Machinery Breakdown Insurance (MBD)

Machinery is a vital component for all manufacturing and industrial units involved in the production of goods, whether for industrial or household use. This includes large industrial firms as well as small and medium enterprises. Any unexpected accident or breakdown of critical machinery can halt operations, causing severe financial strain due to the cost of repair or replacement. Machinery Breakdown Insurance provides coverage against such unforeseen accidents, breakdowns, or damage to insured machinery.

Scope

  • Covers sudden and unforeseen mechanical and electrical breakdowns, as well as damage caused by accidental external events to the insured machinery, plant, and equipment.
  • Aims to protect businesses from the significant repair costs arising from machinery breakdowns, ensuring continued operations and minimizing financial strain.

Covered Machines

  • Mechanical: All types of industrial mechanical machinery, including compressors, pumps, turbines (steam, water, gas), blowers, machine tools, presses, refrigerators, etc.
  • Electrical: Covers all types of electrical machinery, such as transformers, electrical motors, alternators, generators, rectifiers, and switchgear.
  • Process Machines: Includes machinery used in industries like cold storage, engineering, metallurgical, paper/pulp production, printing, rubber/plastics, and textiles.
  • Stationary: Coverage is available for all stationary equipment.

Key Benefits

  • Protection for additional expenses, such as air freight, customs duties, and labor charges.
  • Coverage for business interruptions.
  • Discounts on coverage for standby machinery.
  • Comprehensive coverage against damage caused by unskilled operators, cranes, forklifts, and more.
  • Coverage for electrical, mechanical, and electronic faults leading to partial or complete machinery breakdown.
  • Transparent and easy claims process.
  • Option to include third-party liability for losses or damages caused to others.

Coverages

Faults or poor workmanship related to machine materials, design, construction, or installation.Sudden and unexpected physical damage to machinery while in use, at rest, or during dismantling, removal, or reinstallation at the same premises.Damage caused by centrifugal forces impacting rotating parts.Failure of lubrication due to malfunctioning lubricating pumps.Malfunctions of safety devices.Electrical issues, such as short circuits, fires caused by insulation failure, and voltage irregularities.Damage resulting from the failure of other connected machinery.Entry of foreign objects into the machinery during operation.Operator errors, poor judgment, or improper handling.Vibration, misalignment, and maladjustment issues.External impact, collisions, and similar accidents.

Add-On Covers

  • Damage to machinery foundations.
  • Damage to oil in electrical apparatus.
  • Costs related to express freight (excluding air freight), overtime, holiday rates, etc.
  • Airfreight charges.
  • Additional customs duty, including any extra duty payable on re-importation for machinery replacement.
  • Damage to the insured’s surrounding property due to machinery breakdown.
  • Third-party liability for bodily injury or property damage caused to others.
  • Coverage for escalation, debris removal, and extended maintenance.

Exclusions

  • The policy excess, which is the amount the policyholder must pay out of pocket before the insurer’s coverage kicks in.
  • Fire and allied perils, theft.
  • Losses resulting from overload experiments or abnormal testing conditions.
  • Gradual flaws or damage that don’t require immediate repairs, even though they may eventually need attention.
  • Wear and tear from regular use.
  • Existing faults or defects known to the insured at the time of taking out the policy.
  • Issues that the manufacturer or supplier is responsible for under warranty or contract.
  • Loss of use or consequential loss, including loss of profits or revenue.
  • Damage due to explosions in chemical recovery boilers.
  • Damage to belts, ropes, chains, rubber tires, and exchangeable tools unless the machinery itself is covered.
  • Manufacturer, supplier, or repairer liabilities.
  • War, civil unrest, strikes, and related risks.
  • Nuclear risks.

Claim Process

  1. Immediately notify the insurer about the loss and provide a detailed written statement describing the event and the extent of the damage.
  2. Take steps to reduce further damage or loss.
  3. Assess the proximate cause of the damage and determine whether it falls under the policy’s coverage.
  4. Cooperate fully with the insurer’s appointed surveyor for a proper assessment of the damage.
  5. Provide the necessary documents for the claim, such as the claim form, bills, and policy details.
  6. Keep the damaged property under safe custody until advised by the surveyor or insurer.
  7. Ensure that all required records and proofs are available for review to settle the claim.

This breakdown of the Machinery Breakdown Insurance policy outlines how it offers comprehensive protection for industrial and manufacturing businesses, helping them recover quickly and efficiently from unexpected machinery damage or failure.