Engineering InsuranceMachinery Breakdown

Machinery Breakdown

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Machinery Breakdown Insurance (MBD)

Machines are an integral part of all manufacturing and industrial units engaged in the production of industrial/household goods. These may be large industrial establishments or small and medium enterprises, and any unexpected accident/breakdown to their critical machinery brings it to a standstill adversely affecting business and causing a financial strain towards repair or replacement of the affected machinery. Machinery Breakdown Insurance is designed to provide cover against these unforeseen and sudden physical breakdown, loss or damage to the insured machinery.


  • Covers sudden and unforeseen damages arising from mechanical and electrical breakdowns and accidental external means to insured's plant and machinery
  • To protect the manufacturing industry against hefty expenses necessitated in repairing of the machinery under breakdown, thus ensuring business continuity

Machines covered

  • Mechanical: All types of Mechanical industrial plant like compressors, pumps, turbine engines, turbines (steam, water & gas), blowers, machine tools, presses and refrigerators etc.
  • Electrical: All types of electrical machines like a transformer, electrical motor, alternators & generators, motors, rectifiers and switchgear etc.
  • Process machines: All types of Process machines in such industries as cold storage, engineering and metallurgical, paper/ pulp making, printing, rubber/ plastics and textiles
  • Stationary: All Stationary equipment can be covered

Key Benefits

  • Protects items like air freight, customs duty and labour charges etc. as additionals.
  • Coverage also available for business interruption claims under the policy
  • Discounts to the policyholder on coverage on standby Machinery
  • It provides comprehensive coverage to the machinery, thereby giving great peace of mind to the business owners covering loss due to unskilled machinery operators, cranes or lift forks, etc.
  • Some plans cover detailed electrical, mechanical and electronic faults that may result in the complete or partial breakdown of the machinery
  • Easy and transparent claims settlement.
  • Option to cover Third-party losses/damages.


  • Faulty material/workmanship of the machine, design, construction, erection
  • Unforeseen and sudden accidental physical damage to insured machinery, plant and equipment
    • while at work/rest
    • whilst being dismantled or removed or re-erected, within the same premises
  • Action of centrifugal forces contributing to the 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
  • Vibration, maladjustments, malalignment
  • Obstruction or the entry of foreign bodies
  • Falling, impact, collision or similar occurrences

Add on Covers

  • Damage to the foundation of machinery
  • Damage to oil in electrical apparatus
  • Express freight (excluding air freight), holiday rates, overtime charges
  • Airfreight
  • Additional custom duty, i.e. the additional percentage of duty payable at the time of re-import 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
  • Escalation
  • Clearance and Removal of Debris
  • Extended Maintenance


  • Policy Excess - This is the first amount of any claim that you have to bear. ( Excess 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 to exclude the actual wastage, wear or deterioration but not sudden and unforeseen damage to other parts resulting therefrom.)
  • 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 equipment/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.
  • War & civil war or riot, strike and kindred risks
  • Nuclear risks

Claim Process

In the event of loss, the following are immediate actions to be taken
Intimate the insurer the occurrence of loss, submit a full statement in writing of the claim, provide the nature and extent of loss and also the estimate of loss. Any delay in intimation might jeopardize the claim as the insurer may express an inability in accepting liability of the loss/damage.

  • To take all steps to reduce and minimize the extent of loss/damage and liability.
  • The proximate cause of the loss and assess the type/extent and whether it is within the scope of the policy.
  • To extend full co-operation to the insurer and the surveyor appointed for completion of the survey work and proper assessment of the loss.
  • Produce all such records and proof as may be required by the surveyor or the insurer for arriving at the extent of loss and the liability under the policy.
  • Provide documents such as claim form, Claim bill, copy of policy etc.
  • Keep the damaged property under the safe custody until advised by the surveyor/insurer regarding its disposal.
  • Identification of the subject-matter insured.

Why Choose PrishaPolicy

5 Reasons why you should choose us to be your policy issuing partner of choice. Allow us to tell you why we are one of the fastest growing insurance brokers.

Customer-Centric Culture

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A Decade of Market Leadership

Our teams expertise and experience makes them the perfect guides in choosing a policy that fits your needs.

Reliable and Consistent

Rest assured that everything will be taken care of without a glitch. From shortlisting to claims processing & delivering promises without a hitch.

Guided Policy Assistance

Our experts are forever ready to assist you through each policy detail with a fine-tooth comb.

Claims Assistance

Our DNA prompts - Sales is incomplete without timely support. From start to end, we facilitate smooth processing from lodging to settlement.

Still Thinking About It?

Get on a call with us. We take pride in being associated with you for competitively managing your risks with the best insurance covers and delivering a stress-free experience.

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Questions You Might Have

Should all the losses that are under the deductible be reported?

If the loss is below the deductible, it is not recommended to report it to the insurance provider. If one is not sure about the final amount of loss or deductible amount, it is recommended to contact the insurer.

What is the duration of Contractors All Risk Insurance policy?

Unlike other insurance policies, the Contractors All Risk Insurance plan is issued for the period of the contract that is from the starting of work until the work completes. Even though it is possible to extend the period of the policy if the completion of the contract gets delayed, but it is always wise to choose a slightly longer insurance period initially for avoiding paying a higher premium in case of extension.

For what value of machine the insurance should be purchased?

It is a requirement of this insurance that the sum insured be equal to the cost of replacement of the machines by new machines of the same kind and same capacity, which shall mean its replacement, or reinstatement cost, including freight, custom duties, if any, and erection costs.

Can we cover loss due to design defects in the engineering policy?

Yes, you can cover the costs of project damages caused by design flaws. Damage due to design is an exclusion in a normal policy, but by paying an additional premium, you can cover the design flaw in the policy. There are other forms of design defect cover, such as design defect-3 and design defect-4, that can be added to the policy as an add-on for an additional premium. We advise all of our clients to include this coverage in their erection all risk insurance.