Insurance for Machine Shops & CNC Operations

A precision machine shop may have millions of dollars tied up in CNC equipment while also working to tight customer specifications. The right program needs to consider machinery, downtime, work-to-print exposures, employee safety and the end use of the parts being machined.

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What to Review

Build the program around how the operation actually works.

Manufacturing insurance is not one policy. The right structure depends on the product, process, property, people, contracts and potential severity of a loss.

CNC & production equipmentProperty values should reflect the machines, controls, tooling and supporting equipment that keep the shop producing.

Equipment breakdownA sudden internal mechanical or electrical failure can create repair expense and production downtime.

Customer specificationsWork-to-print operations can face allegations that a part was machined outside tolerance or failed to meet contractual specifications.

Products liabilityThe severity of a finished-part claim can depend heavily on where the part ultimately goes and what it does.

Business incomeA bottleneck machine can make downtime far more expensive than the physical repair itself.

Workers’ compensationMachine guarding, lockout/tagout, lifting and material handling are important parts of the risk picture.

Questions Business Owners Ask

Important distinctions before renewal.

Is CNC equipment covered by commercial property insurance?

Commercial property may cover machinery for covered causes of loss such as fire, subject to the policy. Internal mechanical or electrical breakdown is often addressed through equipment breakdown coverage instead. Forms vary, so both pieces should be reviewed together.

What is a work-to-print exposure?

It describes a shop manufacturing a part to a customer’s drawings or specifications. A mistake may create downstream costs even when there is no bodily injury or physical damage.

What should a machine shop prepare for renewal?

A current equipment schedule, property values, sales and payroll, product/end-use details, loss runs, safety controls, customer contract requirements and any changes in operations are a strong starting point.

Coverage descriptions are general. Actual coverage depends on the specific policy forms, endorsements, limits, exclusions and facts of a claim.

Keep digging into the exposures that matter.

Want a second look at your manufacturing program?

Send us a few basics and we will follow up to learn more about your business, current program and upcoming renewal.

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