Machinery Breakdown Insurance

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machinery breakdown insurance

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What is Machinery Breakdown Insurance?

Machinery breakdown insurance is an insurance policy that covers the risk of loss or damage to machinery & equipment in factories & industries.
The policy covers the cost of repairs & replacement of damaged machinery due to mechanical and electrical breakdowns.

Machinery insurance also covers the loss of income due to business interruptions. It ensures the smooth functioning of factories in unforeseen circumstances.
machinery breakdowns

Who Needs Machinery Breakdown Insurance?

Every business that operates with any kind of machinery or equipment needs breakdown insurance. It is important for the following businesses to get this protection.

Companies with large and sophisticated machinery or equipment. E.g., aerospace, energy, transportation

Construction, manufacturing, and mining businesses that need high-risk machinery for operations

High-precision manufacturing companies that make specialized products. E.g., medical & defense equipment

Businesses that are vulnerable to mechanical and electrical breakdowns

Companies located in areas with irregular power supply and power disruptions

Risk Scenarios in Machinery Breakdown Insurance

The common risk scenarios in machinery breakdown are:

Defects in casting and material

Short circuits and other electrical problems

Physical explosion

Faulty design and poor workmanship

Damage due to high-pressure systems

Bursting or tearing apart due to centrifugal force

Damage from the impact of motor vehicles

What are the Add-on Covers Available in Machinery Breakdown Insurance?

Some of the primary add-on covers available along with the machinery insurance are:

Third-party liability cover

This covers the legal claims arising due to bodily injury or death of any third party or damage caused to third-party properties.

Freight cover

This insurance protects you against losses caused to the shipment during its transit from one place to another.

Holidays & overtime charges cover

This covers the additional cost of labor working overtime, during nighttime, or during public holidays to remedy the breakdown.

Damage to the machinery’s foundation

Any damage caused to the foundation of machinery can be covered by purchasing this add-on cover.

What is Covered Under Machinery Breakdown Insurance?

Machinery insurance covers the loss due to electrical and mechanical breakdowns of machinery & equipment. The general inclusions are:

What is not covered under Machinery Breakdown Insurance?

A machinery insurance policy does not cover the following:

Advantages of Machinery Breakdown Insurance

A machinery breakdown insurance policy offers several benefits, such as:

These plans cover the repair & replacement costs of machinery due to electrical & mechanical breakdown.

Covers the investment in advanced & expensive equipment.

Prevents disruption of business operations due to machinery breakdown.

Covers financial losses due to any production/sales loss or additional expenses on repairs.

Covers expenses incurred on freight, duties, and labor charges.

Some policies also provide coverage for third-party liability claims under an add-on cover.

Frequently Asked Questions About Machinery Breakdown Insurance

Yes. The machinery insurance policy will cover the loss in all conditions. It is not necessary that the machinery should be in operating condition. The policy covers the loss even if it is idle or dismantled.

The premium of a machinery breakdown policy depends on these factors:

(i) Type & value of machinery

(ii) Amount of insurance coverage & add-on covers chosen

(iii) Age & condition of the machinery

(iv) Specific business risks

(v) Location where the machinery is used

First, you need to assess the specific risks & requirements of your business. Then compare the different machinery breakdown policies available in the market. For any support, you can contact PIB Secure. We have a team of insurance experts to help you choose the best policy for your needs.


Disclaimer: It is important to carefully review policy documents to understand the terms and conditions that apply to the policy & make sure that it meets your specific needs and requirements.