Any machine successfully tested and commissioned for normal production and permanently installed in a particular location can be covered under the Machinery Breakdown Policy (MBP) against sudden and unforeseen breakdown. The cover also extends for these machines during operation or at rest or being dismantled for the purpose of cleaning or overhauling within the premises or during subsequent re-erection.
Scope of Cover
This is a policy which covers financial loss incurred by the insured due to loss or damage to machinery as a result of sudden accidental electrical and/or mechanical breakdown due to internal defects and/or external sources such as:
- Internal causes: Faulty material, defects in casting, faulty construction, faulty design, cracking or overheating of parts, short circuits and electrical burnouts, faulty erection, explosion (as defined), tearing apart on account of centrifugal forces, failure of operation of safety devices.
- External causes: Lack of skill, carelessness, sabotage, falling bodies, electrical over pressure, failure of other machinery connected with it, entry of foreign objects.
The policy coverage excludes the following causes:
- Loss or damage to belts, ropes, chains, rubber tyres, dies or exchangeable tools
- Loss or damage due to fire and allied perils, theft
- Subsidence, landslide, rockslide, floods, inundation, earthquake
- War and kindred perils
- Damages due to wear and tear
- Wilful act or negligence of the insured
- Consequential losses
- Faults or defects for which the manufacturer or repairer is legally liable
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.
Following are some of the additional extensions to the standard MBC:
- Express freight
- Labour overtime
- Insured's surrounding property
- Third Party liability