Article June 21, 2021

Insurance for manufacturers: Policies in action

Some manufacturers might struggle to understand the importance of specialist insurance and why they need the cover.

We’ve taken a look at a few claims examples to help your manufacturing clients understand what could have been at stake if they hadn’t had a CFC policy in place.

Intellectual property insurance

A small heavy industrial sector manufacturer had a lawsuit filed against them by a competitor, alleging that the manufacturer’s products infringed on several of their patents. The manufacturer had a strong defense to the infringement allegations and argued that some of the competitor’s patents were actually invalid.

Only after lengthy litigation - and facing the prospect of having their patents invalidated as a result - did the competitor agree to discuss a settlement. In the end, the manufacturer managed to avoid paying any fees to the competitor, but its legal costs had reached millions of dollars, which could wipe out their profit for the year and impact future R&D initiatives.

Luckily, the manufacturer’s IP insurance policy covered all legal costs associated with defending the infringement allegation.

Product recall insurance

A meat manufacturer sources 70% of their stock from a local farm, but the products began testing positive for salmonella and the supplier was identified as the cause. Regulators immediately shut down the farm with a suspension order and instructed the manufacturer to hold all products - even products which were not sourced from the affected farm. The manufacturer lost several valued clients and sales took a hit as consumers lost faith in the brand.

The manufacturer had a contract with the supplier farm which obligated the farm to indemnify the manufacturer for any losses, liabilities or expenses incurred due to unsafe meat. Unfortunately, the farm declared bankruptcy shortly after the suspension order, so the contract became worthless.

The product recall cover reimbursed the costs of the recall event, giving the manufacturer much needed immediate financial relief and ensuring their liquidity.

Read the full case study here

Manufacturers and distributors (E&O and GL) insurance

A global manufacturer that produces industrial heaters and heating components was alleged to have faulty products. A construction company regularly purchased the manufacturer’s products and incorporated them into their building projects. 

Two years later, a fault was discovered with one of the manufacturer’s components that had been used in a building project. The construction company spent several weeks investigating the issue and halted the build until the defect was identified and resolved. Once identified, the construction company alleged that the insured needed to cover the costs incurred for the investigation, time lost and replacement items.

The manufacturer’s insurance policy covered the financial loss that the manufacturer has caused the construction company.


Insurance for manufacturers may seem expensive with limited and often confusing coverage options, but CFC has dedicated insurance policies specific to manufacturers, which means clients will receive the most relevant protection for their business.

We also know that our insurance policies are only as good as the claims service behind them. That’s why our 100-strong team is made up of lawyers, loss adjusters and forensic consultants with deep experience across a variety of geographic jurisdictions and industry sectors. When an incident happens, we understand it’s the manufacturer’s livelihood on the line, so we always allocate a dedicated CFC claims handler who is with the insured every step of the way. Over the past 20 years we’ve paid and handled tens of thousands of claims for businesses of all sizes.

When considering the risks for manufacturers, especially ones which are out of their control, it’s clear that a dedicated insurance policy supports them when they need it most.

Find out more about what CFC can do for manufacturers

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