The smooth functioning of machinery and equipment is one of the major aspects of a successful business. and The breakdown of machinery and physical damage to equipment can disrupt the business operation completely and the lost productivity can pose a huge loss. However, in a big-scale business like manufacturing, such eventualities are unavoidable despite regular monitoring and preventive measures. This is where machinery breakdown insurance (MBD) or property insurance covering machinery breakdown plays a crucial role by giving financial protection to businesses against losses.
What is machinery breakdown insurance?
Machinery breakdown insurance is a type of insurance that factories and industries can avail of for financial security against losses arising from the accidental breakdown of machinery and equipment. The coverage includes the cost of repair, the cost of replacement of damaged machinery or parts along with the cover for some additional risks related to the eventualities. The MBD insurance offers coverage for the following major risks of breakdown.
- Breakdown of machinery or equipment due to short-circuit, faulty material, or any mechanical or electrical breakdowns.
- Breakdowns due to a lack of operational skills and the improper management of machinery.
- Abnormal operating conditions.
- Collision, falling, impact, etc.
- Disruption of the bursting of hydraulic cylinders, compressors, or turbines due to internal pressure, etc.
Importance of machinery breakdown insurance:
Be it a standalone MBD insurance or property insurance, it is important to have coverage for losses arising from machinery breakdown for the following important reasons:
- The cost of repair and replacement of parts of machinery is a high expenditure for the business. Sudden and unforeseen physical damage to machinery can get the business operation to stand still. Hence, it is important to have the financial cushion to repair and replace parts at the soonest as crucial to keep the business running smoothly.
- The machinery breakdown disrupts the business and suffers revenue losses due to lost productivity. The MBD insurance policy provides coverage for some of these income losses related to the accident.
- Specifically, the food industry that involves perishable goods requires this coverage to overcome the direct losses due to the breakdown.
Though you can get extensive coverage by opting for a standalone MBD insurance policy, machinery breakdown coverage is also available under the commercial property insurance policy that provides broader coverage to businesses.
Machinery breakdown insurance cover under commercial property insurance:
Commercial property insurance is comprehensive insurance coverage for factories and industries to avail financial protection against all the damages or risks caused to their property and its content. Property insurance provides financial security to the property and its content (that includes machinery and equipment) against accidental damages, theft, fire and other natural calamities. The commercial property insurance policy is flexible and can be personalised as per the nature of the business. It is crucial for businesses to buy commercial property insurance to safeguard themselves financially from the various types of risks associated with the property and the machinery in it. You can buy online property insurance without any hassles.
The property insurance plan provides coverage for both structures as well as machinery and equipment in a factory and manufacturing plant. Machinery breakdown coverage under property insurance helps businesses to recoup financial losses related to electrical and mechanical breakdowns. Being uninsured can seriously impact business operations and lead to significant erosion of business capital. It is crucial to incur this essential cost to buy property insurance for the businesses to have all-risk protection for the business premise and its content.
