Machinery & Equipment Breakdown
What is Machinery & Equipment Breakdown insurance?
This is a policy which covers financial loss incurred by the insured due to loss or damage to machinery as a result of sudden accidental electrical and mechanical breakdown. It reimburses the insured for the cost of repairs or replacement of machinery of like nature.
What does a machine breakdown insurance policy cover?
The MBD policy covers:
- unforeseen and sudden physical damage to the insured machinery by
- any cause not specifically excluded
- whilst in the specified premises,
- necessitating its immediate repair or replacement.
The MBD insurance also covers loss or damage due to fire, in insured electrical machineries, originating from within such insured machinery and resultant fire damage to such machinery only,. The Standard Fire & Special Perils Policy specifically excludes this risk. For loss or damage occasioned by spread of fire, so originated within electrical machinery, to surrounding property, cover is available by Standard Fire and Special Perils Policy.
Thereby, the following major electrical and mechanical breakdowns risks, faced by plant and machinery, are covered by this policy:
- Short circuiting, excess voltage & electrical arcing
- Faulty design, faulty material and faulty casting (manifesting after warranty period)
- Abnormal operating conditions
- Carelessness and lack of skill in the operation and maintenance of machinery
- Entry of foreign bodies
- Falling, Impact, Collision etc
- Bursting or disruption of turbines, compressors, cylinders of steam engines, hydraulic cylinders or fly wheels or other apparatus subject to centrifugal force, internal pressure.
What is not covered by a machinery breakdown policy?
Significant General Exclusions:
- War & Civil war or Riot, strike kindred risks
- Nuclear risk
Significant Special Exclusions:
- The excess as stated in the schedule.
- Fire & allied perils, theft.
- Loss, damage resulting from overload experiments or tests requiring the imposition of abnormal conditions.
- Gradually developing flaws, defects, cracks or partial fractures in any part not necessitating immediate stoppage and repair although at some future time repair or renewal of the parts affected may be necessary.
- Wear and tear losses arising out of ordinary usage or working. (The intention of this exclusion is simply to exclude the actual wastage, wear or deterioration but not sudden and unforeseen damage to other parts resulting there from.)
- Faults or defects which were in existence when the insurance was arranged and known to the insured.
- Damage due to faults or defects for which the manufacturer or the supplier is responsible either by law or under contract.
- Loss of use of the insured’s plant or property of any other consequential loss incurred by the insured.
- Loss, damage/and/or liability due to explosions in Chemical Recovery Boilers.
- Loss of or damage to belts, ropes, chains, rubber tyres, knives or exchangeable tools and such other parts; unless loss or damage to the equipments/machinery is indemnifiable in terms of the policy.
- Loss or damage for which the manufacturer or supplier or repairer of the property is responsible either by law or contract.
Scope of Machinery & Equipment Breakdown insurance
- Faulty material/workmanship of the machine
- Action of centrifugal forces contributing to disruption of the rotating parts
- Failure of lubrication due to malfunctioning of lubricating oil pumps or its breakdown.
- Malfunctioning or failure of safety devices.
- Electrical short-circuiting including electrical fire originating from failure of insulation and or over voltage or under voltage conditions.
- Abrupt and sudden stoppage of other connected machinery.
- Entry of foreign bodies into running machine.
- Inexperienced operations causing damage due to error of judgment or error in operation.
Add on covers
- Damage to foundation of machinery
- Damage to oil in electrical apparatus
- Express freight (excluding air freight), holiday rates, overtime charges
- Air freight
- Additional custom duty i.e the additional percentage of duty payable at the time of reimport for replacement over and above the percentage of duty included in the original sum insured.
- Own surrounding property i.e. damage to the insured’s own existing property or property in his custody or control (not included in the sum insured of the policy) due to any damage to the insured machines which is covered under the policy.
- Third party liability i.e. liability falling on the insured for bodily injury to any other party other than those covered by the policy or for property damage belonging to such other party.
