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INSURANCE THAT SUPPORTS PACKAGING, ASSEMBLY & TEST OPERATIONS
Why Assembly, Packaging & Test Insurance Matters
Assembly, packaging and test facilities (often referred to as OSAT operations) sit at a critical stage of the semiconductor supply chain. Your site may receive wafers or diced die, package and interconnect devices using ultra-precise processes, then electrically test and qualify products before shipping globally. While fabs are capital intensive, packaging and test can be just as operationally fragile: a small ESD event, humidity breach, contamination issue, tool calibration drift, substrate quality problem or burn-in failure can trigger large batches of scrap, rework, missed delivery windows and contractual penalties.
Insure24 arranges specialist semiconductor manufacturing cover designed for the realities of packaging lines and test floors — from high-value ATE systems and handlers to moulding presses, wire bonders, die attach, flip-chip, underfill, wafer-level packaging, burn-in ovens, inspection equipment, and the sensitive stock you hold (die, substrates, leadframes, mould compounds and finished goods). We help you build an insurance programme that protects your balance sheet, keeps cashflow stable, and stands up to customer and auditor expectations.
Property, Buildings & High-Value Stock Protection
Packaging and test sites often hold a unique mix of property exposures: controlled environment rooms, dry cabinets, nitrogen storage, clean air systems, and areas with chemical use (cleaning agents, solvents, fluxes and adhesives). Your most valuable “asset” may actually be stock — customer-owned die, wafers in transit, work in progress (WIP), packaged devices awaiting test, and finished goods staged for shipment.
A robust property programme considers not only fire and flood, but also smoke contamination, water leaks affecting dry storage, power disturbances, and the consequences of forced shutdown and product spoilage. Where customers place stock on your site, you may have contractual obligations to insure it, or you may be assumed responsible under bailment terms. We structure cover so that your policy aligns with your contracts and operating model.
- Buildings, tenant improvements and fit-out (including controlled environment areas)
- Stock, WIP and finished goods (including customer-owned items where agreed)
- Stock in transit, storage and cross-docking exposures
- Smoke, soot and contamination damage following insured events
- Water escape in dry storage / humidity-controlled areas
- Fire, explosion and electrical faults
- Theft, malicious damage and security breach events
- Optional: refrigeration / temperature deviation style extensions where relevant
Equipment Breakdown, Tooling & Calibration Risk
Assembly, packaging and test operations rely on high-precision equipment across multiple steps: die attach, flip-chip bond, wire bond, moulding, singulation, inspection, marking, final test, burn-in, and shipping. Many facilities also run advanced packaging processes (SiP, fan-out, wafer-level packaging, 2.5D/3D integration), where tolerance stacks are tiny and tool availability is critical.
A single tool failure can create a bottleneck that stops an entire line. Replacement lead times can be long, and specialist engineers may be required. We recommend packaging and test facilities consider both physical damage insurance and engineering-style breakdown cover to address mechanical, electrical and control system failures — including accidental damage during maintenance and commissioning.
- ATE systems, handlers, probers and load boards
- Wire bonders, die attach tools, flip-chip equipment
- Moulding presses, cure ovens and singulation systems
- Inspection, metrology and AOI equipment
- Burn-in ovens, chambers and environmental test rigs
- Robotics, conveyors and automated material handling systems
- Mechanical/electrical breakdown and control system failure
- Optional: hiring-in replacement equipment and express shipping of parts
ESD, Handling Damage, Scrap & Rework Exposure
Electrostatic discharge (ESD) and handling damage are among the most common (and most costly) causes of latent failure in semiconductor assembly and test. The problem is that damage may be invisible at time of shipment, then surface later as reliability issues, RMAs or downstream field failures. Facilities also face risks from humidity excursions, contamination in bonding/moulding processes, substrate/leadframe defects, and tool drift affecting bond integrity or alignment.
Insurance is not a substitute for strong quality systems — but a well-structured programme can help protect your business from sudden shocks, such as insured events that trigger large WIP loss, stock damage, and the extra expense of rework and expedited production. Where appropriate, we also explore how your contractual terms allocate liability between you, the fab, your customer and logistics providers.
- ESD events affecting die, packaged devices and test results
- Handling damage during kitting, loading, unloading and transfer
- Moisture sensitivity level (MSL) breaches and floor-life issues
- Bond lift, wire sweep, voiding, delamination and underfill defects
- Mould compound and substrate/leadframe quality issues
- Process drift, calibration errors and misalignment
- Scrap, rework and re-test costs after insured disruptions
- Optional: contractual penalty / liquidated damages review support
Business Interruption, Throughput & Extra Expense
Packaging and test is a throughput business. When a critical piece of equipment fails — or when the site is forced to stop due to an insured event — the main financial impact is not simply the repair bill. The real cost is lost gross profit, overtime to catch up, scrap and rework, missed shipment windows, and customer escalation. Many supply agreements include delivery performance requirements, chargebacks, and warranty commitments.
Business interruption (BI) cover is designed to protect your profits when operations are disrupted by insured property damage. For packaging and test sites, it’s important that BI is structured with appropriate indemnity periods, realistic downtime scenarios, and “extra expense” cover that allows you to spend money to reduce the total loss (for example, subcontracting overflow work, expediting spares, or running additional shifts).
- Loss of gross profit following insured damage
- Increased cost of working (overtime, alternative suppliers, outsourcing)
- Extra expense for expedited parts and specialist engineers
- Extended indemnity periods to reflect lead times for ATE/handlers
- Utilities interruption exposures (power quality, water, compressed air)
- Contingent BI for key suppliers where applicable
- Claims preparation costs to support documentation
- Optional: denial of access extensions (subject to insurer terms)
Product Liability, Errors, Warranty & Recall Support
Packaging and test facilities can face claims where a packaging defect, test escape, or incorrect binning leads to downstream failures. Even when your contract limits liability, customers may seek recovery for investigation costs, replacement programmes, line stoppages, and reputational damage. Claims may involve multiple parties — the fab, packaging house, substrate supplier, OEM, and end-customer — making early incident management vital.
Product liability insurance protects you against third-party claims for injury or property damage caused by your products. Where the exposure is more about financial loss, contract terms and warranty commitments, it’s important to get specialist advice on policy wording, territorial scope (especially for US exports), and any product recall extensions that may be appropriate. Insure24 helps align cover with your customer agreements and risk profile.
- Worldwide product liability (limits tailored to contracts and territories)
- Legal defence costs and investigation support
- Third-party property damage and bodily injury claims
- Optional: product recall / withdrawal expense cover
- Optional: mitigation / crisis management style costs (where offered)
- Contract review guidance to reduce uninsured exposures
- Support for documented quality systems and traceability
- Consideration of US/Canada exports and jurisdiction requirements
Cyber, OT & Data Exposure in Test Environments
Modern test floors are data-heavy. Test programs, yield analytics, device configuration files, customer IP, and MES/ERP integrations create cyber exposure. If test data is corrupted, stolen, or manipulated, the impact can include shipment delays, incorrect binning, warranty exposures, and contractual disputes. Many sites also use remote vendor access for equipment support, which can introduce additional risk if not properly controlled.
Cyber and operational technology (OT) insurance can help cover response costs after an incident, including forensic investigation, business interruption from network disruption, extortion events, and liability arising from compromised data. The key is selecting cover that reflects how your facility actually runs — and demonstrating strong baseline controls (access management, patching, backups, segmentation, and vendor access procedures).
- Cyber incident response and forensic investigation
- Business interruption from network outages
- Ransomware and cyber extortion events
- Liability for data compromise (where applicable)
- Restoration of systems and recovery of critical data
- Vendor access and third-party IT service exposures
- OT considerations: segmentation, remote maintenance pathways
- Practical underwriter alignment for test and MES environments
Common Risks in Packaging & Test Facilities
We regularly see claims and near-misses arising from the following operational and loss scenarios:
- ESD events and latent device damage
- MSL breaches, humidity excursions and storage failures
- Tool drift, calibration errors and test escapes
- Handler jams, probe card damage and load board failures
- Fire and smoke contamination affecting stock and WIP
- Power disturbances impacting test results and equipment
- Chemical spills, cleaning agents and adhesive handling incidents
- Transit damage to sensitive materials and finished goods
- Third-party contractor errors during maintenance or installation
- Cyber incidents affecting test data, programs or MES
Why Choose Insure24
Semiconductor packaging and test is specialist. Underwriters will ask detailed questions about ESD controls, humidity management, traceability, tool maintenance, change control, and your customer contracts. We help you present the risk properly — and negotiate terms that make sense for your operation.
- Specialist guidance for semiconductor manufacturing risks
- Policy design aligned to stock custody and customer contracts
- Competitive markets and structured submissions to underwriters
- Claims support focused on documentation and incident response
- Ability to build packages: property, engineering, liability, cyber and BI
- Support with risk improvements that can reduce premium over time
How to Get Assembly, Packaging & Test Insurance
Most packaging and test programmes are individually underwritten. The better the submission, the better the outcome — in pricing, exclusions, deductibles and claim responsiveness. We can start with headline information and then refine the programme once we understand your processes and contractual requirements.
- 1. Tell us what you do – packaging types, test scope, key customers and territories
- 2. Confirm values – buildings, plant, tools, ATE, stock and WIP maxima
- 3. Review controls – ESD, humidity, traceability, maintenance and change control
- 4. Structure cover – property, breakdown, BI, liability, transit and cyber as needed
- 5. Place and activate – documentation issued and cover confirmed
After a major power disturbance impacted our test floor and created shipment delays, Insure24 helped us restructure our programme to protect downtime, stock and contractual exposure.
General Manager, Semiconductor Packaging & Test FacilityPROTECT YOUR OPERATION
- The cost of repairing or replacing key tools and ATE equipment
- Loss or damage to stock, WIP and customer-owned items (where agreed)
- Downtime, lost gross profit and extra expense to catch up
- Liability claims relating to packaged devices and test outcomes
- Cyber incidents affecting test data, programs or production systems
- Transit and logistics exposure across a global customer base
REDUCE UNINSURED GAPS
- Align policy wording with customer contracts and quality commitments
- Set realistic indemnity periods for long lead-time equipment
- Confirm stock custody, valuation and maximum foreseeable loss
- Review exports and jurisdiction requirements for liability cover
- Add appropriate cyber and OT coverage where test data is critical
- Make sure deductibles match your risk appetite and cashflow
Compliance & Regulations
Packaging and test sites often operate under customer audits, international standards and strict handling requirements. Your insurance should be compatible with these expectations — and your documentation should support procurement and vendor onboarding.
- Health & Safety compliance (site operations, contractors, equipment)
- Hazardous substances handling and storage requirements
- Environmental obligations (waste streams, solvents, cleaning agents)
- Quality system expectations (traceability, change control, audit readiness)
- Data protection and access control considerations (test data and customer IP)
- Export and supply chain compliance (where relevant)
FREQUENTLY ASKED QUESTIONS
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What is Assembly, Packaging & Test Facility Insurance?
It’s specialist commercial insurance designed for semiconductor packaging, assembly and test operations (including OSAT facilities). Cover is typically structured around property and stock, equipment breakdown, business interruption, product liability and optional extensions like cyber/OT and transit.
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Does it cover ATE systems, handlers and specialised packaging tools?
Yes, subject to underwriting information and values. Policies can be arranged to include scheduled equipment such as ATE systems, handlers, wire bonders, die attach tools, moulding presses, inspection equipment and burn-in ovens, with breakdown and accidental damage extensions where appropriate.
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Can you insure customer-owned stock and work in progress?
Often, yes — but it must be structured carefully. We’ll look at custody arrangements, maximum values on site, valuation basis and contractual responsibilities (bailment terms). This helps ensure your programme responds in line with your obligations to customers.
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Is ESD, scrap or rework covered?
ESD and process-related losses are complex. Standard policies focus on insured physical damage and may not cover pure process defects or gradual quality drift. However, where an insured event causes stock/WIP damage or triggers rework/extra expense, cover can often respond. We’ll help you understand what is and isn’t insurable and how to reduce gaps.
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How much does packaging and test insurance cost?
Premiums depend on your turnover, customer profile, values at risk (buildings, equipment, stock/WIP maxima), ESD/humidity controls, maintenance and change control processes, exports/territories and claims history. Most facilities are individually underwritten — request a tailored quote for accurate pricing.
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Do you offer cover for contractual penalties and delivery failures?
Many penalty and delivery failure costs arise from contract terms and are not automatically insured. However, business interruption and extra expense cover can protect profit loss following insured damage, and we can help you review contractual risk allocations and structure the programme to reduce uninsured exposures.