Machine Shop Insurance

All About Machine Shop Insurance Coverage

All About Machine Shop Insurance Coverage

Manufacturers and machine shops are the most vulnerable businesses to interruptions and other risks in comparison to other industries. The high value of the property makes cnc milling service a risky affair not to have insurance coverage.

That said, it would be beneficial to you and your business to have insurance coverage and a risk manager that can evaluate the cost that could be incurred in case physical losses cause interruptions.

Accurate calculations and prior insight on potential risks and cost of risks allow you to be ready to cover the cost of restoring operations in your shop.

Without further ado, here are the things you should consider in a good machine shop insurance coverage?

In-Process Inventory

As a product passes through the various stages in the manufacturing plant, several factors should be considered, such as the overhead profit. Many products are stored upon completion, awaiting the final assembly.

A machine shop insurance coverage helps you to stay operational as it covers in-process inventories. Therefore, it is essential to find an insurance consultant who understands the capitalization of inventories and has accurate valuation skills of in-process inventories.

International Insurance Policies

Many don’t know this, but it is critical to have coverage that has jurisdiction in countries that you ship out to. It is in your best interest to have insurance that covers inventory that ships into foreign countries.

A great machine shop insurance should have an international liability policy that can cover the physical loss of your inventory. It should also include coverage for business interruptions caused by war or civil unrest.

Manufacturing Errors and Omissions

Many general insurance lack coverage on design defects and faulty products. A proper machine shop policy fills this gap by covering any defect or omissions in your products. It might also cover any design changes, especially if there was no prior communication to clients informing about the changes.


Machines can break down at any moment, and communication is key to avoiding injuries and other accidents. Many injuries in machining, including CNC machining, are a result of machine operators failing to communicate or powering off machines that are not operating properly.

Machine shop insurance policies help cover any injury arising from lack of lockouts and tagouts. A great machine shop insurance coverage should provide a training program to clients that teach lockout-tagout and machine specific EDPs.

Lift Index Calculations

Probabilities of lift injuries in machine shops and manufacturing are very high. Therefore, it is a good management behavior to have an insurance agent that calculates and measures the risks of lifting injury.

The lift index calculations measure factors that may lead to injury such as repetition, twisting, reach, and lift distance. It also provides risk mitigation measures. A good machine shop insurance coverage should include a lift index calculation feature or add-on.


The manufacturing industry comes with high-value properties and high operational costs. A machine shop insurance coverage will make sure that your machine shop stays operational in case of business interruptions caused by either physical loss of inventory, non-lift injury, lift injury, or product defects. It is a must-have insurance policy that fills the policy gaps left by other insurance policies.

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