When the line stops, the loss is not the machine.
Plant, stock, equipment and product liability, and the part that decides the size of the loss: the income you lose while you are not producing.
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Plant, stock, equipment breakdown, product liability and downtime
Manufacturers, processors and contract producers
Your values, your slowest machine, and how long replacement takes
What insurance does a manufacturer need?
Four things carry most of the risk. Property cover for the building, plant and stock. Equipment breakdown, for machinery that fails with no fire or flood involved. Product liability, for harm caused by what you make after it leaves you. And business interruption, for income lost while you cannot produce.
The fourth is easy to set too low, and it can be the biggest number of the four.
Set the indemnity period too short and the payments stop while your replacement machine is still on a boat. Set the stock value on an average and a fire in your busiest month leaves you funding the difference. Health Canada’s instruction to industry is a legal duty, not a suggestion: “Do not manufacture, import, sell or advertise consumer products that could pose an unreasonable danger to the health and safety of Canadians.” Product liability cover answers for the day something you made does. Read Health Canada on the Consumer Product Safety Act (opens in a new tab).
Wholesalers and distributors carry a similar shape of risk, weighted differently. Less machinery. Far more stock value. And goods moving in and out all day.
Cover built around how the business actually runs.
Property, plant and stock
Buildings, machinery, raw materials and finished goods, on your site or in storage elsewhere.
Product liability
Injury or damage caused by what you make or supply, after it has left your control.
Product recall
The cost of getting a faulty batch back, usually excluded from a standard liability policy and bought separately.
Goods in transit
Stock moving to customers or between sites, by your own vehicles or someone else’s.
Equipment breakdown we place direct with the insurer. Product recall and stock throughput we arrange through specialist markets rather than direct with an insurer, which is a real difference, and one we would rather state than blur.
The three numbers that decide a manufacturing claim.
When a plant claim goes badly, it is almost never because the policy was missing. It is because one of these three numbers was set years ago and never revisited.
The rebuild cost
Construction costs have moved sharply. A building insured at its 2019 rebuild value is underinsured today, and that can reduce what is paid on a partial loss too.
The stock value
Stock peaks and troughs through the year. If the sum insured reflects the quiet month, a fire in the busy one is a shortfall.
The indemnity period
How many months of lost income you are covered for. Twelve months is the common default; a specialist machine on a long lead time can take far longer to replace.
Why a broker matters more here than almost anywhere.
Because the numbers are yours, not ours.
Sums insured, indemnity periods and stock values are the whole game here. No insurer sets them for you. A cheap policy with the wrong indemnity period looks exactly like a good one, right up to the day it is tested.
What we do is ask the awkward questions early. How long would it take to replace your slowest machine? What is your stock worth in October rather than in February? Would a key supplier failing stop you? And does your largest customer’s contract put obligations on you that your policy does not cover?
Worth reading next: why product liability does not pay for a recall.
How this can play out.
A press fails and the replacement is fourteen weeks out of Europe. The building is untouched. Equipment breakdown covers the machine; business interruption covers the fourteen weeks, but only if the indemnity period was set longer than twelve months.
Makers, packers, importers and distributors.
If your operation is unusual, or you have been declined because of a process, a material or a claims record, bring us the file. Difficult manufacturing risks are ordinary work here.
What a manufacturing policy takes seriously.
A manufacturing wording carries conditions tuned to fire, stock and machines. They are ordinary housekeeping until a claim makes them evidence.
The sprinkler warranty
A discount for sprinklers usually arrives as a warranty that they work, always. Heads blocked by racking or a valve closed for maintenance and forgotten is the classic refused fire claim.
Hot work without a permit routine
Maintenance welding in a corner of the plant carries the same permit-and-watch conditions a contractor faces, inside your own building.
Stock values set in the slow season
Declare stock at its winter low and burn at its September peak, and the gap belongs to you. Peak-season values are the honest number.
The process change nobody reported
New line, new solvent, new plastic in the mix: process changes move the fire risk the premium was built on. Told early, routine. Found in the ashes, the whole argument.
A yearly walk of the floor with the policy in hand catches all four. Check that the wording still describes the plant you actually run.
What manufacturers and wholesalers ask us.
How much business interruption cover do I need?
Start from how long it would genuinely take to be producing again, including permits, rebuilding, and the lead time on your slowest piece of equipment. That length is the indemnity period, and it drives everything. Most underinsurance we find is here.
Is my machinery covered if it just breaks down?
Not under a standard property policy, which responds to events like fire, water and theft. Mechanical and electrical failure needs equipment breakdown cover, which also usually picks up spoiled stock when refrigeration fails.
Do I need product liability if I only distribute, not manufacture?
Often yes. A distributor can be brought into a claim over a product it sold but did not make, particularly when the manufacturer is overseas or no longer trading.
My stock value changes a lot through the year. What do I insure?
Tell us the pattern rather than an average. Policies can be arranged with peak-season provisions so you are not paying all year for your busiest month, and not underinsured during it.
Does my policy cover a recall?
Usually not. Standard product liability covers harm the product causes; the cost of retrieving and replacing a bad batch is a separate cover. If you produce food, supplements or building products, it is worth pricing.
A customer’s contract demands specific insurance. Can you check it?
Yes, send us the contract. Supply agreements often require limits, additional insureds and wording that a standard policy will not automatically satisfy.
Our plant is outside the Lower Mainland. Can you still help?
Yes. Our licence covers all of British Columbia, so a plant or warehouse in the Interior, on the Island or in the north is inside it. The address does matter to the quote itself, because insurers ask about the building, the sprinklers and how far the fire hall is. It is not what decides whether we can act for you.
Not the question you had? Build the operations file and set out your own situation in plain words. A licensed broker reads it and replies in writing.
The questions behind the questions.
What people usually look at next.
Distributing as well as making? wholesale & distribution is a different shape of risk.
Tell us what you make or move.
What you produce, what it is worth, and how long you could survive not producing. That is the starting point.
SEND YOUR CURRENT POLICY AND WE’LL TELL YOU WHAT IS MISSING, WHETHER OR NOT YOU MOVE TO US
The indemnity period is the number that decides a plant claim. business interruption explains how it is set.
A machine stopping on its own is not a property claim. equipment breakdown.
Your goods leave the floor eventually. The cargo and marine file quotes the journey they take. Build it in minutes →