Machinery breakdown insurance provides a security cover to the machines used by factories and industries. This insurance covers accidental breakdown and physical damage of the machinery, the cost of repairs or replacement of the damaged machine parts. Some insurance companies also offer riders to cover additional risks to the machinery or other aspects like cost, air-freight, machine foundation and customs duty, etc.What Machinery Breakdown Insurance Covers?
The insurance policy covers the loss due to sudden and accidental machinery damage emerging from both internal and external causes. Some of the causes can be short circuit, structural defects, loosening of parts, excessive speed and lack of lubrication. Let us look at the situations when machinery breakdown insurance can be used:
• Machinery breakdown due to short-circuits, excess voltage, and electrical faulty design, faulty material, and faulty casting that manifest after the warranty period due to electrical and mechanical breakdowns
• Abnormal operating conditions of the machine
• Falling, impact and collision resulting in breakdowns
• Carelessness and lack of operating skills in the operations and management of Machinery
• Turbines bursting, compressors, hydraulic cylinders or other apparatus which is subjected to centrifugal force or internal pressure
• Damage or loss due to initiation of fire from within the machinery is also included which is generally excluded from the standard fire protection policyExclusions
Machinery breakdown insurance can be availed by machine owners of large-scale organisations or MSMEs of India. However, there are various exclusions in the policy. Let’s review some exclusions based on the two categories – General Exclusions and Special Exclusions.
• Fire and allied perils, theft, etc.
• Loss or damage as a result of to overload experiments
• Gradual development of abnormalities, defects, cracks etc. in any part being ignored regularly in spite of knowing it demands repair
• Regular wear and tear of the machinery
• Pre-existing faults or defects in the machinery before the policy commencement
• Loss of use of the machinery due to conditions in the plant or factory or any other kind of consequential loss incurred by the insured
• Loss or damage because of explosions in chemical recovery boilers
• Damage to belts, chains, ropes, rubber tyres or any other exchangeable tools unless any loss or damage to the machinery is indemnifiable