Machine Shops & Precision Machining — Minnesota

One spindle down
is the whole schedule gone.

A precision shop runs on a handful of machines, and usually on one that nothing else can replace. Your policy needs to reflect the lead time on that machine, the customer material sitting on your floor, and where your parts end up after they ship.

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CNC and equipment values written current
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Customer-owned material and tooling
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Class code review at every renewal

The quote came off an application. The exposure is on the floor.

Most machine shop programs we review were rated from a form: square footage, payroll, revenue. Nothing on that form captures the eighteen-month lead time on your five-axis, or the customer castings sitting in receiving that you do not own.

  • Equipment values carried at purchase price, not replacement cost
  • Business interruption period shorter than machine lead times
  • Customer-owned material with no bailee coverage
  • Class codes never reviewed after adding secondary operations
  • Work in process valued as raw material rather than at cost plus labor

A precision shop has high asset concentration, long replacement lead times, and a product that ends up inside someone else's assembly. That combination is unusual, and a generalist program rarely accounts for it.

What we look at first

✓ Replacement cost on every machine over $50K
✓ Lead time on the machine you cannot work without
✓ Value of customer material in your custody
✓ Where your parts end up downstream
✓ Class code split between machining and assembly

Where the Exposure Is

Five things that decide a machine shop claim

None of these show up on a standard application, and all of them show up in a loss.

Equipment replacement cost and lead time

A machining center bought for $280,000 in 2018 does not replace for $280,000 today, and depending on the builder it may not replace for eighteen months either. Both numbers matter: one sets the property limit, the other sets the business interruption period of restoration.

Customer-owned material and tooling

Castings, forgings, bar stock, and customer fixtures sitting in your building are property in your care, custody, and control. Your general liability specifically excludes damage to it, and your property policy covers property you own. Bailee coverage is what fills that gap, and most shops do not carry it.

Work in process valuation

A finished part carries raw material cost plus hours of spindle time, tooling, and setup. If your property policy values stock at raw material cost, a fire in the finished goods rack pays a fraction of what the inventory was actually worth.

Product liability downstream

A machined component is rarely the end product. It goes into an assembly, and that assembly goes somewhere. Aerospace, medical, and automotive customers all carry recall and liability exposure that can flow back to a component supplier. What your part goes into determines the limit far more than your revenue does.

Workers comp class codes

Machining, assembly, welding, and delivery can fall under different codes. Shops that added secondary operations over the years frequently never updated the classification, and the correction usually surfaces at audit rather than at renewal.

Coverage

What a machine shop program includes

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Equipment & Machinery

CNC machining centers, lathes, grinders, EDM, inspection equipment, and tooling, scheduled at current replacement cost rather than book value.

Multi-axis equipment from overseas builders carries the longest lead times. That number drives both your equipment limit and your business interruption period.
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Business Interruption

Lost income and continuing expenses, with a period of restoration built around how long it actually takes to replace the machine that stops the shop, not how long it takes to repair the building.

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Equipment Breakdown

Spindle failure, servo and drive faults, electrical arcing, control system failure, and the production loss that follows. Your commercial property policy excludes all of it.

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Bailee & Customer Property

Customer-owned castings, bar stock, fixtures, and tooling in your custody. Excluded by general liability and not covered as your own property.

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Product Liability

Products-completed operations for parts after they ship, with attention to what your component ends up inside of and what your customer contracts require.

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Workers Compensation

Class code review and payroll division across machining, assembly, and secondary operations, plus experience mod analysis.

Minnesota Context

Why Minnesota shops carry different risk

The state's precision machining base grew up feeding medical device, aerospace, and agricultural equipment manufacturers. That customer mix changes the exposure profile.

Medical device supply chains

Shops feeding the Twin Cities medical device cluster inherit their customers' regulatory and recall exposure. Contract requirements are typically stricter, and third-party recall coverage matters more than it would for general industrial work.

Certification-driven contracts

ISO 9001, AS9100, and ISO 13485 customers write insurance requirements into purchase agreements. We read those requirements against the policy rather than issuing a certificate and hoping.

Concentrated supplier relationships

Many shops run two or three customers at most of capacity. If one of them has a covered loss and stops taking parts, contingent business interruption is the coverage that responds.

Winter and the building envelope

Coolant systems, compressed air lines, and unheated storage areas all become freeze exposures once a Minnesota December arrives. Loss control here is inexpensive and underrated.

Shops in Chaska, Chanhassen, Shakopee, and the southwest metro industrial parks sit inside a dense supplier network. That proximity is good for business and worth understanding when we look at contingent business interruption and supplier dependency.

On Your Floor

What we look for when we walk a machine shop

A walkthrough takes about 45 minutes and produces a written exposure summary you keep, whether or not you ever ask us for a quote.

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The machine that stops everything

Every shop has one. We identify it, confirm the replacement lead time with you, and size the business interruption period around that rather than around the construction schedule.

02

Receiving and the customer material in it

What is on your floor that you do not own, at what value, and for how long. That number sets the bailee limit.

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Coolant, oil mist, and chip handling

Fire load, mist collection, and housekeeping drive both the property rate and how underwriters view the account.

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Electrical service and panel age

Panel condition and capacity drive the equipment breakdown exposure and frequently come up in underwriting on older buildings.

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The finished goods rack

What is in it, what it is worth at cost plus labor, and whether the property policy values it that way.

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Where the parts go

What your components end up inside of. This determines product liability limits more than anything on the application does.

Request a plant walkthrough
Frequently Asked Questions

What machine shop owners ask us

Not automatically. Property you do not own but hold in your care, custody, or control is excluded by general liability and is not your own property for purposes of a commercial property policy. Bailee coverage addresses it. For shops running customer castings, forgings, or supplied bar stock, it is a meaningful exposure and an inexpensive one to cover.
At cost including the labor and machine time already invested, not at raw material cost. A part three operations into a five-operation routing is worth considerably more than the bar it started as. Confirm how your property policy values stock, because the default is frequently not what you would expect.
Machining operations generally fall under a machine shop classification, but shops that also weld, assemble, install, or deliver may have payroll that belongs in separate codes. Division of payroll has to be supported by records to hold at audit. We review classifications as part of every machine shop account rather than accepting what was assigned years ago.
Yes, and in some respects the exposure is larger. A component supplier can be pulled into a claim or a recall driven by the finished product it went into. The relevant question is not what you make but what your part ends up inside of, and who has the contractual power to compel a recall.
It matters more than almost anything else on the account. The business interruption period of restoration should reflect how long it takes to get back into production, and if a critical machine is an eighteen-month order, a twelve-month period leaves an uninsured gap regardless of how fast the building gets repaired.
Specified general liability and products limits, often with a dedicated products aggregate, additional insured status, waiver of subrogation, primary and non-contributory wording, and sometimes product recall coverage. Requirements vary by customer and are written into the purchase agreement, which is why we read the agreement rather than just the certificate request.
Related Coverage & Industries

How this coverage connects to the rest of your program:

Manufacturing Overview Metal Fabrication & Welding Medical Device Manufacturing Food & Beverage Manufacturing Plastics & Injection Molding Printing & Packaging Business Interruption Equipment Breakdown Product Liability & Recall Inland Marine
Get Your Quote

Insurance built around what is actually on your floor.

Send us your current declarations pages and equipment schedule. We will tell you what is valued wrong and what is missing, whether or not you move the business.

  • Equipment scheduled at current replacement cost
  • Business interruption sized to machine lead times
  • Bailee coverage for customer material
  • Work in process valued at cost plus labor
  • Class codes and experience mod reviewed
  • Plant walkthrough included

Start your free quote

Fill out the form and an agent will be in touch within one business day.

We respond within one business day. No spam, ever.

The application does not ask about your lead times.

Equipment values, restoration periods, customer material, and where your parts end up. These are the four numbers that decide a machine shop claim, and none of them appear on a standard submission.

Dane Roti — Options Insurance
Featured Agent

Dane Roti, CPIA

Commercial Lines Agent

The first question I ask in a machine shop is which machine, if it went down tomorrow, would stop you shipping. Then I ask what the lead time is on replacing it. Those two answers set the equipment limit and the business interruption period at once, and I have never gotten them off an application. Send me your dec pages and let me come see the shop. Worst case you get a written summary of what I found and you keep your current agent.

(952) 960-8450 Email Dane
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Last updated: September 14, 2026