ARE THESE ONLY THE PERILS ARE THESE ONLY THE PERILS YOUR MACHINERY IS PRONE YOUR MACHINERY IS PRONE

TO ???TO ???

Fire Lightening Explosion

Aircraft Damage Riot Strike Flood Storm

IF YES ….HOW ABOUT THESE IF YES ….HOW ABOUT THESE LOSSESLOSSES

MACHINERY BREAKDOWN POLICYMACHINERY BREAKDOWN POLICY

MACHINERY BREAKDOWN INSURANCE

Unison Insurance Broking Services Pvt Ltd

InitialInitial MatureMature TerminalTerminal

DesignDesignMaterialMaterial

StableStable InnovationInnovationRehabilitationRehabilitation

Machinery BreakdownMachinery BreakdownLoss potential by LifeLoss potential by Life

FAILU

RE R

ATE

TIME

AT INITIAL STAGES &

AT TERMINAL STAGES

POSSIBILITY OF

BREAKDOWN IS MORE

MACHINERY BREAKDOWN INSURANCEMACHINERY BREAKDOWN INSURANCE

Technically a breakdown is a malfunction, but is Technically a breakdown is a malfunction, but is

insurable only when it is sudden, accidental and insurable only when it is sudden, accidental and

involves physical damage to the machine / equipment involves physical damage to the machine / equipment

in whole or partin whole or part

Manufacturers provide warranty only and no overall Manufacturers provide warranty only and no overall

protection is possibleprotection is possible

Majority of losses caused by human influence or due to Majority of losses caused by human influence or due to

operationoperation

CAUSES OF MACHINERY BREAKDOWNCAUSES OF MACHINERY BREAKDOWN

CarelessnessCarelessness NegligenceNegligence Faulty operationFaulty operation Lack of skillLack of skill Malicious actsMalicious acts StormStorm CycloneCyclone Flooding / inundationFlooding / inundation EarthquakesEarthquakes Entry of Foreign Entry of Foreign

Particles Particles

• Failure of control / regulating devices• Physical explosion / implosion• Shortage of lubricants / coolants• Overheating, impact•Faulty insulation, short circuit

•Defective material / casting

• Bad workmanship

• Faults in assembly & erection

TO DESCRIBE FEW MAJOR CAUSESTO DESCRIBE FEW MAJOR CAUSES

MACHINERY BREAKDOWN COVERMACHINERY BREAKDOWN COVER

Physical damages to machinery which are Physical damages to machinery which are sudden & accidentalsudden & accidental

Cover is given irrespective of the fact that machineryCover is given irrespective of the fact that machinery Are in use / not in use, dismantled for cleaningAre in use / not in use, dismantled for cleaning Maintenance / overhauling is being carriedMaintenance / overhauling is being carried Moved on the premisesMoved on the premises

Premium Rate charged per equipment basisPremium Rate charged per equipment basis Parts of machines only can be covered for insuranceParts of machines only can be covered for insurance Electronic equipments such as computers, medical and Electronic equipments such as computers, medical and

biomedical equipments are not considered for machinery biomedical equipments are not considered for machinery breakdown insurance.breakdown insurance.

MACHINERY BREAKDOWN COVERMACHINERY BREAKDOWN COVER

Different premium rates for different machineryDifferent premium rates for different machinery

Gear boxes are not insured in isolation Gear boxes are not insured in isolation

Standby machinery can also be covered (50% Standby machinery can also be covered (50%

discount of rate)discount of rate) In case ‘foundation’ & Lubrication oils needs to In case ‘foundation’ & Lubrication oils needs to

be covered, their values should be declared be covered, their values should be declared separately & Specifically.separately & Specifically.

MACHINERY BREAKDOWN COVERMACHINERY BREAKDOWN COVER

Electrical machinery •H.T./L.T. Switchgears

•Oil/air circuit breakers

•Cables/electrical wiring

•Voltage stabilizer •Power and distribution transformers

•Electric motors, welding sets , dg sets

•Gas based combined cycle power plants

General Machinery •Air compressors •Boilers •Chiller plants •Pumps•Diesel engine •E OT crane •Arc furnaces • A/C Plant

MACHINERY BREAKDOWNMACHINERY BREAKDOWN – – ExclusionsExclusions

Damage due to fire related perilsDamage due to fire related perils

War & nuclear eventsWar & nuclear events

Damage due to overload experimentsDamage due to overload experiments

Gradually developing flaws, cracksGradually developing flaws, cracks

Wear & tearWear & tear

Willful act, gross negligenceWillful act, gross negligence

Pre - existing defects known to insuredPre - existing defects known to insured

MACHINERY BREAKDOWNMACHINERY BREAKDOWN – – Special ExclusionsSpecial Exclusions

Excess or deductibleExcess or deductible

Belts, ropes, chains, rubber tyres, dies, moulds, Belts, ropes, chains, rubber tyres, dies, moulds,

objects made of glass, porcelain, all operating media objects made of glass, porcelain, all operating media

(e.G. Lubricating oil, fuel), endless conveyor belts, (e.G. Lubricating oil, fuel), endless conveyor belts,

packing material, non metallic parts and non-metallic packing material, non metallic parts and non-metallic

lining or coating of metal parts lining or coating of metal parts

Parts under manufacturers guaranteeParts under manufacturers guarantee

INFORMATION REQUIRED FOR MBDINFORMATION REQUIRED FOR MBD

Full nameplate details of the machine Full nameplate details of the machine

HP / KW / PSI / KVA / RPMHP / KW / PSI / KVA / RPM

Manufacturer’s name, Manufacturer’s name,

Type, year of manufacture, Type, year of manufacture,

Serial number Serial number

And such other identification details are required to be submitted to the insurer, And such other identification details are required to be submitted to the insurer,

Risk inspection is carried out by insurers to ascertain:Risk inspection is carried out by insurers to ascertain:

Physical condition of equipmentPhysical condition of equipment

Loss history Loss history

Maintenance practices, spares availability etc.Maintenance practices, spares availability etc.

Unconventional featuresUnconventional features

Plant configuration,overhauling details etcPlant configuration,overhauling details etc

BASIS OF SUM INSUREDBASIS OF SUM INSURED SUM INSURED SHOULD BE THE SUM INSURED SHOULD BE THE

REPLACEMENT VALUE OF THE REPLACEMENT VALUE OF THE EQUIPMENTS INCLUDING THE COST OF EQUIPMENTS INCLUDING THE COST OF DUTIES PAID, FREIGHT CHARGES AND DUTIES PAID, FREIGHT CHARGES AND ERECTION COST.ERECTION COST.

DEDUCTIBLESDEDUCTIBLES

Other Deductibles / WarrantiesOther Deductibles / Warranties

Apart from the standard Excess, Apart from the standard Excess, Depreciation / Deduction applicable on the Depreciation / Deduction applicable on the Equipments based on the Endorsements Equipments based on the Endorsements provided in Tariffprovided in Tariff

MACHINERY BREAKDOWNMACHINERY BREAKDOWN – – ExtensionsExtensions

Insured’s own surrounding property (25% of Avg MB rate)Insured’s own surrounding property (25% of Avg MB rate) THIRD PARTY LIABILITY (-do-)THIRD PARTY LIABILITY (-do-) Express freight, overtime, holiday wages etc. (Avg MB rate)Express freight, overtime, holiday wages etc. (Avg MB rate) Air freight (5%)Air freight (5%) Additional Custom Duty (2%)Additional Custom Duty (2%)

Machinery breakdown cover is quite popular in following industriesMachinery breakdown cover is quite popular in following industries Power generation /distributionPower generation /distribution Chemicals / pharmaceuticalsChemicals / pharmaceuticals Steel / Paper / Cement / PrintingSteel / Paper / Cement / Printing

INDEMNITY CONDITIONINDEMNITY CONDITION PARTIAL LOSSPARTIAL LOSS : WHERE INSURERS : WHERE INSURERS

WILL SETTLE THE CLAIM WITHOUT WILL SETTLE THE CLAIM WITHOUT CONSIDERING THE DEPRECIATION.CONSIDERING THE DEPRECIATION.

TOTAL LOSSTOTAL LOSS : WHERE IN INSURERS : WHERE IN INSURERS WILL SETTLE THE CLAIMS AFTER WILL SETTLE THE CLAIMS AFTER DEDUCTING THE DEPRECIATION.DEDUCTING THE DEPRECIATION.

Claims RequirementsClaims Requirements In event of claim the following requirements are basic for claim In event of claim the following requirements are basic for claim

processingprocessing Claim IntimationClaim Intimation Claim FormClaim Form Copies of log booksCopies of log books Estimate of damage Estimate of damage Cause of damage to the machineryCause of damage to the machinery Service Engineer’s report stating the cause of lossService Engineer’s report stating the cause of loss Parts testing report by manufacturer stating the cause not Parts testing report by manufacturer stating the cause not

attributable to manufacturing defectattributable to manufacturing defect New purchase cost with installation of a new machinery/part of the New purchase cost with installation of a new machinery/part of the

same configurationsame configuration Repair BillsRepair Bills Payment ReceiptsPayment Receipts

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