Machinery Breakdown Insurance
This provides indemnity against accidental damage to completely installed machinery, resulting from machinery breakdown, as a result of sudden and unforeseen causes.
Machinery Breakdown insurance complements cover under the Fire and Special Perils policy as Fire and Special Perils does not provide cover for breakdown in machinery.
Sum insured should represent replacement by machinery of same kind and capacity, i.e. cost of replacement including freight, dues and customs duty, if any, and cost of erection
Any extra charges incurred for overtime, night work, work on public holidays, and express freight are covered only if especially agreed in writing
Cover on agreed value basis is provided where replacement value cannot be substantiated, especially for obsolete machinery, although this is rare nowadays.
Loss of Profit following Machinery Breakdown
It is named Consequential Loss Policy because cover becomes effective only and until you have suffered material damage under your Machinery Breakdown Policy
Main risks covered are:
- Loss of Gross Revenue due to reduction in turnover following breakdown in machinery
- Increased cost of working
- Claims Preparation Cost which may be optional.
- Failure of Public supply Electricity (where additional cost may be incurred to resume production by using other forms of energy). This is optional and would attract additional premium