Machinery Breakdown

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Machinery Breakdown Insurance

Machinery breakdown is an ideal cover for critical machines to cover the cost of repair, replacement of damaged parts resulting from unforeseen sudden physical damage. This cover is valid while the machine is at work or at rest or while they are being dismantled for the purpose of cleaning, inspection and overhauling or removing to another position or in the course of their operations or subsequent re-erection provided they are being performed in the same premises. You can also cover the machinery foundations, masonry, brickwork as well as oil in transformers from unforeseen and sudden physical loss or damage, other than specified excluded perils.

Items covered

Starting from a small electrical motor to a turbine in a power generation station can be covered under this policy. It covers wide range of production equipments, electrical equipments, boilers, pressure vessels, heating and cooling equipments. Coverage is available for only those items which are specifically mentioned in the schedule of policy and hence specification of item should be accurately specified on the policy. Under MB policy section of equipments for coverage is allowed.

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Coverage:

The policy is a kind of all-risk cover and it provides protection against any sudden and unforeseen physical loss or damage to the machine covered subject to exclusions. Therefore, policy broadly covers loss due to all kinds of Accidental, electrical and mechanical breakdowns as a result of internal and external causes.

Add ons

Various add ons are available and just to name a few:

  • Air freight

  • Express freight, overtime and holiday wages

  • Insured’s own surrounding property

  • Third party liability.
Exclusions

The policy does not cover loss and/or damage from:

  • Fire and allied perils

  • Theft and burglary.

  • Overloading experiments

  • Willful acts or gross negligence

  • Flaws that gradually develop and deterioration from normal use.

  • Certain components like exchangeable tools (drills, crusher bits), non-metallic parts (foundation blocks, furnace refractory) conveyer belts and feed stock like fuels and catalyst,

Sum Insured:

Value proposed for insurance should be equal to replacement cost including freight, erection cost and custom duty if any.

Premium

Rate of premium depends on type of machinery and discounts are offered based on standby facility, procedure of maintenance, availability of spares and claim experience.

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Claim Procedures:

  • When You suffer loss or damage to any Insured Property, You must give notice to the insurance company immediately along with details of the event and Your loss,

  • Take all reasonable steps to prevent further damage to Insured Property,

  • You must not sell, give away or dispose of any damaged items of any property,

  • You must not carry out repairs unless such repairs are urgent. Damage should be shown to the surveyors

  • preserve and collect evidence, take and preserve photographs,

  • Assist Insurance company and/ or surveyor in collecting evidence and details about Your loss.

  • Prove that the Insured Event has happened, and prove the extent of Your loss.

  • Insurance company appoints independent surveyors who will assess the loss.

  • Under insurance. Underinsurance occurs if the declared sum insured is found to be less than the replacement value on the date of loss, and the claim amount will be proportionately reduced.

  • Mode of settlement. In case damage can be repaired, insurance company will pay cost required to restore the damaged equipments. This will include cost of repair, cost of parts replaced, dismantling and re erection, ordinary freight etc. No depreciation will be applied except for parts with limited life and wear and tear parts. In case of total loss, insurance company will pay actual value of machinery just before the loss (i.e., Replacement value- depreciation)