Engineering InsuranceMachinery Loss Of Profit

Machinery Loss of Profit Insurance (MLOP)

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Machinery Loss of Profit Insurance (MLOP)

An Industrialist suffers a loss due to unforeseen damage to the machinery. Many times, the time lag between the breakdown and the completion of repairs is too long and the consequential loss is substantial. The Machinery Loss of Profit policy covers consequential loss suffered by the insured as an inevitable consequence of the breakdown of any machinery due to an accident.

Key Benefits

  • Covers financial loss upon breakdown or failure of necessary machinery
  • Offers exhaustive coverage along with the machinery break down policy for all risks associated with boilers, pressure plants and industrial machinery
  • Extensions available to cover wages and auditor fees


The covers loss of gross profit due to:

  • Reduction in the output: the sum produced by applying the rate of gross profit to the amount by which the output during the indemnity period shall in consequence of the damage fall short of the standard output.
  • Increase in Cost of Working: the additional expenditure (subject to provision of memos) necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in output but for that expenditure would have taken place during the indemnity period in consequence of the damage, but not exceeding the sum produced by applying the rate of gross profit to the amount of the reduction thereby avoided.
    Less any sum saved during the indemnity period in respect of such of the Insured Standing Charges as may cease or be reduced in consequence of the damage.

Provided that if the sum insured by this item be less than the sum produced by applying the rate of gross profit to the annual output, the amount payable shall be proportionately reduced.


  • Willful act or willful negligence or gross negligence of the insured or his responsible representatives
  • Spoilage of raw materials, semi-finished materials or operating media (fuel, catalyst, lubricant etc.)
  • Restrictions imposed by law enforcing authority
  • Extensions of the normal repair period beyond 4 weeks due to
    • Inability or delay of insured in securing replacement parts or delay in carrying out repairs.
    • Customs restrictions
    • Transport of damages or replacement parts to and from the insured premises. Alterations, improvements or over-hauling made while repairing.
  • War and allied perils, Nuclear Perils
  • Any defects are existing at the time of commencement of the policy , which as known to the insured.

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 for 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

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Customer-Centric Culture

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A Decade of Market Leadership

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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.

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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.