WHAT IS MACHINERY BREAKDOWN
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.
WHAT DOES MACHINERY BREAKDOWN COVER?
The insurance 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. Machinery breakdown insurance can be used when:
- 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 policy
The protection is offered for machines both in working and in rest condition. Some other conditions are when dismantled or moved or re-assembled for cleaning, inspection or repair.
There are two scenarios representing replacement cost of the machinery:
- Partial Loss - In case of partial loss to the machinery, the coverage will include full cost of parts, including labour charges, air-freight charges, custom duty and the charges for dismantling and re-erection of the machinery.
- Total Loss - Sum insured in this scenario covers the actual value of items immediately before the occurrence minus the applicable depreciation value.
EXCLUSION
There are various exclusions in the policy. These exclusions are based on the two categories – General Exclusions and Special Exclusions.
- General Exclusions: War, Civil War, Riots and Strikes
- Special Exclusions include the following:
- Fire and allied perils, theft, etc.
- Loss or damage as a result of to overload experiments
- Gradual development of abnormalities, defects, cracks etc.
- 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
