Machinery Breakdown Insurance
Machinery Breakdown Insurance, is designed to provide cover against unforeseen and sudden physical loss or damage to the machinery by any cause subject to excepted risks. Machines are an integral part of all manufacturing and industrial units engaged in production of industrial/household goods. These may be large industrial establishments or small and medium enterprises and any unexpected accident/breakdown to their critical machinery brings it to a standstill adversely affecting business and causing a financial strain towards repair or replacement of the affected machinery. The Machinery Breakdown Insurance offers coverage to your organization against these sudden unforeseen accidents/events.
What are the key benefits of Machinery Breakdown Insurance?
The Machinery Breakdown Insurance covers sudden and unforeseen damages arising from mechanical and electrical breakdowns and accidental external means to insured’s plant and machinery. This insurance policy is extremely useful to protect manufacturing industry against heavy expenses necessitated in repairing of the machinery under breakdown, thus ensuring business continuity.
Who can take the Insurance?
- The owner(s) of the machinery
- Lessor /Lessee of the machinery
- Jointly where financial interest can be established for more than one party such as bankers financiers.
What does Machinery Breakdown Insurance cover?
- This policy covers the unforeseen and sudden accidental physical damage to insured machinery, plant and equipment
- while at work / rest
- whilst being dismantled or removed or re-erected, within the same premises
- It also covers loss or damage due to faulty operation, adjustment, casting, vibration, entry of foreign objects, loosening of parts, self-heating, and centrifugal force
The sum insured proposed for insurance shall be equal to the cost of replacement of the insured property with new property of the same kind and same capacity. This will comprise new replacement cost including freight and customs duties, if any, and erection costs.
Basis of Compensation
- Partial Loss (where repairing is feasible) – In cases where damage to an insured item can be repaired, the company will pay expenses towards restoring the damaged machine to its former state of serviceability plus the cost of dismantling and re-erection as well as ordinary freight to and from a repair shop, customs duties and dues.
- Total Loss – In cases where an insured item is destroyed with repairs not being feasible, the company will pay the actual value of the item (by deducting proper depreciation from the replacement value of the item) including costs for ordinary freight, erection, customs duties and charges for dismantling after adjusting the salvage value, if any.
What does Machinery Breakdown Insurance not cover?
The policy excludes loss or damage by following perils/causes-
- Fire and allied perils
- War and Nuclear Perils
- Overload experiments / tests / abnormal operating conditions
- Gradually developing flaws, defects, cracks or partial fractures in any part not necessitating immediate stoppage, although at some future time repair or renewal of the parts affected may be necessary
- Deterioration of or wearing away or wearing out any part of any machine caused by or naturally resulting from normal use or exposure
- Willful act / negligence of the Insured
- Contractual liabilities
- Pre-existing defects
- Consequential losses or any kind
What are the add-on covers under Machinery Breakdown Insurance?
- Escalation of sum insured
- Express freight
- Holiday and overtime rates of wages
- Air freight
- Owners surrounding property
- Third party liability
- Additional customs duty
Note:- These are indicative details of the Policy. Exact terms, conditions, coverages and exclusions are as per the wordings of standard Machinery Breakdown Insurance