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Factories, food plants and fabrication workshops buy manufacturing insurance because their goods carry their name long after they leave the dock. Large retailers and distributors often set a minimum products liability limit in their supplier terms, and you may be asked for proof before the first order ships. Fortis Risk Solutions checks that the products liability section matches where your goods end up, including any export markets, and whether recall cover is worth adding for your line. If a product is blamed for injury or damage, we help you notify the insurer early and manage the claim. Send a product list with your export destinations first. Call 03 7046 3766 or send an enquiry.
What Manufacturing Insurance Covers
Manufacturing insurance covers the buildings, plant, stock and product liability of a factory or workshop, along with the income lost when a line stops. A maker carries risks a reseller never sees. The goods leave the site with your name on them, and a single machine can hold up every order in the book.
Fire is the loss that closes factories. Raw materials, packaging, dust and solvents burn hard, and the rebuild then waits on planning approvals and machine lead times from overseas. Breakdown is the quieter version of the same problem: a press, compressor or oven fails, and production stops until the replacement part lands. A fire at a key supplier can stop your line just as effectively.
A property policy pays for fire and impact, not for a machine that fails on its own, so machinery breakdown is a section you add. Injury to a contractor or a visitor on the floor answers to public liability insurance, which many principals want to see before they issue a purchase order. Set the indemnity period on business interruption insurance against real rebuild and re-equipping time.
Fortis Risk Solutions arranges manufacturing insurance for factories across Australia as part of our business insurance range, from offices in Box Hill and Hawthorn. We walk through what you make, which machines are irreplaceable in a hurry, where the components come from and who you supply, then take that picture to insurers who write industrial risk rather than generic packages.
Who this covers
Manufacturing covers very different processes. The notes below show what changes the rating and the cover for each type.
Food manufacturing
Products liability for anything that reaches a consumer, recall cover for a contaminated batch, refrigeration and processing plant under machinery breakdown, and spoilage of raw materials. Food safety records are read at claim time. The food manufacturing insurance page covers recall, contamination and refrigeration in detail.
Textile and apparel manufacturing
Dust, lint and combustible stock make fire the main loss, and imported fabric and finished garments sit in both marine cargo and stock cover. Products liability covers garments and childrens wear, where the safety standards are strict.
Metal and machinery manufacturing
Hot work, heavy plant and finished goods installed into other machines. Machinery breakdown on presses and CNC equipment, products liability for parts that fail in use, and the indemnity period set on the lead time of imported replacement plant.
Electronics manufacturing
High value components, static-sensitive stock and products sold into other people’s equipment. Products liability and recall, goods in transit for components and finished units, and cyber cover for the design files and the production systems.
Industrial processing plants
Chemicals, heat and continuous processes that cannot stop. Industrial special risks for property and interruption, machinery breakdown on critical plant, pollution and environmental liability, and a business interruption indemnity period long enough for a rebuild with regulatory approvals.
Packaging and printing
Paper, solvents and inks make a high fire load, and the presses are expensive and slow to replace. Property, machinery breakdown and business interruption carry the weight, with products liability for food contact packaging.
Light manufacturing and workshops
Smaller sites assembling, fabricating or finishing. A business insurance package with machinery breakdown, products liability and business interruption added, and tools and plant covered on and off site. See the factory and manufacturing insurance sections above.
Manufacturing Insurance: Cover Sections and Benefits
What Factory and Manufacturing Insurance does not cover
A factory package pays for sudden damage and for the liability that follows a defective product. It does not pay to put your own product right, and it does not carry plant problems that built up over time. Typical manufacturing insurance exclusions include:
- The cost of repairing or replacing your own faulty product, as distinct from the damage that product causes
- Product recall and withdrawal expenses, unless the optional recall extension has been added (it is not part of a standard business package)
- Wear and tear of machinery; sudden mechanical or electrical breakdown is covered only where the machinery breakdown section is added
- Faulty design and workmanship, with cover limited to the resulting damage
- Additional liability you agree to under a supply contract that goes beyond your normal legal responsibility
- Injury to employees and labour hire staff, which generally falls under workers compensation
- Goods being worked on, and plant hired in, unless they are declared
FRS reviews the policy exclusions against your production activities and relevant contractual obligations to help identify potential gaps in your insurance cover.
How Factory and Manufacturing Insurance premiums are set
Manufacturing insurance premiums are influenced by the type of production process and the risks involved, along with turnover, property values and the products being made. A dry assembly line and a coating plant using solvents are priced on different scales. The main factors:
- The process itself, including hot work, spraying, dust, solvents and heat treatment
- Building construction, separation between production and storage, and fire protection systems
- Declared values for buildings, plant, machinery, raw materials and finished stock
- Turnover and export sales, since overseas markets change the product liability rating
- Product type, particularly food, children’s items, electrical goods and parts fitted to vehicles
- Safety record, machine guarding, maintenance records and workers compensation claims
- The liability limit customers demand in supply agreements, and the excess accepted
FRS sets out the process and the controls in the submission, so underwriters rate the plant as it stands rather than pricing an unknown.
How to claim on Factory and Manufacturing Insurance
Factory claims are damage plus downtime, and the downtime is usually the bigger number. The FRS process for a manufacturing insurance claim:
- Notify: Call FRS as soon as the incident happens, and notify WorkSafe where the law requires it for a serious injury or dangerous occurrence
- Make safe: Make the area safe, and preserve the damaged machine, the failed part and any product involved
- Report: Report theft or malicious damage to police and keep the report number
- Do not admit liability: Do not admit liability to a customer or an injured person, and pass every letter of demand to FRS
- We lodge and manage: FRS lodges the claim, agrees the assessor and pushes for interim payments so production can restart
- Keep records: Production and sales records support the interruption figure, and declared values are reviewed at renewal
Start on our make a claim page and we take it from there.
Factory and Manufacturing Insurance compared with a standard Business Pack
| Question | Factory and Manufacturing Insurance | Standard Business Pack |
|---|---|---|
| What it covers | Buildings, plant, stock, machinery breakdown, product liability and interruption built around a production process | Property, general liability and basic interruption for an office, shop or trade business |
| Who buys it | Factories, food producers, fabricators and assemblers | Retailers, consultants and small service businesses |
| Typical trigger | A machine failure stopping the line, a fire, a product that injures a user | Break in, storm damage, a customer slip |
| Sits with | Workers compensation, marine cargo and commercial motor | Workers compensation and cyber |
The packaged wording runs out at the factory gate. Once production plant, raw materials and product liability come into it, a business insurance pack has to be rebuilt around the process rather than extended.
Terms used on this page
Short definitions of the insurance terms used above.
- Products liability: the section that pays compensation and defence costs when goods you made or supplied injure someone or damage property after they leave the site.
- Product recall extension: an optional cover for the cost of getting a faulty product back: freight, storage, destruction and customer notification. Products liability alone does not pay for this.
- Machinery breakdown: an optional section that pays to repair or replace plant that fails through an internal mechanical or electrical fault.
- Indemnity period: the maximum number of months the business interruption section keeps paying after an insured event. Set it on machine lead times and planning approvals.
- Incoterms: the trade terms in a sale contract that fix where risk passes from seller to buyer, and so who insures the shipment.
Factory and Manufacturing Insurance - Client Case Studies
Cases from the Fortis Risk Solutions broking team. Client names have been removed.
Client case: Factory Fire: Property and Business Interruption
The client situation: A fire started in a manufacturing facility following an electrical fault, damaging production machinery, raw materials, finished goods, office contents and sections of the factory fit-out.
Production had to stop while the damaged area was repaired and replacement machinery was arranged.How the policy could respond: Property cover could assist with insured damage to machinery, stock, contents and fit-out.
Business Interruption cover could help with insured loss of income and applicable ongoing expenses while production was disrupted.
Additional increased costs incurred to maintain production may also be covered where provided by the policy.How Fortis Risk Solutions helps: We work out the indemnity period with the owner from the lead time on replacement machinery, which is often longer than the repair to the building.
Client case: Machinery Breakdown Stops Production
The client situation: A significant electrical event damaged sensitive electronic controls within several production machines. Several critical production machines suffered a sudden mechanical breakdown during operation. The affected machines could not operate until replacement components were sourced and installed.
Orders were delayed and sales declined during the interruption.How the policy could respond: Machinery Breakdown cover could assist with insured repair or replacement costs following a covered breakdown.
Appropriate Business Interruption or Consequential Loss following Machinery Breakdown cover could assist with insured loss of income resulting from the reduction in production.How Fortis Risk Solutions helps: Breakdown is not fire, and a standard property section does not cover it. We add machinery breakdown and the business interruption that follows it for any plant that depends on a few machines.
Every policy is different and the outcome of a claim depends on its terms. As your broker, Fortis Risk Solutions compares insurers and policy wording before you buy, and lodges and manages the claim for you when something happens. Talk to us about your own cover.
Manufacturing Insurance FAQs
Manufacturing insurance covers three fronts: the site, the product and the income. Site means buildings, plant, stock and machinery breakdown. Product means the liability that follows goods you made once they are in use somewhere else. Income means the gross profit lost while production is down. Smaller workshops start with a business insurance package and add the industrial sections they need.
No. Property cover responds to an external event such as fire, storm or impact, and it excludes a machine that fails through its own mechanical or electrical fault. Breakdown cover fills that gap and can extend to spoiled work in progress and the hire of a temporary replacement. Larger plants often carry breakdown inside an ISR insurance wording rather than as a bolt-on section.
The manufacturer usually carries it. Under the Australian Consumer Law a supplier can be liable for goods with a safety defect, and suppliers must report goods associated with serious injury or death to the ACCC. Products liability pays compensation and defence costs, whether the fault is in the design, the assembly or the labelling. It applies to goods you import and rebrand as well.
Not automatically. Products liability answers the injury or damage the item causes, not the cost of getting the item back. Recall expenses such as freight, storage, destruction and customer notification need a recall extension or a separate policy, and insurers will ask about batch coding and traceability before they offer it. Food, cosmetics and components sold into vehicles are the usual candidates.
Only under a transit or cargo section. Property cover stops at the boundary of the site, so finished goods on a truck, in a container or on a ship need marine insurance. Who arranges that cover depends on the Incoterms in the sale contract, because the point where risk passes to the buyer is set there. Read the contract before you assume the customer is insuring the shipment.
Factory risk sits in the detail: declared values, the indemnity period, breakdown conditions and how the products liability wording treats export sales. FRS helps you disclose processes and materials accurately, structure limits for plant and stock, compare specialist industrial insurers and act as your advocate at claim time. Owner-run factories should also review management liability insurance for employment and regulatory claims.
Related pages
Related industry groups: Trade and Logistics Insurance, High Value and Complex Business Insurance, Transport and Automotive Insurance
Talk to a broker about Factory and Manufacturing Insurance
Call 03 7046 3766 on weekdays between 9:30am and 6pm, email admin@fortisrisksolutions.com.au, or send an enquiry and a broker from our Box Hill or Hawthorn office will come back to you about factory and manufacturing insurance. Tell us what the business does and what the lease or contract asks for, and we take it from there.