- Protection against machinery breakdowns
- Coverage against a range of risks
- Easy claim settlement
What is machinery breakdown insurance?
Machinery breakdown insurance is a type of engineering insurance policy that provides financial protection in the event of a sudden machine breakdown. It reimburses you for the expenses incurred when replacing or repairing a damaged machine, thereby ensuring minimal disruption to your work. If you are in a business deploying a large number of machines, it’s prudent to buy a machinery insurance policy.
Key features of machinery breakdown insurance
Given below are the key features of a machinery breakdown policy:
1. Financial assistance
Repairing a damaged machine can be expensive. Thankfully, a machinery breakdown insurance policy provides you with financial assistance in case your machinery breaks down and needs repair.
2. Covers a range of risks
A machinery breakdown policy covers a range of perils that can damage your machine. These include natural and man-made disasters, including fire, explosion, theft, mechanical breakdown etc. Thus, it provides robust coverage against various risks.
Types of machinery breakdown insurance policies
A machinery breakdown policy is available in various types. These include:
1. Electronic equipment policy
This machinery breakdown insurance offers financial protection in the event that your electronic gadgets or systems are damaged. If you rely heavily on electronic equipment and gadgets for your work, you can opt for this policy.
3. Boiler pressure plant insurance
This is another type of machinery breakdown policy that’s particularly useful for industries operating boilers and pressure vessels. This insurance policy provides coverage in the event of any damage that disrupts operations.
If you are a contractor and possess high-value equipment and machinery, you can opt for this machinery breakdown insurance policy. It safeguards against unexpected expenses for damages suffered by machinery during construction and related activities.
Benefits of machinery breakdown insurance
Here are the potential benefits of having an MBD insurance policy:
1. Reduces financial loss
If your machines fail, your work may come to a halt. This may result in significant financial losses. With insurance, you get money to repair or replace the damaged machine quickly. This reduces the loss and helps your business continue to run smoothly.
2. Helps maintain business reputation
When machines stop working, deliveries and services may get delayed. With a machinery breakdown policy, you can resolve the issue more quickly. It helps you deliver on time. This helps protect your business image and reputation.
3. Supports long-term growth
When you understand the coverage of risks, you can invest in new machines with greater confidence. This encourages business expansion and growth. In this way, a machinery breakdown policy acts like a safety net that supports future plans.
What machinery breakdown insurance covers?
A machinery insurance policy offers coverage in case your machinery suffers any damage due to:
- Fire, lightning and explosion
- Floods, storms and other associated perils
- Burglary or theft
- Human errors or negligence
- Mechanical breakdown
- Voltage fluctuation and short circuits
- Earth’s movements including landslides, rockslides, etc
Go through the policy wording in detail to know the coverage offered in detail.
Exclusions in machinery breakdown insurance
There are certain instances when a machinery breakdown policy doesn’t offer coverage. These include damages suffered due to:
- War or invasion
- Wilful misconduct, such as negligence
- Poor workmanship and subpar material quality
- Defective design
- Acts of terrorism
- Deterioration caused by oxidation and wear and tear
Read the policy wording carefully to know the exclusions in detail.
How machinery breakdown insurance functions?
The working of the machinery insurance policy is simple and straightforward. When the insured machine breaks down or suffers any damage, you raise a claim. Provide the required documents supporting your claim to the appointed surveyor and the insurance company settles the claim post surveyor’s report as per the policy’s terms and conditions.
Claim process of machinery breakdown insurance
Follow this procedure to raise a claim from machinery breakdown insurance:
1. Claim intimation
Notify us regarding your claim on our toll-free number 1800 2666. You can also email us regarding your claim at customersupport@icicilombard.com. Fill out the claims form along with claim related documents.
2. Surveyor appointment
Your claims manager will appoint a licensed surveyor based on your claims eligibility within 24 hours of reporting the claim. The appointed surveyor will assess and approve the repair or replacement details in support of the claim.
3. Claim settlement
We will settle your claim based on the surveyor’s report and as per the policy’s terms and conditions. We’ll transfer the claim amount directly to your bank account.
Documents required for claiming machinery breakdown insurance
The essential documents needed while filing a claim for machinery breakdown insurance are follows:
- Duly filed up claims form
- Photographs / Video of the damaged item under claim
- FIR investigation report, wherever applicable
- Repair, replacement quotation and invoice payment proof for each and every item claimed
- Offer for retention of salvage, if any
- KYC / NEFT Details as per AML guidelines
- Any other document which may be specified by the surveyor, post completion of the initial survey
Factors affecting machinery breakdown insurance premiums
Several factors contribute to determining the premium you need to pay for a machinery breakdown insurance policy. These include:
1. Age and machinery type
The premium depends on the type and age of the machinery. Newer machines are less likely to break down than older machines. Insurers factor this in while determining the premiums.
2. Usage and workload
The way a machine is used plays a big role in deciding the premium. If a machine runs for long hours or handles heavy workloads, the risk of damage goes up and vice versa.
3. Maintenance and service records
Regular servicing and proper upkeep reduce the chances of sudden breakdowns. Insurers often check maintenance history before fixing the premium.
4. Industry and operating environment
The industry in which the machinery operates also matters. Machines used in harsh conditions like mining or construction carry higher risks of breakdowns than those in controlled environments.
5. Machinery replacement value
The cost of replacing the machine is another factor that affects the premium. High-value machines need higher coverage compared to lower-value ones.
Tips to choose the right machinery insurance policy
Here are some important things you need to keep in mind while choosing the right machinery breakdown policy:
1. Understand your needs
Before purchasing machinery insurance, determine the machines you have and their importance to your work. This will help you choose the right coverage and avoid paying for things you don’t need.
2. Check the coverage
Look at what the policy covers. The right machinery insurance should protect you against sudden breakdowns, repair costs and replacement if needed. Always read the terms carefully to understand what is included and what is not.
3. Compare different plans
Do not go for the first policy you see. Compare a few options from different insurers. Check the premium, benefit and claim process. This can help you get better value for your money.
4. Look at claim support
The right policy is not only about coverage but also about how quickly and easily claims are settled. Opt for a policy from an insurance company with a robust and reliable claim process.
Difference between machinery breakdown insurance and equipment all risk policy
While machinery breakdown insurance and equipment all risk policy may look the same at a first glance, they differ on several aspects (see table).
|
Aspect
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Machinery breakdown
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Equipment All Risk Policy
|
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Scope of cover
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Covers sudden and unforeseen mechanical or electrical breakdown of machinery while in use
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Provides wider cover including accidental damage, theft, fire, burglary, natural calamities, and external causes, in addition to breakdown
|
|
Premium amount
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Relatively lower since coverage is limited to breakdown risks only
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Higher, as it provides wider protection against multiple perils
|
|
Types of machines covered
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Typically fixed, installed machinery and plant equipment
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Both movable and stationary equipment
|
FAQs
1. How much premium do I need to pay for machinery breakdown insurance?
The premium depends on a host of factors, including age and type of machinery, usage, and the industry in which you operate.
2. Is it mandatory to buy a machinery breakdown policy?
No, machinery breakdown insurance is typically not mandatory. However, it’s highly advisable for businesses heavily dependent on machinery to reduce financial risk.
3. What are the common exclusions in a machinery insurance policy?
Common exclusions include damage resulting from wear and tear, corrosion, erosion, gradual deterioration, neglect, poor maintenance, and pre-existing defects. Read the policy wording to know the exclusions in detail.
4. What types of machinery are covered by MBD insurance policy?
This policy can cover a range of equipment. These can include boilers, pressure vessels, motors, transformers, compressors and electrical systems, among others. Review the policy wordings to gain a detailed understanding.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.