Property Insurance
Machinery Breakdown Insurance
Machinery Breakdown Insurance (MBI) is a specialized policy that covers unexpected and sudden physical damage or breakdown of machinery and equipment due to mechanical, electrical, or accidental failures. It helps businesses recover from losses caused by machinery failures, reducing financial and operational disruptions.
Why is Machinery Breakdown Insurance Essential?
- Protects Expensive Machinery & Equipment
- Reduces Financial Burden
- Ensures Business Continuity
- Covers Electrical & Mechanical Failures
- Essential for Industries Using Heavy Machinery
Important Things You Should Note
- Covers Sudden & Accidental Failures Only – Does not cover gradual wear and tear or maintenance issues.
- Applicable for Stationary & Mobile Machinery – Covers machines in factories, plants, and construction sites.
- Can be Customized with Add-ons – You can include business interruption, third-party liability, and additional coverage for spare parts.
- Premium Depends on Machine Type & Age – Newer machines have lower premiums, while older equipment may have exclusions.
- Insurers May Require Regular Maintenance Reports – To ensure machinery is properly maintained for eligibility.
What is Covered & What is Not Covered?
What is Covered?
- Mechanical Breakdown – Damage due to defects in gears, bearings, pistons, or other components.
- Electrical Failures – Damage due to power surges, short circuits, overheating, insulation failure.
- Accidental Damage – Damage caused by mishandling, overloading, or operational errors.
- Explosion or Implosion– Internal explosions damaging the machinery.
- Damage During Cleaning or Overhauling – If machinery breaks down during maintenance.
- Lubrication or Cooling System Failures – Damage due to coolant or lubrication system malfunction.
What is Not Covered (Exclusions)?
- Normal Wear & Tear – Aging, rust, or gradual deterioration.
- Improper Maintenance – Damage due to poor upkeep or ignored repairs.
- Fire, Flood, or Natural Disasters – Needs separate Property Insurance or Fire Insurance.
- Intentional Damage or Negligence – Damage caused due to deliberate actions.
- Loss During Transportation – If machinery is damaged while moving, Marine Insurance is required.
- Existing Defects – Pre-existing issues before the policy started.
Frequently Asked Questions (FAQs)
Who should buy Machinery Breakdown Insurance?
Businesses that rely heavily on machinery and equipment, such as manufacturers, power plants, textile mills, construction firms, and hospitals, should opt for this insurance.
Is machinery breakdown covered under Property Insurance?
No, Property Insurance covers external damage due to fire, flood, or burglary, while Machinery Breakdown Insurance covers internal failures due to electrical or mechanical issues.
Does this policy cover old machinery?
Yes, but insurers may charge higher premiums and may require maintenance reports. Some older machines may have limited coverage or exclusions.
Can I get coverage for loss of business due to machinery breakdown?
Yes, you can add Business Interruption Coverage, which compensates for income loss due to machine failure and downtime.
How is the sum insured determined for Machinery Breakdown Insurance?
The sum insured is based on replacement cost, including custom duties, freight, installation costs, and commissioning expenses.
