What is Machinery Breakdown  Insurance?

Machinery Breakdown

Machinery Breakdown Insurance is insurance businesses buy to cover their physical business machinery, equipment and plant if they breakdown or are damaged.

These damages may cost the business a lot of money and time to fix; therefore, machinery breakdown reduces these disadvantages.

Machinery breakdown insurance is mainly used by construction firms, real estate businesses, production and processing enterprises, electrical power, gas and water production and supply businesses.

What is covered?

Machinery Breakdown Insurance includes coverage against internal machinery damage such as:

  • Electrical damage
  • Centrifugal forces
  • Failures in safety devices
  • Overheating
  • Impact/Shock
  • Pressure or lubrication defects

Types of Equipment that may be able to be covered with a Machinery Breakdown policy include :

  • Air conditioning Equipment
  • Boilers
  • Electronic Equipment
  • Mechanical Equipment
  • Factory Plant

What should you know?

The insured payment will depend on the value created by the insured. This value must be equal to the replacement cost of the machinery with a new one of the same class and capacity. Also must include all the taxes that are required to put the new machine in the place of insurance and ready to begin intended operations.

The insurance has some exclusions, which are split into two categories – General Exclusions and Special Exclusions.

  1. General Exclusions: This includes war, civil war, riots and strikes
  2. Special Exclusions include the following:
  • Fire and theft
  • Loss or damage as a result of overload/overworking experiments
  • The gradual development of  defects, cracks etc. in any part being ignored regularly,even though business knows it demands repair
  • Regular wear and tear of the machinery
  • Pre-existing defects in the machinery before the policy has been purchased
  • Loss of use of the machinery due to conditions in the plant or factory


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