Insurance Requirements for CNC, Fabrication, and Welding Shops
- Nate Jones, CPCU, ARM, CLCS, AU
- 23 hours ago
- 2 min read
Whether you run a precision CNC machine shop, a metal fabrication facility, or a welding operation, the right machine shop business insurance is essential for compliance, contracts, and risk protection. Vendors, landlords, lenders, and customers often require proof of specific policies and limits before you can step on the floor or ship parts. Here are the key insurance requirements manufacturers should expect when requesting a machine shop business insurance quote.
1) General Liability (Often Contractually Required)
Nearly every lease, supplier agreement, or customer PO will require Commercial General Liability (CGL). It responds to third‑party bodily injury and property damage arising from your operations (e.g., a vendor trip-and-fall or damage during a site visit). Many contracts specify per‑occurrence and aggregate limits (commonly $1M/$2M) and may require you to add customers as Additional Insureds and provide Waiver of Subrogation.
If your shop’s parts are used in assemblies (automotive, aerospace, industrial equipment), expect customers to require Products/Completed Operations coverage. This protects you if a machined component allegedly contributes to failure or causes downstream damage. Higher‑hazard end uses (load‑bearing, safety‑critical) may require higher limits.
3) Commercial Property & Business Income
Your building, CNCs, lasers, press brakes, welders, tooling, and raw materials are core assets. Commercial Property covers physical loss (fire, theft, vandalism), while Business Income/Extra Expense replaces revenue and helps pay expenses if a covered loss shuts down production. Many landlords and lenders require this coverage with Replacement Cost valuation and specified coinsurance terms.
4) Equipment Breakdown
Standard property policies typically exclude internal mechanical/electrical failure. Equipment Breakdown can cover motor burnouts, electrical arcing, and sudden failures impacting CNC spindles, compressors, lasers, and HVAC serving climate‑sensitive tolerances.
5) Inland Marine (Tools & Customer Property)
If you move tools/fixtures between facilities or hold customer‑owned parts (care, custody, and control), you’ll likely need Inland Marine/Tool & Equipment and Bailees coverage. Many OEM contracts require proof that customer property at your site is insured to a set limit.
If you have employees (machinists, welders, inspectors, drivers), Workers’ Comp is typically required by state law. Accurate class codes and payroll splits (e.g., welding vs. light assembly) help control cost.
7) Auto & Umbrella
Commercial Auto is required if you have titled vehicles or regular deliveries. An Umbrella/Excess Liability policy may be required by landlords or large customers to increase your total liability limits.
Get the Right Insurance Requirements in Place for Your Shop
Not all insurers understand machining, fabrication, or welding risks, and requirements vary by contract, landlord, lender, and customer specifications. Wexford Insurance partners with top‑rated carriers that specialise in machine shop coverage, helping owners meet insurance requirements with the right limits, deductibles, endorsements, and COIs, fast.
👉 Request your Machine Shop business insurance quote from Wexford Insurance today and ensure your tools, equipment, and operations are fully protected.