Common Mistakes That Increase the Insurance Cost for a Machine Shop
- Nate Jones, CPCU, ARM, CLCS, AU
- 1 day ago
- 2 min read
Machine shops often pay higher-than-necessary premiums simply because of avoidable mistakes. Whether you run a CNC machining center, metal fabrication shop, welding operation, or laser‑cutting facility, understanding the factors that raise your cost for machine shop insurance is essential. By correcting the most common errors, you can reduce your premiums while keeping full protection in place.
Here are the biggest mistakes machine shops make that drive their insurance costs up.
1) Inadequate Safety and Training Programs
Machine shops are high‑risk environments. When shops lack documented safety procedures, insurers classify them as risky accounts. Common issues include:
No lockout/tagout (LOTO) program
Lack of machine guarding or PPE enforcement
No hot‑work permits for welding
Missing or outdated employee safety training
Poor housekeeping around machines and walkways
Carriers reward shops with strong safety documentation.
2) Poor Maintenance of Equipment and Electrical Systems
CNC machines, welders, lasers, and fabrication tools require consistent maintenance. Mistakes that increase premiums include:
No documented preventive maintenance
Outdated or improper electrical systems
No surge protection for CNC/laser equipment
Poor ventilation for welding and cutting
These factors raise the risk of property claims, breakdowns, and fire hazards, resulting in higher pricing.
3) Incorrect Equipment and Property Values
Machine shop owners often make these two costly mistakes:
Overstating values, which inflates premiums
Under-insuring equipment, which creates gaps after a loss
Your insurer needs accurate replacement cost values for:
CNC mills/lathes
Laser cutters
Welding stations
Press brakes
Tooling and fixtures
Accurate values help speed up your machine shop business insurance quote and reduce unnecessary costs.
4) Holding High‑Value Customer Property Without Proper Documentation
If your shop stores customer-owned materials or parts, insurers need to know:
Maximum value on-hand
Storage methods
Security measures
Environmental controls
Not disclosing this can lead to increased premiums or denied claims later.
5) Working With a Generalist Insurance Agent
Machine shops have specialised exposures:
Heat-producing operations
Precision-critical machining
Expensive equipment
Product liability risk
Customer property in your care
General insurance agents often miss essential coverages or misclassified operations, leading to higher premiums or incorrect limits.
Working with a manufacturing-focused agency ensures proper rating and better pricing.
Get the Right Insurance Cost for Your Machine Shop
Not all insurance carriers understand machining, welding, or fabrication risks, and common mistakes like poor maintenance, weak safety programs, or incorrect valuations can increase your premiums. Wexford Insurance partners with top-rated carriers that specialise in machine shop coverage, helping owners secure the right limits, deductibles, and policy structure at competitive pricing.
👉 Request your Machine Shop business insurance quote from Wexford Insurance today and make sure your tools, equipment, and operations are fully protected.
