This policy provides effective insurance cover for plants, machinery, and mechanical equipment at work, whether idle or during maintenance operations. It covers unforeseen and sudden physical loss or damage to the insured items against any losses and/or misuse by inexperienced labour, explosions, disintegration, and electricity failure or overload.

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A Machinery Breakdown Insurance policy covers accidental material losses and damages to machines and machines due to a sudden unexpected accident, during their operation and rest periods, in case of dismantling them during cleaning or overhauling, as well as when re-installing, and other covers can be added such as the risks of power outages, electrical overload, explosions, and fires for an additional premium.

What is Machinery Breakdown Insurance?

The machinery malfunction policy provides security cover for machines used by factories and major companies in manufacturing, as this insurance covers accidental breakdowns and bears the material loss of machines and the cost of repairing or replacing damaged machine parts or all.

In some insurance companies, the company makes additional coverage offers to cover additional risks to machinery or other aspects such as cost, air freight, machine foundation, customs duties, and other breakdowns.

What are the limits of Machinery Breakdown Insurance coverage?

The machinery breakdown insurance policy covers loss resulting from sudden and accidental damage to machinery caused by internal or external malfunctions.

Some of the reasons can be an electrical failure or the result of structural defects from loosening parts or running machines at excessive speed, lack of lubrication, etc., and from here we take a look at the malfunctions that can be covered by insurance against machine breakdowns, as it includes:

  • Machine failures due to short circuits, overvoltage, faulty electrical design, and defective materials appear after the warranty period due to electrical and mechanical failures.

  • Abnormal operating conditions of the machine.

  • Falls and collisions that lead to breakdowns.

  • Negligence and lack of operational skills in machine operations and management.

  • The explosion of turbines, compressors, hydraulic cylinders, or other devices that are subjected to centrifugal force or internal pressure.

  • In a machine breakdown insurance policy, damage or loss resulting from the start of a fire from inside the machine is also incurred and is generally excluded from the normal fire protection policy.

  • The document includes the protection of machines, whether in operating or comfortable condition, as there are some other conditions when disassembling, transporting, or reassembling them for cleaning, inspection or repair.

How can machines be replaced under a Machinery Breakdown Insurance policy?

There are two scenarios that represent the cost of replacing the machine:

  • Partial Loss: In case of partial loss of machinery, the insurance policy will cover the full cost of the parts, including labor fees, air freight charges, customs duties, and machinery dismantling and reinstallation fees.

  • Total Loss: The amount insured in this scenario covers the actual value of the damaged machinery immediately before it occurs minus the applicable depreciation value.

Additional covers can be enjoyed when you pay more installments, including express shipping, air freight, customs duties and third-party liability.

What are the exceptions not covered by Machinery Breakdown Insurance?

Machinery Breakdown Insurance can be availed by machine owners in large enterprises or micro, small and medium enterprises.

However, there are exceptions included in the policy like any other insurance policy, so they must be recognized for clarification, and include:

Some general exceptions such as:

  • Civil war, riots, and strikes.

Special exceptions include:

  • Fire and associated hazards, theft, etc.

  • Loss or damage due to overload of machines.

  • The gradual development of deformations, defects, cracks, etc. in any part is regularly ignored despite knowing that it requires repair.

  • Regular natural destruction of the machine.

  • Pre-existing defects.