What is Contractor’s Plant & Machinery Insurance?

The execution of almost all projects necessary requires use of various types of plant and machinery. The nature and the type of equipment may differ according to the nature, type and location of a project and may even differ at different stages of the project. Such equipment may comprise of cranes, compressors, road-rollers, vibrators, welding sets, hydraulic excavators and the likes. While it is possible to have the contractor’s Plant and Machinery covered under an EAR or CAR Policy at specific project sites, Contractors’ Plant and Machinery (CPM) Insurance has been designed to provide a cover on annual basis to a contractor who may be using his plant and machinery at different projects during the course of the year.

Who needs Contractor’s Plant & Machinery Insurance?

The policy can be taken by the Owner, Lessor or Hirer (where responsible either legally or through a leasing agreement) of the Machinery/Equipment.

Why do you need Contractor’s Plant & Machinery Insurance

It covers all the damage/loss of the insured’s machinery such as cranes, bulldozers, compressors, etc. The advantage of this insurance policy is that it provides cover to the insured’s machineries irrespective of the fact that they are working / at rest/ dismantled for cleaning purposes.

What all equipments can be covered under Contractor’s plant and machinery insurance policy?

Any contractor’s plant & machinery equipment like excavators, dumpers, earth moving equipment, cranes, drilling machines, compressors, road-rollers, vibrators, welding sets, hydraulic excavators and the likes etc. which are utilized in the construction or Erection site can be covered under this policy.

What is covered & not covered by Contractor’s Plant & Machinery Insurance?

It’s an All Risk Policy, i.e., everything is covered except specifically excluded.
Below are the detailed exclusions of Contractor’s Plant & Machinery Insurance.
● Excess – but highest single deductible concept applies
● Loss of or damage to replaceable parts and attachment
● Damage to vehicles designed and licensed for general road use – unless used exclusively on construction sites
● Loss of or damage to Hull and machinery of waterborne vessels or crafts
● Transit loss ( One should opt for Marine Transit policy, to cover the risk of transit loss)
● Testing
● Earthquake
● Nuclear
● Willful negligence
● Consequential loss or liability of any kind or description
● Consequential loss or liability of any kind or description
● Electrical or Mechanical breakdown/ derangement – but as a result if an accident happens causing external damage then such consequential damage is payable
● Explosion of any boiler or pressure vessel
● Loss or damage due to total or partial immersion in tidal waters
● Wear and tear
● Plant and/ or machinery working underground
● Terrorism
● Pre-existing faults
● Damage for which the supplier or manufacturer is responsible either by law or under contract
● Inventory loss
● Pay loaders on barges cannot be covered under CPM

How to calculate Sum Insured under Contractor’s plant and machinery insurance policy?

Just as in the case of other Engineering Policies, the Sum Insured under the CPM Policy also should be equal to the cost of replacement of the machinery equipment by new machinery equipment of the same kind and capacity.

What information do I need to share before and after issuing the policy?

● Make, Model & Serial no. & Manufacturing year
● Details of risk location like terrain, Under Ground works
● Details of project where equipment are to be used
● Last 5 years premium Vs claim history for equipment
● If old machine/ equipment is replaced by a new machine of same or different type or model, it should be informed as each equipment has a unique serial number.

What are the additional add-ons one should buy with this policy?

● Owner’s Surrounding property
● Third Party Liability
● Escalation
● Removal of debris
● Inclusion of Express Freight, overhead charges, overtime wages, air freight charges

Explanations mentioned in “What’s Covered & What’s Not Covered?” are illustrative and will be subject to terms, conditions and exclusions of the Policy. Please refer to the Policy Document for more details