FCA authorised · FRN 7249520117 325 0027Quote & buy →
Manufacturers insurance exists because making a physical product concentrates several very different exposures under one roof — the machinery that has to keep running, the stock and raw materials sitting in the building, the people operating the line, and the goods themselves once they leave your control. Most firms buy the cover as a package, and most of the trouble starts when that package is assembled from generic assumptions rather than the reality of what you actually produce, how much of it, and where it ends up. A finance director signs off a schedule that looks complete, then discovers at claim that the indemnity period was too short, the stock figure was a year out of date, or a product they now export was never declared. Apex places manufacturers’ cover on the specialist market through a named broker who presents your business as it genuinely operates — not as a tick-box trade code.
A manufacturers’ policy is usually a combined package, and the sections below are the ones that carry the weight. Which apply, and at what limits, depends on what you make, how much of it, and where it goes — all subject to underwriter assessment.
The single biggest rating factor is the product itself and where it ends up. A firm pressing steel brackets for agricultural machinery is a very different risk from one making children’s toys, food ingredients, or components that end up in vehicles, aircraft or medical devices. Underwriters look hard at the end use, because a product that can cause injury — or that sits inside a safety-critical assembly — carries a far heavier product liability tail. Export destination matters just as much: sales into the United States and Canada are rated separately and can sharply change terms, because the litigation and damages environment there is more severe than the UK.
Turnover is the usual exposure base for the liability sections, so underwriters want an accurate, current figure split by activity and by territory — not last year’s rounded estimate. They will ask about sub-contracting in and out, whether you fit or install what you make, and whether you carry out any design. Design responsibility pulls in a different kind of liability and may need professional indemnity or an efficacy extension to sit alongside the standard product cover.
On the property and interruption side the focus moves to the building, the machinery and the concentration of value. Age, condition and maintenance of plant, the presence of pressure systems and lifting equipment, the fire load from materials, dust and waste, and protections such as sprinklers, alarms and separation between process and storage all feed the rate. A single site holding all your stock and all your production capacity is a concentration risk, and underwriters price the possibility that one fire takes out everything at once.
Business interruption is assessed on gross profit and, critically, on how long the business would take to recover — rebuild, replace long-lead-time machinery, re-qualify with customers and re-source suppliers. Dependency on a single customer, a single supplier or one irreplaceable machine is scrutinised, because those dependencies lengthen the realistic recovery time and therefore the loss.
Finally, they look at how you control quality — batch coding, traceability, testing and complaints handling — because good traceability limits the size of a recall and speeds a liability defence. Claims history, hot-work controls and general housekeeping round out the picture. A well-presented submission that answers these points honestly, meeting the Insurance Act 2015 duty of fair presentation, is what separates a competitive quote from a loaded one or an outright decline.
The scenarios below show how the sections of a manufacturers’ policy are meant to work together — and why gaps between them are where losses fall through. Each is subject to policy terms and the sums insured.
Machinery breakdown halting the line. A core CNC machine suffers a sudden control-gear failure and is out of action for weeks awaiting parts. Machinery breakdown covers the repair or replacement; business interruption responds for the lost gross profit while the line is down, provided the indemnity period is long enough to cover the wait.
Overnight fire in the stores. An electrical fault ignites racked packaging and raw materials. Buildings and contents cover the damage to the unit and fixed plant, stock cover the destroyed materials and finished goods, and business interruption the trading loss during reinstatement — three sections triggered by one event.
A defective product in the field. A batch of manufactured components fails in service and damages a customer’s own product or injures an end user. Product liability responds to the third-party injury or damage and the defence costs — a claim that can surface months or years after the goods left your control.
A recall the liability section won’t pay for. A food or drink manufacturer discovers a contamination or mislabelling issue and must withdraw a batch from retailers. Product recall cover meets the retrieval, disposal and replacement costs — expenses that product liability alone would not, because no third party has yet been injured.
Damage on the way to the customer. A delivery of finished goods is damaged in a road accident en route; goods in transit responds. Separately, a burst pipe over a weekend soaks stored stock; property and stock cover respond, subject to any escape-of-water and unoccupancy conditions.
Underinsurance. The most common and most expensive mistake. Sums insured for buildings, plant and stock drift out of date while rebuild costs, machinery replacement prices and stock volumes rise. When a claim is settled the insurer can apply “average” — if you insured for 60% of the true value, they can cut the payout proportionately, even on a partial loss. Manufacturers are especially exposed because plant and stock values move constantly. Our free underinsurance check at /underinsurance-check/ is a quick way to sense-check whether your declared figures still reflect reality.
The wrong indemnity period. A business interruption indemnity period that is too short quietly caps your recovery. Twelve months is a common default and is often nowhere near enough for a manufacturer — replacing a bespoke, long-lead-time machine, rebuilding a unit, re-qualifying with customers and rebuilding order books routinely takes 18, 24 or 36 months. When the period runs out cover stops, even though the loss continues. The right period is a judgement about your slowest realistic recovery, not a figure to leave at default.
Breached conditions and warranties. Policies carry requirements — hot-work permits, alarm maintenance and setting, fire-door and housekeeping standards, minimum stock security. If a condition precedent is not met, the insurer may decline the related claim outright. These are not small print to skim; they are the terms on which the cover exists, and they are checked after a loss.
Undeclared activities and changes. Taking on a new product line, starting to export, moving into a new material, adding a night shift, acquiring a second site or beginning to install what you previously only supplied all change the risk. If they are not declared, the insurer can argue that the risk it accepted is not the risk that existed — and under the Insurance Act 2015 duty of fair presentation that can reduce or defeat a claim.
Each of these fails silently. Everything looks fine until the loss happens, which is exactly when the shortfall is discovered. A proper annual review, with a broker who understands manufacturing, catches them while they are still cheap to fix.
Manufacturing sits inside a well-established framework of legal duties, and your insurance has to line up with them. Employers’ liability cover is compulsory under the Employers’ Liability (Compulsory Insurance) Act 1969 for almost any business with employees, with a minimum limit set in law and a certificate you must make available. The Health and Safety at Work etc. Act 1974 places general duties on you for the safety of employees and others affected by your work, and specific regulations bite on the factory floor — PUWER 1998 on the safe use of work equipment, LOLER 1998 on lifting equipment, and the Pressure Systems Safety Regulations 2000 (PSSR) where you run compressors, boilers or pressure vessels, which typically require a written scheme of examination.
On the product side, Part I of the Consumer Protection Act 1987 imposes strict liability on producers for damage caused by defective products, and the General Product Safety Regulations 2005 require that consumer products placed on the market are safe. Both underpin why product liability, and for many firms product recall, matter so much. Where processes involve emissions, effluent or waste, an environmental permit from the Environment Agency (England) or Natural Resources Wales may also be required.
Insurance is not a substitute for compliance, and insurers increasingly make it a condition of cover — evidence of statutory inspections, maintenance regimes and safety systems. Meeting the duty of fair presentation under the Insurance Act 2015 by disclosing these matters accurately protects the cover you are paying for. This page is general information, not advice; your specific obligations depend on your processes and should be confirmed with the relevant regulator.
Tell us about your business and we’ll place it on the specialist market — or leave your number and a named broker calls you back, usually the same working day.
