A contractors plant and machinery insurance policy indemnifies the insured contractor, owner of machinery and plants, and investors of a civil engineering project for any damage or external loss to the insured machinery used in such construction projects. Construction machinery such as bulldozers, cranes, compressors, forklifts etc.are insurable.
A contractor can opt for partial or complete cover depending on their requirements. At all times, the insured must oversee that the machinery or plant insured is maintained adequately and not overloaded unreasonably. The tenure of a contractor’s plant and insurance policy is typically 12 months and begins when the insured machinery arrives at the construction site or the civil engineering project begins, whichever is earlier.
The general inclusions and exclusions of a typical contractor’s plant and machinery insurance policy are listed below to illustrate what this type of insurance covers.
General inclusions covered under contractor’s plant and machinery insurance policy are:
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Coverage for insured plant and machinery against any type of physical damage for any reason whatsoever, unless the reason is categorically excluded from the policy coverage
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A contractors plant and machinery insurance policy is always calculated based on the current replacement value of the insured’s machinery
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Most contractors plant and machinery insurance policies allow complete and partial cover, alongside total damage to equipment or machinery cover
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The insurance policy can be purchased after the machinery or plant has been successfully commissioned
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The insurance policy also provides cover for the insured machinery whether they are at work or rest
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The coverage extends to when the machinery is dismantled for cleaning or overhauling purposes
General add-on covers under a contractors plant and machinery insurance policy include:
There are certain specific scenarios that are not generally covered under a contractors plant and machinery insurance policy. These exclusions include:
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Damage due to electrical or mechanical failures
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Pre-existing damages or faults of the machinery
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Damage to replaceable parts of the machinery like drills, knives, saw blades, etc.
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Damage caused due to the explosion of pressure vessels or boilers
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Damage to machinery due to earthquakes
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Damage to machinery due to terrorism activities
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Damage to vehicles manufactured and licensed specifically for general road use, unless they are exclusively and widely used on construction sites
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Loss or damage during transit
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Damage caused due to activities of a nuclear power plant
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Damage caused due to the wilful negligence of the insured
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Loss or damage to machinery due to partial or total immersion in tidal waters
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Loss or damage to machinery used underground
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Loss or damage to inventory
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Loss or damage due to the negligence of the manufacturer or supplier, who is bound by a contract or legal provisions to perform the action diligently
To conclude
A contractors plant and machinery insurance policy indemnifies the insured, i.e., the contractor, owner of the machinery & plant, or the investors, for any damage caused to the insured’s machinery or plant. These include damages caused to the machinery while at or work and rest or while it is being dismantled for cleaning or overhauling purposes.
But in case the machinery is damaged due to earthquakes, terrorism activities, willful negligence of the insured, and so on, the damage is not covered under a contractors plant and machinery insurance policy.