Manufacturers errors and omissions (E&O) insurance protects manufacturers against claims that their product or service caused a customer financial or economic loss. It responds where a product failed to perform as specified, where a design or specification error caused downstream costs, or where a labelling failure triggered rejection costs. As manufacturers take on more complex roles, supplying integrated solutions, embedding technology into their products, and taking on maintenance and service obligations, the scope of claims they face has grown beyond what a standard product liability policy is designed to address. We structure manufacturers errors and omissions cover around the products your business makes and the contracts it operates under.
What manufacturers errors and omissions insurance covers
This cover responds to third-party claims alleging financial or economic loss arising from a product or service defect, deficiency, inadequacy, or failure to perform. It meets the cost of defending the claim and, where liability is established, the resulting damages or settlement, subject to policy terms and conditions. The cover is designed to address financial loss claims of the kind that fall outside the scope of a standard product liability policy: a product that fails to work as promised, causes a customer's production line to slow, or leads a supplier contract to be terminated, where the loss is economic rather than physical.
Why product liability does not reach far enough
A standard product liability policy responds to bodily injury and tangible property damage. It is not typically designed to respond to the failure of a product to perform as promised, or to the financial loss that follows. As manufacturers modernise, incorporating software, sensors, embedded electronics, and Internet of Things (IoT) connectivity into their products, and as they position themselves as total solution providers offering bundled products and services, the claims they face increasingly involve financial loss rather than physical harm. A temperature monitoring system that records inaccurate readings and causes a cargo rejection, a conveyor system whose defect causes late deliveries and lost income, a set of custom bolts that fail a specification and result in a terminated supply contract: these are the kinds of claims that a product liability policy may not be designed to address. Holding product liability cover without considering errors and omissions cover can leave a significant gap for manufacturers operating in these circumstances.
The types of claims this cover responds to
The scenarios that give rise to manufacturers errors and omissions claims share a common thread: a product or service did not do what it was supposed to do, and a customer suffered financial consequences as a result. They include a product incorporating software or firmware that malfunctions and causes loss of use to end users; a product that fails to meet labelling or regulatory requirements, leading customers to incur removal and lost revenue costs; a product whose defect causes a customer's operations to run below capacity, resulting in lost output; and a manufacturer whose product is rendered non-compliant by a supplier's defective raw material, causing the loss of a downstream supply contract. In each case, the claim is for financial loss rather than physical harm. These situations are becoming more common as the products manufacturers supply grow more technically complex and the obligations they take on become more demanding.
Who should consider it
Manufacturers errors and omissions cover is worth considering for any manufacturer whose products could fail to perform as specified and whose customers may have grounds to claim for the resulting financial loss. It is particularly relevant for manufacturers who supply products incorporating technology, software, electronics, or sensors; those who offer bundled product and service arrangements or take on maintenance and support obligations; those who supply to industries where production downtime or product rejection costs are significant; and those whose contracts already require them to hold errors and omissions cover as a condition of doing business. The more technically complex the product and the more demanding the contractual relationship, the more this cover deserves consideration alongside a standard product liability policy.
Where the exposure sits
Two decisions shape whether the cover responds. The first is whether the policy scope matches the roles the business actually performs. A manufacturer who also services and supports its products takes on obligations that a pure supply contract does not, and the cover should reflect the full scope of what has been agreed. The second is the contractual position: an increasing number of principals and customers require errors and omissions cover as a condition of the supply contract, and reviewing the policy limit and scope against those requirements before the contract is signed is where the protection is decided.
How we structure it
We take time to understand the products your business makes, the contracts it operates under, the service and support obligations it has taken on, and the customers and industries it supplies, and we place cover with our appointed insurers around that. We review the cover as your products, services, and contracts change, and we remain your point of contact if a claim is made. The aim is cover that responds to the way your business actually operates, not only to its name on a policy schedule.