Manufacturing insurance

A practical guide for UK manufacturers

Manufacturing insurance protects factories, workshops, and production lines against the financial impact of accidents, property damage, injuries, defects, and cyber incidents. It brings multiple covers under one roof so a single unexpected event does not halt operations or drain cash flow. From fire in a plant room to a product fault or a ransomware attack on your CNC systems, the right policy can help your business recover faster and meet legal duties.

The UK market is competitive in 2025. Overall insurance rates fell 6% in early 2025, with property rates also down 6% and cyber down about 8%. At the same time, persistent inflation, higher repair costs, and climate risks have pushed many premiums up in recent years, with building insurance costs having risen strongly between 2021 and 2024. These mixed signals mean buyers should benchmark carefully and review cover scope - not just price.

Casualty rates nudged up around 1% on average, although some areas excluding motor liability eased. Professional indemnity has softened significantly due to increased competition and new managing general agents, while motor fleet faces claims inflation driven by repair costs and vehicle values. Many SMEs remain exposed, with a sizeable share lacking any cover and a high proportion underinsured. This guide explains how to put a sensible, proportionate programme in place so you pay only for what you need, while avoiding costly gaps.

Insurance can offer real protection when you understand what is covered - and where the gaps are.

We will cover the main policy parts, typical exclusions, what affects cost, and how to buy with confidence. You will also find step-by-step guidance, key considerations, and alternatives so you can choose the most suitable protection for your operation.

Cover in plain English - what is and is not included

Manufacturing policies usually combine several sections. Property insurance covers buildings, machinery, stock, and plant against risks such as fire, explosion, vandalism, and storm. Business interruption helps replace lost income and extra expenses while you repair or relocate. Liability insurance addresses injury or damage you may cause to employees, visitors, or the public, and product liability tackles harm caused by items you make or distribute. For firms offering design, advice, or specifications, professional indemnity responds to alleged errors that cause a client financial loss.

Cyber insurance is increasingly relevant for connected machinery and OT networks. It can contribute to incident response, data restoration, and business interruption after cyber events. With standalone cyber uptake still low among small businesses, many manufacturers are adding this to close a growing gap.

Policies have exclusions and conditions. Flood and subsidence may need specific limits or higher excesses in certain locations. Wear and tear, gradual deterioration, and known defects are typically excluded. Liability policies will not cover intentional acts or contractual guarantees that go beyond legal liability. Business interruption only responds if the trigger is insured - for example, a fire that damages the premises. Simple examples help: if a fire in your panel shop shuts down production, property pays to repair equipment and stock, while business interruption helps with lost gross profit. If a faulty batch injures a customer, product liability responds, but it will not usually pay to remake the product unless you add product recall cover.

Be alert to sums insured and indemnity periods. Underinsurance reduces claim payments, and a too-short interruption period may run out before you are back to full capacity.

Who benefits most from this cover

Manufacturing insurance suits UK businesses that make, assemble, process, or distribute goods - from precision engineering and food production to textiles, chemicals, and electronics. It is valuable where machinery downtime, supply chain delays, or product defects could lead to meaningful financial loss. Companies with vehicle fleets, on-site visitors, or hazardous processes such as welding, cutting, or heat treatment also benefit from robust liability and risk management.

Firms offering design, drawings, or specifications should consider professional indemnity due to softer rates and the protection it offers against alleged errors. Businesses with connected machines, remote monitoring, or ERP systems face rising cyber risk - a targeted cyber policy can help contain operational and financial damage.

It may be less necessary for micro operations with minimal equipment, no visitors, no product exposure, and low revenue - but even then employers’ liability is a legal requirement if you employ staff, and public liability may be prudent if you have any third-party interaction. The key is proportionality - buy the cover that matches your real exposures, not more and not less.

Levels of protection - choosing what suits your operation

1. Basic - core essentials

   • Property damage for buildings, machinery, and stock with standard perils.
   • Public and product liability at entry-level limits.
   • Short business interruption period focused on essential expenses.
   • Suitable for small workshops with modest equipment and simple processes.

2. Standard - balanced cover

   • Property with extended perils, including storm and escape of water, plus machinery breakdown.
   • Employers’ liability and higher public and product liability limits.
   • Business interruption with a longer indemnity period, typically 12-24 months.
   • Optional cyber and goods in transit.
   • Fits growing manufacturers needing resilience during repairs or relocation.

3. Comprehensive - enhanced protection

   • All-risks property wording with improved limits for stock fluctuations and seasonal peaks.
   • Higher aggregate liability limits and product recall extensions.
   • Business interruption with 24-36 months, contingent suppliers and customers.
   • Tailored cyber with OT-specific endorsements and incident response support.
   • Suitable for plants with complex supply chains and critical machinery.

4. Optional add-ons - tailor to need

   • Professional indemnity for design or specification work, benefiting from softened rates.
   • Motor fleet with telematics and risk management to counter claims inflation.
   • Environmental impairment for pollution risks.
   • Engineering inspection for statutory plant checks and safety compliance.
   • Trade credit for customer insolvency risk.

Pick limits that reflect real rebuild times and production lead times - not best-case scenarios.

What it costs - the drivers behind your premium

Prices vary by insurer and market conditions. Recent competition reduced property and cyber rates, while inflation and reinsurance costs have pressured pricing elsewhere. Expect underwriters to reward strong risk controls and accurate sums insured, and to price in supply chain resilience.

Can you apply - and what insurers will ask for

Most UK manufacturers can apply, from start-ups to multi-site operations. Insurers will seek details of your premises, construction materials, fire protection, security, machinery, production processes, and quality controls. They will ask for wage rolls, turnover split by activity and territory, and your health and safety protocols. For business interruption, they will need gross profit calculations and realistic indemnity periods. Cyber underwriters often ask about backups, multi-factor authentication, patching routines, and incident response plans.

Common reasons for decline or restricted terms include severe past losses without remedial actions, poor housekeeping, unsafe hot works, inadequate electrical testing, high flood exposure without defences, and inaccurate sums insured. Fleet terms may tighten after frequent or large claims, while PI may require proof of design controls and peer review. Providing accurate, complete information helps avoid delays and ensures cover reflects your real risk.

From quote to claim - a simple path

1. Gather key details - premises, machinery, turnover, wages, and processes.
2. Request quotes - property, liability, BI, and relevant options.
3. Compare limits, exclusions, excesses, and indemnity periods carefully.
4. Select risk controls - fire protection, cyber basics, and fleet safety.
5. Finalise sums insured and realistic BI period with your accountant.
6. Purchase policy and store documents, endorsements, and contact numbers.
7. Implement risk improvements agreed at placement or survey.
8. If a loss occurs, notify insurer promptly and follow claims guidance.

Upsides and watch-outs

Key checks before you commit

Confirm excesses for each section, especially property, flood, and cyber. Review exclusions such as wear and tear, defective design, and contractual liabilities that go beyond legal requirements. Set sums insured on a reinstatement basis using current rebuild costs and supply lead times. Choose a business interruption indemnity period that reflects real recovery - 24 to 36 months is common for complex plants. Check renewal terms, claims reporting timelines, survey requirements, and documentation you must retain, such as maintenance logs and electrical certificates. Finally, ensure named insureds, sites, and activities match your actual trading footprint.

Related cover to consider

1. Product recall insurance - when withdrawal and replacement costs could be significant.
2. Directors and officers insurance - for management liability and regulatory investigations.
3. Trade credit insurance - if customer insolvency would strain cash flow.
4. Equipment breakdown - for sudden and accidental failure of critical plant.
5. Marine cargo and goods in transit - to protect raw materials and finished goods.
6. Contractors all risks - for businesses with installation or on-site build activities.

Frequently asked questions

Q: Is employers’ liability compulsory for manufacturers? A: Yes, if you employ staff in the UK you must hold employers’ liability insurance with at least the legally required limit. It protects against employee injury or illness claims arising from work.

Q: How long should my business interruption period be? A: Choose a period that covers repairs, equipment lead times, commissioning, and ramp-up. Many manufacturers select 24 to 36 months due to supply chain delays and specialist machinery.

Q: Do I need cyber insurance if I only operate on-site machinery? A: If your machinery or planning systems connect to networks, cyber incidents can still disrupt production. A cyber policy can fund response, recovery, and loss of gross profit.

Q: Why do some premiums fall while others rise? A: Market competition reduced certain rates, especially property, cyber, and professional indemnity. Inflation, repair costs, and reinsurance have increased others, particularly motor fleet and complex risks.

Q: How do insurers view sustainability investments? A: Upgrades that improve resilience - such as flood defences, fire protection, and energy-efficient materials - can improve your risk profile and may attract premium incentives from some insurers.

Q: What leads to underinsurance? A: Outdated rebuild values, missing stock peaks, and short interruption periods. Review sums annually and include inflation provisions, supplier dependencies, and realistic recovery times.

What to do now

Take stock of your risks, assets, and processes, then request comparable quotes that state limits, excesses, exclusions, and indemnity periods in plain terms. Consider adding cyber and professional indemnity where relevant, and set realistic sums insured. If you need help, speak to a regulated broker who can compare options without pressure and ensure the cover matches your manufacturing footprint.

Important note

This guide is general information, not personal financial advice. Policy terms vary by insurer and by business. Always read your schedule, endorsements, and wording carefully, and confirm details with a regulated adviser before buying.