Free Consultation

Machinery Breakdown Insurance

Safeguard your equipment from unexpected damages that disrupt your business with machinery breakdown insurance, whether active or idle.

Coverage worth

₹50 Lakhs

at just

₹7,000^*

annually

Get MBD Insurance in Minutes

Insurance Expert

Free Consultation

50+ years of collective insurance experience

₹5,000 Cr+ of cumulative risks insured

What Is

Machinery Breakdown Insurance Policy?

Machinery breakdown insurance protects industrial and factory machines. This insurance covers the costs associated with unintentional mechanical failures and physical damages. It also addresses the expenses for repairing or replacing damaged machine components. Commonly insured machinery under this policy includes generators, compressors, industrial ovens, printing presses, boilers, and various other mechanical and electrical equipment utilized in industries. Some insurers offer additional coverage options or riders to further protect against potential risks or unforeseen expenses such as price fluctuations, air freight, machinery foundation, and customs duties.

When determining the replacement cost of damaged machinery, a machinery breakdown insurance policy typically examines two situations:

1. Partial Loss: Should there be a partial loss to the machinery, the policy covers the entire cost of the replacement parts. This includes labor charges, air freight fees, customs duties, and expenses related to dismantling and re-erecting the machinery.

2. Total Loss: In this scenario, the insured amount is based on the machinery's actual value prior to the damaging event, subtracting any relevant depreciation.

For an added premium, policyholders can avail of expanded coverage options. These can encompass express freight, customs duty, air freight, and third-party liability, among other provisions.

Features of Machinery Breakdown Insurance Policy

Offers financial protection by covering the expenses of repairing or replacing complex machinery.
Insures machinery, whether it's operational, idle, or being dismantled for tasks like maintenance, inspection, relocation, or reassembly—provided these activities happen on the same premises.
Delivers tailored coverage that matches the specific machinery used by a business and its risk tolerance.
Assists businesses in strategically planning and allocating resources with the confidence of having a backup in case of unexpected machinery failures.

Who Needs

Machinery Breakdown Insurance Policy?

Machinery breakdown insurance is apt for a vast array of businesses spanning different sectors. Below are some business types that stand to gain from such a policy:

Heavy engineering firms
Industrial plants and facilities
Construction companies
Transportation and logistics companies
Power plants and water treatment centers
Enterprises in the textile sector

Why Get

Machinery Breakdown Insurance Policy?

In commercial and industrial realms, machinery is pivotal for operations. A breakdown or malfunction can instigate considerable financial setbacks due to repair expenses, production halts, and even potential operational interruptions. Securing machinery breakdown insurance becomes vital for enterprises that are significantly dependent on machinery and equipment.

When machinery encounters issues, it often triggers operational hindrances and downtime, leading to postponed production, unmet timelines, and compromised efficiency.

In such circumstances, machinery breakdown insurance steps in, offering coverage for indispensable repair or replacement costs. This helps alleviate the monetary strain on the organization. In essence, with machinery breakdown insurance, firms can delegate a segment of the aforementioned risks to the insurance company. This empowers businesses to hone in on their principal activities, freeing them from perpetual apprehension over machinery and equipment mishaps.

Coverages & Exclusions in

Machinery Breakdown Insurance Policy

CoveragesExclusions

The coverages provided by this policy may be categorized as mentioned below:

Mechanical Breakdown of Machinery and Equipment

Mechanical breakdowns often involve the failure of essential components within machinery or equipment. This includes problems like broken gears, worn-out bearings, and misaligned parts. The policy covers the repair or replacement of these components. If a machinery breakdown is due to manufacturing defects, the policy will also cover the costs of repairing or replacing the faulty parts.

Electrical Breakdown of Machinery and Equipment

The policy provides coverage if an electrical component within a machinery system malfunctions or fails, resulting in a breakdown. This encompasses issues like short circuits, electrical surges, and burned-out motors. Additionally, damages caused by control panel failures, circuit breaker failures, and other such fluctuations are covered.

Internal Fire-Related Damage

Breakdowns can sometimes be caused by friction and overheating within the machinery's components, initiating a fire. Electrical components within machinery might malfunction, causing short circuits or sparks that can start fires. If machinery that utilizes combustible fluids, like oils and lubricants, experiences leaks or spills, a fire can start upon contact with hot machinery parts or sparks. In such cases, the policy covers the repair or replacement costs to bring the machinery back to working condition. It's important to note that damages resulting from fire-fighting efforts, such as those caused by water or chemicals, are also covered. This coverage is distinct from standard fire protection policies, making the machinery breakdown policy invaluable for businesses affected by such incidents.

Issues with Turbines, Compressors, Hydraulic Systems, and Rotating Equipment

Turbines, whether utilized in power generation or industrial processes, can face mechanical failures leading to bursting or severe damage. Rapid pressure changes within turbines can cause them to burst. These pressure surges may arise due to operational issues or sudden load shifts. Machinery breakdown insurance will cover the ensuing damage. Failures within compressors can lead to breakdowns and reduced efficiency. If hydraulic systems are operated incorrectly or overloaded, cylinders might malfunction. Equipment that experiences centrifugal force, such as rotating machinery, might face imbalances leading to breakdowns. Damages resulting from these issues are covered.

Falling, Impact, and Collision Resulting in Breakdowns

Coverage is provided if machinery or equipment gets damaged due to the falling of external objects, such as debris or tools. This includes situations where objects accidentally fall from heights, directly impacting the machinery. Additionally, machinery and equipment located near driveways or roads may be at risk of vehicle collisions. Breakdowns may also happen due to internal components colliding or impacting each other unexpectedly, especially in industries where many machines operate closely together. For these types of machinery breakdowns, the policy covers repair or replacement costs.

Breakdown Due to Carelessness and Lack of Operating Skills

This coverage is designed for when machinery and equipment malfunction due to human errors. Errors might include incorrect adjustments, improper calibration, or not following recommended procedures. Insufficient maintenance practices or machinery being operated by individuals without the necessary skills or training can also result in breakdowns. In all such scenarios, the policy will cover the damage and the repair costs.

Machinery Breakdown Insurance Claims Examples

Insurance Claim for Business Interruption

Incident

ABC Industries Pvt. Ltd., situated in Mumbai, is renowned for producing top-tier textiles with the aid of sophisticated machinery. Unexpectedly, a sudden electrical malfunction occurs within one of their state-of-the-art computerized weaving machines, leading to an internal fire. This fire not only damages the weaving machine but also affects the surrounding equipment and the area it occupied. As a direct result, there's a significant halt to the production line, creating a major disruption in their day-to-day operations.

Resolution

Thanks to their wise choice of comprehensive machinery breakdown insurance, ABC Industries was well-prepared for various scenarios, including fires originating within their machinery. This insurance policy takes care of the financial responsibilities for repairing or replacing the fire-damaged weaving machine, adjacent equipment, and the affected area. To minimize production delays, ABC Industries quickly initiated repair work and opted to rent temporary machinery, all covered by the insurance. This proactive approach ensures they can meet their delivery commitments without significant delays. With the safety net of this insurance policy, ABC Industries can confidently focus on getting back to normal operations without worrying about potential financial setbacks.

About Machinery Breakdown Insurance Policy

What leads to machinery breakdown?

How is the premium for machinery breakdown insurance determined?

How do machinery breakdown and failure differ?

What documentation is needed to initiate a machinery breakdown insurance claim?

How can machinery breakdowns be prevented?

Business Protection for SMEs & Startups

Get Business Insurance in Minutes

Schedule a call

Say hello to a spam-free zone! We respect your privacy and
won't bombard you with unwanted calls.

Free Consultation

Backed by The Best

Indore-based BimaKavach caters to the Business Insurance needs of Small & Medium Enterprises

View Article

This is an article by YouStory written by Palak Agarwal and published on October, 2022

How do you get started?

Schedule a consultation to see how BimaKavach can reduce your risk.

Schedule a call

Say hello to a spam-free zone! We respect your privacy, and we won't bombard you with unwanted calls.

Free Consultation

Subscribe to our Newsletter

Our Products

Disclaimer:

BimaKavach Insurance Broking Pvt. Ltd. | CIN- U66010MP2022PTC059393 | Registered Office- Flat No 201, Classic Avenue, 184 Shrinagar Main, Indore Madhya Pradesh India- 452018 | Phone No.- 9036554785 | Email- support@bimakavach.com

BimaKavach is registered as a Direct Broker | Registration No. 901, Registration Code No. IRDAI / DB 985/ 2022, Valid till 25/06/2026, License category- Direct Broker (General).

Visitors are being informed that BimaKavach Insurance Broking Pvt. Ltd. holds the right to share the information submitted by you on the website with Insurers. Product information is genuine and exclusively based on information obtained from insurers.