General Liability vs. Product Liability for Machine Shops: Key Differences
- Nate Jones, CPCU, ARM, CLCS, AU
- 1 day ago
- 2 min read
Machine shops face a unique set of risks, from heavy machinery and welding operations to precision‑critical CNC components used in larger assemblies. When requesting a machine shop business insurance quote, owners often get confused about the difference between general liability and product liability. Although both are essential, they protect your shop from very different types of claims.
Here’s a clear, practical breakdown of how these two coverages work and why every CNC, fabrication, or welding shop needs both.
1) What Is General Liability Insurance?
General Liability (CGL) covers injuries and property damage related to your day‑to‑day operations, not the parts you manufacture. It typically covers:
A vendor slipping on a wet floor
Property damage you accidentally cause at a customer’s facility
Visitors injured while touring your shop
Advertising or personal injury claims
General liability is the foundation of machine shop business insurance and is required by most landlords, vendors, and contracts. However, General liability does not cover failures of the parts you machine, weld, or fabricate.
2) What Is Product Liability Insurance?
Product liability covers claims arising from parts your machine shop manufactures, including:
Failed or defective CNC parts
Welds that break under stress
Precision machining tolerances not met
Parts causing injury or property damage after installation
If a machined component is used in automotive, aerospace, medical, marine, or load‑bearing assemblies, the financial exposure can be significant. Even if your customer misuses the part, your shop might still be included in a lawsuit.
This is why product liability is essential for:
CNC machining
Welding/fabrication
Laser cutting
EDM machining
Industrial prototyping
Component manufacturing for OEMs
3) Key Differences Between the Two Coverages
General Liability | Product Liability |
Covers on-site accidents | Covers defective parts you produce |
Protects operations & premises | Protects completed products |
Slip‑and‑fall claims | Failure of CNC/welded/fabricated parts |
Visitor injuries | Injuries caused by your manufactured parts |
Required by landlords | Required by OEM and supplier contracts |
If your shop only carries general liability, you are not protected from claims involving machined or welded parts after they leave your facility.
4) Why Machine Shops Need Both
Because shops handle high‑value customer parts and produce precision components, a single product failure can:
Stop production for your customer
Trigger contractual penalties
Lead to property damage or bodily injury claims
Result in six‑figure lawsuits
General liability protects your shop operations; product liability protects your completed work.
Get the Right Liability Coverage for Your Machine Shop
Not all insurers understand machining, fabrication, and welding exposures. Choosing the wrong liability coverage can leave your shop exposed to catastrophic losses. Wexford Insurance partners with top-rated carriers that specialise in machine shop insurance, helping owners secure proper general liability, product liability, and supporting policies at competitive pricing.
👉 Request your Machine Shop business insurance quote from Wexford Insurance today and ensure your parts, equipment, and operations are fully protected.
