My Account
We compare quotes from leading insurers
LIABILITY INSURANCE BUILT FOR SEMICONDUCTOR DEVICES & GLOBAL SUPPLY CHAINS
Why Product / Device Liability Is High-Stakes for Semiconductor Manufacturers
Semiconductor devices are rarely “standalone” products. They sit inside systems where failure can have significant downstream consequences — from automotive safety systems and aerospace electronics to medical devices, industrial automation, energy infrastructure and consumer products shipped at global scale. This creates an unusually challenging liability environment: a claim might start with a component defect, but it can rapidly expand into allegations of systemic failure, mass warranty programmes, third-party property damage, bodily injury, or business interruption at your customer.
Even where your contracts limit liability, customers may still pursue recovery for investigation and containment costs, replacement programmes, freight, production downtime, and reputational impact. There may be multiple parties involved (fab, assembly/packaging, test house, substrate supplier, OEM and end-customer), and the ultimate cause can take months to determine. Specialist product liability insurance helps protect your balance sheet by covering legal defence costs and insured damages, and (where arranged) can provide access to product recall / withdrawal expense cover to manage the cost of removing affected devices from the supply chain.
Insure24 arranges semiconductor-focused liability programmes designed for real-world device risks, global exports and demanding procurement frameworks. We help you select limits that match contractual requirements, structure worldwide territorial cover (including US/Canada where required), and make sure key exclusions don’t undermine the protection you think you have.
What Product / Device Liability Insurance Covers
Product liability insurance generally covers your legal liability for bodily injury or property damage caused by a product you manufacture, supply or distribute. It typically includes legal defence costs. In the semiconductor context, “property damage” can include damage to equipment, systems or other components caused by device failure — and the allegation may arise far downstream, sometimes in a different jurisdiction to where you operate.
The most important part is not just “having a policy”, but having one structured correctly: appropriate territory, correct description of products, clear treatment of exports, and realistic limits that match customer demands. We help you avoid common traps such as inadequate US cover, unhelpful exclusions, missing vendors/additional insured requirements, and unclear handling of contractually assumed liabilities.
- Legal defence costs for covered claims
- Bodily injury caused by defective devices (where you are legally liable)
- Third-party property damage caused by device failure
- Worldwide sales and exports (where selected)
- Optional: vendors / additional insured endorsements (where required)
- Optional: failure to warn considerations (subject to underwriting)
- Optional: product recall / withdrawal expense cover (where arranged)
- Claims support and incident response guidance
Common Semiconductor Liability Loss Scenarios
Claims can originate from quality escapes, design issues, packaging defects, handling/ESD events, counterfeit/traceability disputes, or failures under specific environmental conditions. Often the claim is not immediate: latent defects may only appear after thousands of devices are installed in the field, or once a customer completes extended qualification testing.
Understanding “how a claim really unfolds” helps you structure better cover. Underwriters will also want to know how you control these exposures: incoming inspection, traceability and lot control, quality management, customer change control, burn-in and reliability testing, and escalation processes.
Typical Scenarios
- Device failure causing damage to a customer’s system or equipment
- Automotive electronics failure leading to property damage and investigations
- Medical device or industrial control failure allegations
- Overheating, short circuit or power regulation failure incidents
- Packaging defects (bond issues, delamination, voiding) leading to field failures
- Test escape or incorrect binning claims
- ESD/handling damage leading to latent defect claims
- Alleged failure to warn / specification dispute following performance issues
Downstream Cost Drivers
- Legal defence and expert engineering investigation costs
- Third-party property damage and consequential repair programmes
- Containment actions: quarantines, sorting, rework and re-test programmes
- Freight and logistics for replacement components
- Customer downtime and production disruption allegations (often contractual)
- Multi-jurisdiction disputes (US/Canada, EU and Asia supply chains)
- Regulatory notifications for safety-critical systems (where relevant)
- Reputational impact and procurement escalation
Worldwide Cover, US/Canada Exports & Contract Requirements
Semiconductor manufacturers frequently sell into complex global supply chains. Liability exposure varies by territory and by end use. Some customers will require specific limits, named insured language, vendors endorsements, or proof of US jurisdiction cover — especially where chips are used in automotive, aerospace, medical or industrial safety applications.
We help you map your real exposure: where devices are sold, where they are ultimately installed, and which jurisdictions could apply in a dispute. Then we structure policy terms that align with your contracts and procurement requirements, without paying for unnecessary cover where your real risk is low.
- Worldwide territorial scope options (including USA/Canada where required)
- Limits aligned to customer frameworks and sector expectations
- Vendors/additional insured endorsements (where offered)
- Contract review support to identify uninsured obligations
- Product description alignment (semiconductors, modules, packaged devices)
- Traceability and lot control narrative to strengthen underwriting
- Claims-handling expectations for multinational supply chains
- Support for certificates and procurement onboarding
Product Recall / Withdrawal Expense Insurance (Optional)
Product liability policies are designed to address third-party claims for injury or property damage. Recall costs are different: they are first-party expenses you incur to remove or replace affected products from the supply chain, manage quarantine, sorting and logistics, and protect customers and end users. For semiconductor devices, recall events may involve rapid containment actions across multiple tiers of the supply chain.
Recall cover is not always available in a standard form for all semiconductor risks, and it must be structured around your products and customers. Where it is appropriate and offered by insurers, it can provide valuable support for recall logistics, third-party sorting, disposal, and crisis management costs. We’ll advise on when recall extensions make sense, and when other risk transfer / contractual measures are more practical.
- Recall / withdrawal expense cover (where arranged)
- Quarantine, inspection, sorting and re-test programmes
- Freight, storage and logistics costs for affected stock
- Replacement product distribution costs (subject to terms)
- Crisis management support (where offered)
- Disposal and destruction costs for affected product
- Alignment with quality systems and traceability
- Support with incident management and documentation
Key Underwriting Information (What Insurers Will Ask)
Liability underwriters evaluate semiconductor risks through the lens of end use, territories and quality control. Two businesses with similar turnover can have completely different exposure depending on whether devices are used in consumer electronics or safety-critical automotive systems. The better you can explain your product applications and controls, the better the terms are likely to be.
We help you prepare an underwriting pack that answers the questions insurers care about and reduces delays: where you sell, what your devices are used for, how you manage traceability, and how you respond when something goes wrong.
Typical Questions
- Device types and end uses (automotive, industrial, medical, consumer, aerospace)
- Territories: UK/EU sales vs worldwide exports, USA/Canada exposure
- Largest customers and contractual insurance requirements
- Quality systems, traceability, lot control and change management
- Testing, burn-in, qualification standards and failure analysis approach
- Claims/loss history and any recalls, RMAs or major incidents
- Warnings, instructions, specifications and compliance documentation
- Use of subcontractors (fab/OSAT partners) and supply chain controls
How Insure24 Improves Outcomes
- Clear risk narrative aligned to end use and customer expectations
- Territory and limit optimisation to avoid under/over buying cover
- Policy wording review to prevent hidden exclusions undermining cover
- Support for vendors/additional insured endorsements where needed
- Alignment of liability and recall where appropriate
- Claims-readiness guidance: incident response and documentation
- Contract review support to identify uninsured contractual liabilities
- Competitive placement across suitable insurers
When a field-failure allegation escalated across multiple territories, Insure24 helped us evidence our controls to underwriters and secure worldwide liability cover aligned to customer requirements.
Commercial Director, Semiconductor Device ManufacturerPROTECT YOUR BUSINESS
- Legal defence costs for complex, technical disputes
- Protection against property damage and injury claims
- Worldwide exports and multi-jurisdiction claims support
- Optional recall / withdrawal expense cover (where arranged)
- Support for certificates and procurement onboarding
REDUCE UNINSURED GAPS
- Territory and limit checks (including USA/Canada where required)
- Contract review to highlight uninsured assumptions of liability
- Product description and end-use clarity to avoid disputes
- Policy wording review to avoid unhelpful exclusions
- Claims-readiness guidance and incident response planning
Compliance, Standards & Governance
Semiconductor liability risk is influenced by standards, documentation, and quality governance. Insurers (and customers) look for robust traceability, controlled change management, and clear evidence of qualification and test processes. Good governance not only reduces risk — it also helps defend claims.
- Quality management systems, traceability and lot control
- Change control and configuration management
- Qualification testing and reliability programmes
- Failure analysis procedures and documented corrective actions
- Customer documentation: specs, warnings and application guidance
- Export controls and customer onboarding requirements (where relevant)
FREQUENTLY ASKED QUESTIONS
+-
What is product / device liability insurance for semiconductor manufacturers?
Product / device liability insurance is designed to protect semiconductor manufacturers against legal liability claims arising from defective devices that cause bodily injury or third-party property damage. It typically includes legal defence costs and can be structured for worldwide exports.
+-
Does product liability cover financial losses like customer downtime?
Product liability policies generally focus on bodily injury and property damage. Pure financial loss and contractual penalties may not be covered unless they arise directly from insured damage and fall within policy terms. Insure24 can help you understand where contractual exposures sit and how to reduce gaps.
+-
Do I need USA/Canada cover if I sell into global supply chains?
If your devices are sold into the USA/Canada, or your customers require it for procurement, you may need worldwide cover including USA/Canada. Even if you don’t sell directly, devices can end up in those markets. We’ll help map territories and align cover with customer requirements.
+-
What is product recall / withdrawal expense cover?
Product recall / withdrawal expense insurance (where available) can help cover the costs you incur to remove, quarantine, inspect, sort, re-test and dispose of affected products, plus associated logistics and crisis management costs. It is separate from standard product liability and must be structured carefully for semiconductor risks.
+-
What information is needed to quote device liability insurance?
Typically: device types and end-use (automotive/industrial/medical/consumer), territories and exports, turnover and major customers, quality systems and traceability, testing and qualification processes, and claims/recall history. Customer contractual requirements and requested limits are also important.
+-
How can I reduce product liability premiums?
Strong traceability, controlled change management, documented qualification testing, robust failure analysis and corrective action processes, clear specifications/warnings, and a proven incident response plan can all improve underwriting confidence. We can help present these controls to insurers and negotiate competitive terms.