Insurance for industrial companies
A plant concentrates three exposures that rarely sit together elsewhere: an asset that is expensive and slow to replace, a chain that stops as a whole, and a product that keeps answering for itself long after it has left the gate.
What it is
Industrial risk is not organised by policy, it is organised by consequence. A single incident — a fire on a line, the failure of a critical machine, a defective batch reaching the customer — touches the asset, the production and the liability all at once, and each of those three fronts is covered by a different contract. Designing the programme means making sure all three respond in a coordinated way and leave no stretch unattended.
What is particular to this sector is that the largest loss is rarely the physical damage. When a critical machine goes down, the cost of replacing it is known and bounded; what is not bounded are the months of lost production, the customers who move elsewhere and the contractual penalties. That is why in industry the technical work concentrates less on the sum insured and more on the indemnity period and on the list of critical machinery.
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At a glance
- Environmental financial guarantee
- Annex III
- Statutory deductible on product damage
- €500
- Scope
- Domestic and export
- Broker registered with the DGSFP
- J0140
In an industrial programme, the split between policies follows not the nature of the incident but the nature of the loss. A fire on a production line generates damage to the asset, a shutdown, and — if the product was already delivered — a possible third-party claim. Three different contracts, with three different limits and three different deductibles, all answering for the same event.
Which is why technical work in industry consists less in choosing covers than in checking their seams: where one ends and the next begins, and whether a stretch is left between them that nobody takes on.
Where the gaps open up in a plant
Three appear far more often than any other.
The first is the indemnity period on business interruption. It gets set by thinking about how long the installation takes to repair rather than how long the company takes to invoice as it did before, which includes rebuilding stock, regaining approvals and winning back customers who moved elsewhere. Where the affected machine has a long lead time, the difference between those two periods is the gap.
The second is undeclared critical machinery. Many policies cover machinery breakdown against a specific schedule of equipment. If the plant has added a new line and the schedule has not been updated, the most expensive item may be precisely the one that is missing.
The third is interruption of computer origin. A traditional property policy requires prior physical damage to trigger business interruption, and encrypted systems do not produce any. In a plant with connected industrial control, that exclusion leaves out one of the likeliest causes of shutdown today.
What triggers the purchase
In commercial insurance the purchase is almost never set off by fear: it is set off by an obligation. In industry three of them come up again and again.
The environmental financial guarantee under Law 26/2007, where the activity appears in its Annex III. The coordination of business activities under Royal Decree 171/2004, which turns the liability certificate into the key to another company's workplace — and into the key you demand of your own contractors. And the contractual requirements of large customers, which in industrial supply chains routinely impose minimum liability and product limits above whatever the company had in place.
Why through a broker
As a brokerage registered with the Spanish insurance regulator, the Dirección General de Seguros y Fondos de Pensiones, under reference J0140, New Brokers acts on the client's mandate, not on any insurer's behalf.
In industrial risk that matters for a specific reason: the information taken to market determines price and wording as much as the risk itself. A submission that documents protections, replacement lead times and dependencies is the difference between a standard quotation and a negotiated one, and at higher capacities it also requires structuring the placement in layers across several insurers, including the London market where domestic capacity will not absorb the risk.
What this sector is exposed to
Damage to the industrial asset
Fire, explosion, weather events and machinery breakdown affecting buildings, production lines and equipment. Where machinery is highly specific, the replacement lead time weighs more than the replacement value.
Interruption of production
The margin lost while the plant is down. This is the exposure most often under-sized, because it is calculated on the technical repair time rather than on the real time to return to market.
Dependence on suppliers and customers
The interruption that happens not at your plant but at a sole supplier's or a key customer's. It needs an express extension and those companies named in the policy.
Product liability
Damage caused by the product once delivered, including damage that appears once it is integrated into a third party's goods. It extends to market withdrawal only where a recall sub-limit is bought.
Environmental liability
Contamination of soil, water or air and the cost of remediating ecological damage, which general liability excludes and which, for Annex III activities, also requires a financial guarantee.
Workplace accident and employers' liability
The employee's claim beyond social security benefits, aggravated in settings with heavy machinery, work at height and contractors working alongside.
Shutdown from a cyber incident
The convergence of IT and OT means encryption of the management systems now stops the plant as well. Property policies usually exclude interruption of computer origin.
Transport and storage of goods
Goods in transit, in third-party storage or moving internationally, whose risk changes hands according to the agreed incoterm rather than according to who manufactured them.
What the law requires of you
The obligations that, in this sector, trigger the purchase of a specific cover.
| Rule | What it requires |
|---|---|
| Law 26/2007 on environmental liability — View the legislation | Its article 24 requires operators of the activities listed in Annex III to hold a financial guarantee enabling them to meet the environmental liability inherent in their activity, subject to the exemptions in article 28. The minimum amount is set by the competent authority according to the intensity and extent of the damage the activity may cause. |
| Consolidated Consumer Protection Act (TRLGDCU) — View the legislation | Its article 141 sets two rules for liability for defective products: a deductible of €500.00 is applied to compensation for property damage, and the producer's global liability for death and personal injury caused by identical products with the same defect is capped at €63,106,270.96. |
| Royal Decree 840/2015 on major accidents — View the legislation | Imposes prevention, notification and planning duties on establishments handling dangerous substances above the thresholds in its Annex I. How the establishment is classified determines what the insurance market asks for before it will quote. |
| Royal Decree 656/2017 on chemical product storage — View the legislation | Regulates the conditions for storing chemical products and its supplementary technical instructions. Documented compliance with those instructions is, in practice, an underwriting requirement at plants with significant storage. |
| Royal Decree 171/2004 on coordination of business activities — View the legislation | Implements article 24 of Law 31/1995 and requires the operator of a workplace to coordinate prevention with the companies working there. In practice it means asking every contractor for a current liability certificate before granting access to the plant. |
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Breakdown of a machine with no spare in Europe
A press or a packaging line with a lead time of several months goes out of service. The physical damage is bounded; the shutdown is not.
What it means
What decides the claim is not the sum insured but the indemnity period agreed and whether that machine appears on the schedule of critical machinery. A twelve-month period at a plant whose replacement takes eighteen leaves six months uncovered.
A defective batch already built into the customer's product
A component leaves with a manufacturing defect and the customer has already fitted it into their own product, which has been distributed.
What it means
Basic product liability is not enough here: damage to the third party's product comes into play, along with the cost of dismantling and refitting and, if a withdrawal is decided, the recall sub-limit, which is rarely bought with any headroom.
An outside contractor working in the plant
Subcontracted maintenance starts a fire, or a contractor's operative is injured on your premises.
What it means
Royal Decree 171/2004 requires you to coordinate prevention, and the loss generates cross-claims between your liability policy, the contractor's and the employers' section. Without a current certificate from the contractor, whatever their policy does not cover falls to you.
The covers that structure your programme
Property damage and business interruption
The core of an industrial programme: the asset and, above all, the margin not earned while the plant is not producing.
General, employers' and product liability
Answers for damage to third parties, for the employee's claim after an accident, and for the product already delivered — three distinct exposures under one contract.
Environmental liability
Gradual pollution and the remediation of ecological damage require their own policy, and Annex III activities also require a financial guarantee.
Cyber
Property policies exclude interruption of computer origin, which in a connected plant is now as real a cause of shutdown as a fire.
Transport and cargo
Goods in transit answer under their own policy, and the split of risk is set by the incoterm, not by ownership.
Credit and surety
Protects collection against the insolvency of industrial customers, where payment terms are long and turnover is usually concentrated in few accounts.
Frequently asked questions
What insurance does an industrial company need?
There is no single list, but the core of an industrial programme is four coordinated contracts: property damage with business interruption, covering the asset and the shutdown; general, employers' and product liability; environmental liability, which the previous one excludes; and cyber, because property policies do not cover interruption of computer origin. Transport, credit and surety, and D&O are added according to the structure of the business. The scope of each is governed by the specific conditions of each policy.
Is environmental liability insurance compulsory in Spain?
Law 26/2007 does not require buying a particular insurance policy, but holding a financial guarantee, and only for operators of the activities listed in its Annex III, subject to the exemptions in article 28. That guarantee may take the form of a policy, a bank guarantee or a technical reserve. The minimum amount is set by the competent authority according to the intensity and extent of the damage the activity may cause. It is worth checking activity by activity whether the installation falls within Annex III.
How is business interruption calculated at a plant?
On the gross margin the company does not earn during the indemnity period, plus the additional costs incurred to keep serving customers. The two habitual errors are sizing the margin on the last financial year without allowing for growth, and setting an indemnity period based on the technical repair time rather than the real time to recover the market, which includes rebuilding stock and winning back customers.
Does the policy cover withdrawing the product from the market?
Only where an express recall sub-limit has been bought. Product liability answers for the damage a defective product causes to people or property, but the logistical and commercial cost of taking it off the market is a separate concept and is excluded unless specifically covered. In sectors with wide distribution it is one of the items most worth reviewing.
What does the market ask for before quoting a plant?
Usually a description of construction and fire protection, a schedule of machinery with replacement lead times, a breakdown of turnover and margin, the claims history of recent years, the establishment's classification if the major accidents rules apply, and documented compliance with the technical storage instructions. The better prepared that information is, the better the comparison that can be asked of the market.
What information do you need to prepare a proposal?
The annual accounts, the schedule of sites with their sums insured, the list of critical machinery, turnover broken down by product line and market, the supplier chain with any sole dependencies, and, if you have them, the current policies with their specific conditions. With that we can compare on a like-for-like basis and find the gaps in the existing programme.
This information is for guidance only and is not binding. Covers, limits and exclusions are governed in all cases by the specific terms of each policy. New Brokers Correduría de Seguros, S.L., registered with the DGSFP under reference J0140.