When a factory’s production halts because of a breakdown, it can result in a huge loss to the business. In order to work smoothly, factories need to be prepared for such breakdowns of machines or equipment’s. Factories can purchase Machinery Breakdown Insurance. And if you want to know more about insurance, then click here- https://fastmachineryinsurance.com.au/.
Machinery Breakdown Insurance
This insurance policy covers loss due to all kinds of accidental, mechanical and electrical breakdowns due to internal and external causes. It covers the cost of repairs or replacement of any damaged parts.
What does Machinery Breakdown Insurance cover?
This policy will cover the loss which is caused due to sudden and accidental machinery damage. Below are the major electrical and mechanical breakdown risks faced by plants and machinery which are covered by this policy:
- Short-circuiting, excess voltage
- Entry of any foreign bodies
- Falling, collision
- Abnormal operating conditions
- Fault in design, faulty material and faulty casting
- Excessive speed
- Loosening of parts
- Lack of lubrication
- Bursting or disruption of turbines, compressors, and cylinders of steam engines
- Lack of skill in the operation and maintenance of machines
- Initiation of fire within the machinery
- Failure of other connected machinery
The protection is offered to insured machines at work or rest and when they are dismantled or moved for cleaning, inspection, and overhauling. Also, during subsequent re-erection or operations, provided these are performed on the same premises. This policy covers all internal and external parts of the machinery.
Basis of claim settlement
Below are the situations for the replacement cost of machines:
- Partial loss- In this case, the policy will cover the total cost of parts, including air-freight charges, custom duty, labour charges and the charges for dismantling and re-erection of the machinery.
- Total loss- It covers the actual value of items immediately before the loss minus the applicable depreciation value.
Extensions available under this policy
With the payment of an additional premium, you can enjoy certain extra coverage. These cases include:
- air freight
- custom duty
- express freight (excluding air freight), holiday wages and overtime
- third-party liability
- surrounding property
How does Machinery Breakdown Insurance function?
The Machinery Breakdown Insurance helps the industries which use machines. This policy will cover the loss that may happen due to the sudden breakdown of machinery in the factories. The insurance company will pay the money to the organisation to repair or replace the machinery as per the need and requirement. Hence, by paying for the loss, this insurance will help the organizations to grow.
The claim process for this insurance varies for different companies. Following are some general steps to imitate the claim:
- The insured should immediately call the insurance company and inform them about the breakdown. The customer also should provide the complete information in writing when they are asked by insurance company staff.
- The policyholder should give correct information about the damage’s nature and extent.
- The insured should take all reasonable steps to minimize the loss.
- The policyholder should keep all the damaged or defective parts in the machinery so that insurance staff can properly inspect them.
- The insured should provide complete documentary evidence to the insurance company.
- The policyholder should support the insurance company in the claim investigation process.
- Once the investigation report is completed successfully and all documents verified by investigation company staff, they start the claim settlement process.
- The policyholder will submit all ID proofs and other required documents to settle the claim money as reimbursement and receive the amount in their bank account.
- The policyholder can talk to or meet with the insurance company’s Branch Manager/ Regional Manager if they are not getting proper response and support from the insurance staff.
Documents required for the claim process
To get the claims, a policyholder needs to submit:
- ID proofs
- All policy documents
- Invoice of the machinery
- Statement from the engineer about the type and level of breakdown
Machinery breakdown insurance can help machine owners of large-scale organisations. There are various exclusions in the insurance. The exclusions are divided into two categories:
- General exclusions
This includes war and civil war, riots, strikes, kindred risks and Nuclear risks.
- Specific exclusions
This includes the following:
- Damage due to overload experiments
- Fire and allied perils
- Wear and tear losses
- Gradually development of cracks, defects in any part being ignored, despite knowing that it needs to repair.
- Loss because of explosions in chemical recovery boilers
- Loss of use of machinery due to conditions in the factory
- Damage to rope, chains, belts, rubber tyres, knives or exchangeable tools unless damage to the equipment is indemnifiable
Advantages of Machinery breakdown insurance
Some of the benefits of this policy are discussed below:
- Insurance companies give good customer support options to the policyholder.
- The process of claim is easy and transparent.
- Reimbursement of the loss helps the factory’s owner overcome the losses.
- It protects other coverage items like custom duty, air freight etc.
- It includes third-party coverage as well.
- Some insurance companies offer discounts to the policyholder to compensate for the losses due to the machinery breakdown.
- It provides coverage to the machinery, which gives peace of mind to the business owners.
- Some plans cover detailed electrical and mechanical faults that may cause the breakdown of machines.
It depends upon the type of machinery. Insurance companies give discounts regarding standby facility, spare availability and favourable claim experience. The companies can choose various rider options as well. Based on a number of factors, the sum insured and the premium amount is calculated by the insurance company.
Machine insurance helps business owners overcome the losses that happen when there is a sudden breakdown of machinery in the factory. It covers the cost of repair or replacement of damaged parts of the machinery due to physical damages. Some insurance companies also offer riders to cover risks to the machinery. This insurance is beneficial for the company’s using machines. It will cover the loss that the business may face during the breakdown of machines.