or injury in an OEM assembly " + "or finished product.
- Line stoppage exposure – defects or delays halting customer production.
- Rejection & rework – costly scrap, expedited remakes and quality disputes.
- Single-point-of-failure machinery – reliance on one or two critical machines.
- Contractual penalties – late delivery or performance clauses.
- Traceability failures – inability to isolate affected batches quickly.
- Cyber disruption – loss of production scheduling, CAD/CAM files or supplier communications.
As an OEM supplier, our insurance had to satisfy customer audits and contract clauses. Insure24 helped us align cover to our contracts and present our risk properly to insurers.
Operations Director, OEM Contract Manufacturer (UK)PROTECT YOUR SUPPLY CHAIN POSITION
- Liability limits aligned to OEM and framework agreements
- Cover that responds to high-severity downstream claims
- Protection against production stoppage and machinery failure
- Insurance evidence that satisfies customer audits
- Risk presentation that improves insurer appetite and pricing
What We Need to Quote (OEM & Contract Manufacturers)
Accurate quoting for OEM suppliers relies on understanding contracts, dependency and downstream exposure. Having this information ready helps achieve faster and more accurate terms.
- Turnover split by customer type and contract
- Key contracts and insurance requirements (limits, clauses)
- Products supplied and whether components are safety-critical
- Machinery and production dependency details
- QA, traceability and audit processes
- Premises details, fire and security protections
- Claims history and near-miss incidents
FREQUENTLY ASKED QUESTIONS
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Why do OEM suppliers need higher liability limits?
OEM supply contracts often require higher Products and Public Liability limits because a single component failure
can cause injury, property damage or significant downstream disruption. Limits are usually driven by customer
requirements rather than turnover alone.
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Does insurance cover rejection, scrap and rework costs?
The cost of redoing your own work is usually excluded under standard policies. Cover typically responds where there
is resulting injury or property damage, or where specific extensions apply. We’ll help you understand the boundaries.
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Do OEM suppliers need Professional Indemnity?
If you design parts, advise on specifications, or modify drawings, Professional Indemnity is strongly recommended.
Many OEM disputes present as financial loss rather than physical damage claims.
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Can insurance help with customer audits?
Yes. We help align cover to contract requirements and provide clear insurance documentation to support OEM
onboarding, audits and ongoing supplier approval.
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How quickly can OEM & contract manufacturing insurance be arranged?
Timeframes depend on complexity and contract requirements. Many risks can be quoted quickly, but OEM supply
arrangements often require underwriter review of processes, QA and contracts. Call us to discuss the fastest route.