Machinery Loss of Profit Insurance

• Safeguard profit during machinery breakdown
• Maintain business stability
• Helps keep reputation safe

What is machinery loss of profit insurance?

Machinery loss of profit insurance provides financial protection when your machine stops working due to a breakdown. When machines fail, you may not be able to produce goods or provide services. This may result in a loss of income.

This type of engineering insurance covers the loss of profit that occurs during the time your machines are under repair. It may also cover the costs associated with continuing operations as per the policy’s terms and conditions. This policy is also known as machinery loss of profit insurance and machinery breakdown loss of profits insurance policy.

Key features of machinery loss of profit insurance

The key features of a machinery loss of profit insurance policy are as follows:

1. Covers loss of income

The machinery loss of profit insurance helps when your machines stop working due to damage. It pays for the loss of income during the time the machines are being repaired.

2. Helps maintain business stability

When machines fail, it can impact a company’s profits and daily operations. The machinery loss of profit insurance helps reduce financial stress. It thus ensures business stability.

Types of machinery loss of profit insurance policy

Machinery breakdown loss of profits insurance policy is available in several types. These include:

1. Contractor’s all risk policy

A contractor’s all risk (CAR) Policy offers broad protection against financial losses that may arise from damage to property or materials at a construction site. When linked with a machinery loss of profit cover, it protects against loss of income resulting from delays in project completion due to machinery breakdowns.

2. Erection all risk insurance

An erection all risk insurance caters to the needs for projects involving installation, testing and commissioning of machinery or plant equipment. When extended to include a machinery loss of profit, it covers the loss of anticipated profit due to the delay in start-up caused by machinery damage.

Benefits of machinery loss of profits insurance

Here are some major benefits of machinery loss of profits insurance policy:

1. Helps support quick recovery

With financial assistance from your policy, you can repair or replace damaged machinery more quickly. This reduces downtime and helps your business return to normal operations sooner.

2. Keeps reputation safe

If your business stops for too long, you might lose customers. By helping you recover quickly, machinery breakdown loss of profits insurance policy ensures your customers stay with you and keeps your reputation intact.

What machinery loss of profit insurance covers?

Machinery loss of profit insurance covers losses arising from:

• Fire, lightning and explosion
• Floods, catastrophic storms, and other associated perils
• Earth's movements, including landslides, rockslides and subsidence
• Defects in construction
• Human errors or negligence
• Mechanical breakdown
• Unforeseen accidents

Read the policy wordings carefully to know the coverage in detail.

Exclusions in machinery loss of profit insurance

The exclusions in machinery loss of profit insurance are:

• Willful neglect or gross negligence of the insured or his responsible representatives
• Loss or damage to machinery or other items that are not listed in the list of machinery insured
• Any restrictions on reconstruction or operation imposed by any public authority
• Loss or damage arising out of war, invasion, etc

Read the policy wording carefully to know the exclusions in detail.

How does machinery loss of profit insurance function?

Machinery loss of profit insurance helps a business when its machines suddenly stop working due to a breakdown. When this happens, production or services may stop, and you can lose income. The insurance covers the lost profit for the time the machine is being repaired or replaced.

Claim process of machinery loss of profit insurance

To make a claim for machinery loss of profit insurance policy:

1. Inform us

Immediately notify us about your loss. You can connect with us through our toll-free number 1800 2666 or email us at customersupport@icicilombard.com. You can also inform us through our website. You will get a claim reference number upon registering your claim.

2. Surveyor appointment

Your claims manager will contact you and appoint a licensed surveyor basis claim eligibility within 24 hours of reporting the claim.

3. Submit the documents

Fill up the claims form and submit the required documents. The repair/replacement details submitted in support of the claim will be assessed and approved by the CSM/surveyor.

4. Claim settlement

Based on the surveyor’s report, we will assess your claim and settle it as per the policy’s terms and conditions.

Documents required for claiming machinery loss of profit insurance

The documents required for filing claims from your policy are:

• Claim bill / claim form duly filled up
• Photographs / video of damaged property/item under claim
• Document/s in support of admissibility of the claim, for instance, Service Engineer’s Report, Fire Brigade Report, etc.
• FIR / Final Police investigation report, wherever applicable
• Offer for retention of salvage, if any
• KYC / NEFT Details as per AML guidelines
• Invoice copy / Goods Receipt Note / Monetary Claim on carrier / Damage Certificate
• Any other document which may be specified by the surveyor, post completion of the initial survey

Factors affecting machinery loss of profit insurance premiums

Premium for this policy depends on several factors, including:

1. Type and value of machinery

The kind of machines you use and their total cost affect the premium. Expensive machines may require a higher premium and vice versa.

2. Nature of business

If your business depends heavily on continuous machine work, the risk of loss is higher. This can affect the premium amount.

3. Maintenance and safety measures

Well-maintained machines and good safety systems lower the risk of breakdown. This can affect the premium you need to pay for your policy.

Tips to choose the right machinery loss of profit insurance

Here are some essential things you need to keep in mind while opting for machinery loss of profit insurance:

1. Assess your business needs

Think about how much profit your business might lose if a machine fails. Choose coverage that matches your real risk. This helps you avoid paying extra or being underinsured.

2. Understand policy coverage

Before purchasing, review the policy to understand what it includes. Knowing the policy coverage can help you make an informed choice.

3. Compare different plans

Do not pick the first plan you see. Compare policies from different insurers for coverage, premiums, and claim service. Choose the one that gives good value and support.

4. Check insurer’s reputation

Buy from a trusted insurance company. Check the insurer’s claim settlement record and customer reviews. Purchasing from a reliable insurer ensures quick and fair claim handling.

Differences between machinery loss of profit insurance and equipment all risk policy

The table captures the differences between machinery loss of profit insurance and equipment all risk policy on various parameters:

FAQs

1. Who needs machinery loss of profit insurance?

Any business that relies on machinery for production or services can benefit. It is especially useful for manufacturing units, factories and plants where downtime can cause significant financial loss.

2. How can I reduce the premium for machinery breakdown loss of profits insurance policy?

Premiums may be lower if you adopt good maintenance practices, backup machinery or contingency plans to reduce downtime. Accurate reporting of revenue and production data also helps lower premiums.

3. How often should I renew this insurance policy?

It’s recommended to review annually or whenever there are significant changes in machinery, production capacity or business revenue to ensure adequate coverage.

4. Is it mandatory to buy machinery loss of profit insurance?

No, it is not legally required. However, it’s highly recommended for businesses that depend on machinery for revenue. Without it, production stoppages can cause serious financial strain.

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.