Liability Insurance

Machinery breakdown insurance policy covers loss due to sudden and accidental machinery damage. Damage could be a result of internal and external causes. The cover is offered for machinery in both working and in rest condition. We have highlighted a few situations below that lead to machinery damage –

  • Short-circuits, excess voltage, faulty electrical designs,
  • Operating the machine in excess of prescribed norms,
  • Collision or impact leading to machine damage,
  • Improper maintenance,
  • Lack of operating skills,
  • Damage due to centrifugal force or internal pressure,
  • Initiation of fire from within the machinery due to excessive heating, etc.

Inline is the process that policyholder needs to follow to file for machinery breakdown claim –

  • Immediately notify the insurance company in writing about the occurrence
  • Provide as much information as possible about the nature and extent of loss
  • Take all possible steps to minimize the extent of loss
  • Facilitate inspection by the surveyor of the insurance company
  • Preserve all damaged machinery parts
  • Provide all necessary documents to the insurance company in support of the claim including a repair estimate from the service engineer

The machinery breakdown policy will cover the cost of repairs or replacement of the damaged machine parts. Let us explain how the insurer settles the claim in the two given scenarios –

  1. Partial Loss: In the event of partial loss machine can be repaired and brought back to working condition. Hence the insurance company pays for the cost of spares, labour charges, air-freight charges, custom duties and charges for dismantling and re-erection of the machinery.
  2. Total Loss: In the event of total loss machine cannot be repaired and has to be replaced by a new one. In this scenario, the insurance company settles the claim as per the insured value of the machineless of usage depreciation and income from salvaging the damaged machine.

Kindly note that the machinery breakdown policy is subject to an excess as stated in the policy schedule which is to be borne by the insured.

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