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LOWER PREMIUMS START WITH LOWER RISK (AND BETTER PRESENTATION)
How to reduce costs without creating coverage gaps
Precision engineering premiums are driven by a mix of exposure (what you make, where it goes, and what could go wrong), controls (how you prevent/contain issues), and presentation (how clearly insurers understand the risk).
Many manufacturing businesses try to cut premiums by reducing limits, removing extensions, or “shopping around” late in the renewal cycle. That can backfire. The most sustainable way to reduce cost is to make your risk more attractive — and ensure your information is insurer-ready.
This guide gives practical actions that typically help reduce premiums for CNC machining, precision engineering and contract manufacturing businesses.
Why Precision Engineering Insurance Premiums Go Up
Before you reduce premiums, it helps to understand what underwriters are pricing. In precision engineering, insurers commonly worry about: (1) product and liability severity, (2) contract-driven losses, (3) overseas exposures, (4) quality escapes, (5) fire and property loss severity, and (6) dependency on specific machines and skills.
Premium increases often happen when insurers perceive rising frequency or severity in any of these areas — even if you haven’t had a claim. The goal is to demonstrate that your business is well-controlled, well-documented, and predictable.
Common premium drivers
- Products/end-use – safety critical, regulated, medical, aerospace, pressure systems, high consequence parts
- Territories – exports, overseas distributors, worldwide/USA exposure
- Design responsibility – design & build, tolerancing advice, drawings/CAD, sign-off
- Customer concentration – single large OEM accounts or high max contract value
- Claims / incidents – quality escapes, recalls, near misses, past liability allegations
- Property risk – hot works, flammables/coolants, poor housekeeping, weak fire protection
- Machinery dependency – single points of failure, long lead times, limited alternative capacity
- Information quality – vague proposals cause “decline by default” or higher loading
Good news: many drivers are controllable
Insurers don’t expect perfection — they expect you to know your risk, manage it, and show evidence. Even in higher-risk supply chains, a strong risk profile can attract better pricing and wider market access.
The rest of this page focuses on the highest impact actions you can take to reduce premiums while keeping cover fit for purpose.
If you’d like, Insure24 can also review your current policy structure and point out “spend” that isn’t delivering real protection.
10 High-Impact Ways to Reduce Premiums
These actions focus on what underwriters respond to: preventing severe losses, containing quality issues quickly, and reducing uncertainty around your operations and contracts.
1) Improve fire and property protection (often the biggest lever)
In manufacturing, property and fire losses can be catastrophic. Improving fire protection can reduce premiums and increase insurer appetite. Key improvements include:
- Clear housekeeping rules: swarf management, oily rag control, waste removal, no blocked exits
- Secure storage and segregation of flammables, aerosols, solvents and coolants
- Electrical inspection and documented maintenance of extraction/compressors
- Hot works controls and permits (where applicable)
- Alarm and security upgrades (intruder + CCTV) to reduce theft and arson risk
- Fire doors, compartmentation, and keeping fire routes clear
If you have a landlord, ask for building fire risk information and ensure responsibilities are clearly split. Insurers price uncertainty.
2) Reduce “quality escape” frequency with targeted controls
Insurers worry about product and liability severity, but they also pay attention to recurring quality incidents. Practical improvements include:
- First-off / last-off inspections for drift-sensitive runs
- Tool life management on critical characteristics
- Calibration schedules + “as found” checks and documented corrective actions
- Quarantine controls: physical segregation and clear labelling of non-conforming product
- Version control for drawings, programs and inspection templates
Even a simple one-page “containment plan” for escapes can materially improve insurer confidence.
3) Clarify design responsibility (avoid misclassification)
Many businesses are rated incorrectly because the insurer doesn’t understand whether you are: build-to-print, design-and-build, or “manufacture + design input”.
Underwriters price design exposure differently because professional indemnity-style losses can be severe and complex. If you provide design advice, tolerancing recommendations, CAD changes, prototyping sign-off, or engineering approvals, disclose it clearly and structure cover accordingly.
- Better clarity often = better pricing (because uncertainty reduces appetite)
- Correct structure reduces the chance of claim disputes later
4) Align limits and deductibles to your real risk
One of the cleanest premium levers is your excess (deductible) and limit selection — but it must be realistic. If you can comfortably absorb smaller losses, a higher excess can reduce premium.
Don’t guess. Use your accounts and incident history to choose an excess you can genuinely fund without harming cashflow. Also ensure limits match contract requirements. Insurers may price high limits heavily where end-use severity is high.
- Review: product liability limit vs max realistic worst-case scenario
- Review: PI limit if you provide design services
- Avoid: reducing limits below OEM contract requirements (can create uninsured contract breach)
5) Reduce customer concentration risk
If one customer is 60–80% of turnover, insurers worry about the impact of a single dispute, recall or contract termination. Diversifying your customer base can improve underwriting confidence over time.
Even if you can’t diversify quickly, you can mitigate concentration risk by showing:
- Strong contracts and limitation of liability terms (where possible)
- Clear QA and traceability that reduces dispute frequency
- A practical incident response process that limits escalation
6) Tighten contract terms (often overlooked)
Many “losses” in manufacturing are not insured because they are contractual: chargebacks, penalties, and pure financial loss. If your contract forces you to accept liability beyond negligence, you may pay more for cover and still have gaps.
Practical steps that can reduce risk and support better insurance outcomes:
- Use limitation of liability clauses (cap at fee, cap at insurance limit, etc. where viable)
- Avoid “fitness for purpose” commitments unless you control design
- Define acceptance criteria and inspection responsibility clearly
- Define what counts as “consequential loss” and exclude where possible
Insurers favour businesses that manage contractual exposures sensibly.
7) Document your risk controls in an insurer-friendly way
Underwriters can’t “see” your shop floor. If you don’t document controls, it’s as if they don’t exist. A short insurer pack can materially improve quotes.
Include:
- One-page company overview + what you make and end-use
- Quality controls summary: inspection stages, calibration, traceability
- Fire and security measures
- Claims/incident summary and what changed afterward
- Territories and whether any US exposure exists
Insure24 can help package this so insurers can quote quickly and competitively.
8) Start the renewal process earlier
Late renewals lead to fewer insurer options. Underwriters under time pressure often apply conservative pricing or decline. Starting earlier allows:
- More markets to be approached (and re-approached if needed)
- Time to clarify “grey area” exposures (design responsibility, territories, special processes)
- Time to evidence improvements (maintenance records, fire upgrades, calibration proofs)
As a rule, the more complex the operation, the earlier you should begin.
9) Consider policy structure: package vs split lines
Some manufacturers are best placed with a single package policy. Others benefit from splitting certain covers (e.g., PL in one market, PI in another) depending on appetite and pricing.
A good broker will test structure options rather than “renew as is”. The cheapest policy isn’t always the best value; wording matters in manufacturing.
- Consider: PL/PI interaction and cross-allegation scenarios
- Consider: machinery breakdown and business interruption alignment
- Avoid: duplications that add premium but don’t add protection
10) Improve claims handling discipline (it affects future pricing)
Insurers watch claim frequency and how you manage incidents. Good discipline can reduce claim costs and support better renewals:
- Notify insurers/brokers promptly where policy triggers may exist
- Preserve evidence: batch records, inspection data, certificates, traceability
- Contain fast: isolate suspect lots and stop shipments
- Root cause + corrective action documentation (shows learning)
- Keep communications professional and consistent with contract terms
The goal is to reduce both the size of losses and the insurer’s perception of volatility.
Quick Savings Checklist (What You Can Do This Month)
If you want to reduce premiums quickly, focus on high-impact items that insurers recognise immediately. Here’s a practical checklist you can start now:
- Update housekeeping and flammables storage (take photos as evidence)
- Confirm alarm and security details (type, monitoring, keyholder response)
- Create a one-page QA controls summary (inspection, calibration, traceability)
- List critical machines and replacement lead times (single points of failure)
- Confirm product territories and whether any US exposure exists
- Document any improvements since last renewal (new controls = better pricing story)
What to send your broker
The difference between “good” and “great” quotes is often the submission pack. Send:
- Turnover split by activity (manufacture vs design/services, if applicable)
- Largest customer and max contract value
- Product list and end-use summary
- Territories and distribution model (direct, OEM, distributor)
- Claims/incidents and corrective actions
Insure24 can help you format this in a way that underwriters can quote quickly.
We were seeing annual premium rises even with no claims. Insure24 helped us present our QA controls clearly, document our fire and security improvements, and restructure limits/excesses sensibly — the renewal came back significantly more competitive.
Director, UK Precision Engineering ManufacturerFREQUENTLY ASKED QUESTIONS
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What’s the fastest way to reduce my manufacturing insurance premium?
The fastest levers are usually: (1) improving and evidencing property/fire protection, (2) adjusting excesses realistically, and (3) providing a clearer underwriting submission so insurers price you with less uncertainty. Long-term savings come from reducing quality incidents and contract-driven exposures.
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Will increasing the excess always reduce premium?
Often, but not always. A higher excess can reduce premium because the insurer is taking less of the “small loss” frequency. However, the excess must be affordable for your business and still align with contract requirements (some contracts specify maximum excess levels or require approval).
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Do ISO certifications reduce insurance costs?
They can help, especially when backed by clear evidence of how the system works in practice (calibration control, traceability, non-conformance handling). Certifications alone don’t guarantee discounts, but they often improve insurer confidence and can widen market options, which can reduce premium through competition.
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Why do insurers ask about territories and “USA exposure”?
Territory and jurisdiction affect claim severity and legal costs. Worldwide distribution (and especially any US exposure) can change insurer appetite and pricing significantly. Being clear about where products go and how they are distributed helps prevent conservative pricing assumptions.
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Can better contracts reduce insurance costs?
Yes. If contracts force you to accept liability beyond negligence (e.g., broad indemnities, unlimited liability, fitness-for-purpose), insurers may price higher and you may still have uninsured gaps. Using clearer limitation of liability terms and defining responsibilities can reduce the risk profile and improve insurer confidence.
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Does “shopping around” every year lower premiums?
Not always. If insurers see incomplete information or last-minute submissions, they often quote conservatively or decline. A better approach is to start earlier, present strong risk information, and test the market properly. Consistency and a clear improvement story can also help renewals.
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How can Insure24 help reduce my premium?
We help you package your risk properly for insurers, identify premium spend that isn’t delivering real protection, align policy structure to your true activities (manufacture vs design/services), and approach the right markets for your sector. We also highlight practical risk improvements that underwriters recognise.
Important: This page provides general information only and does not constitute advice. Cover is subject to insurer underwriting, policy terms, conditions and exclusions. Always check contract requirements and policy wordings before relying on any cover.