What is Machinery / Electronic Breakdown Insurance?
Plant and machinery insurance, often referred to as machinery breakdown insurance, is designed to cover the risks associated with the operation of machinery and equipment. This type of insurance is particularly relevant in industries such as construction, manufacturing, agriculture, and mining, where the functioning of machinery is crucial for business operations.
Cover can be arranged for a single item or for a fleet of plant equipment.
Plant and machinery insurance is a vital component of risk management for businesses in Australia that rely on the smooth operation of their machinery and equipment. It ensures that businesses can recover quickly from machinery-related incidents, minimising financial loss and operational disruption.
What Does Machinery / Electronic Breakdown Insurance Cover?
The most common types of machinery insured under a Plant and Machinery policy are:
- Cranes
- Excavators
- Concreting equipment
- Forklifts
- Tippers
- Farming machinery
- Trailers
- Trucks
- Lifting equipment
Who Needs Plant and Machinery Insurance?
Plant and machinery insurance is essential for businesses that rely heavily on machinery and equipment for their daily operations, such as construction companies, manufacturing plants, agricultural businesses, mining operations, transport and logistics companies.
Client Example
The Insured is a recycling plant in that uses a variety of machinery, including shredders, balers, and conveyor systems to process and recycle various materials.
One day, the primary shredder, valued at $250,000, experiences a sudden mechanical breakdown due to a failure in the motor and cutting blades. This incident halts the entire recycling process.
The plant manager contacts the insurance broker to report the breakdown and initiate a claim under their plant and machinery insurance policy.
A technician is called in to assess the damage and determine the cause of the failure. It is confirmed that the motor and cutting blades need to be replaced.
The costs incurred were $140,000 including repair and labour costs ($85,000) and business interruption ($50,000) as the business was unable to operate for 5 days. Additional expenses to expedite alternative processing arrangements were also incurred.
The insurance provider reviewed the claim, assesses the damage reports, repair invoices, and business interruption documentation and approves the claim, providing a payout of $140,000 to cover the repair costs and business interruption losses.
The insurance payout allowed the Insured to minimise the financial impact of the breakdown and ensured business continuity and financial stability.