Contractor's Plant and Machinery (CPM) Insurance covers any loss or damage to construction machinery and equipment due to fire, floods, explosion, theft, riots, malicious activity, or any other accident.
Buildings and structures such as residential complexes, commercial buildings, road projects, shopping centres, etc. are extremely vital for the economic advancement of a region. And they require extensive construction projects to be fully functional.
Such construction projects employ the use of numerous heavy equipment and machinery like bulldozers, scrapers, compactors, and cranes for the purpose of lifting, hauling, compressing and excavating various materials. And these expensive machines are exposed to a multitude of risks and hazards at construction sites.
Any damage to these machines on account of fire, natural calamities, riots, burglary, malicious activity, and other likely perils can force the contractor into considerable losses. Hence, to protect their interests, contractors of civil engineering projects purchase a Contractor’s Plant and Machinery Insurance policy.
This policy protects the policyholder (builder, supplier or a factory) against partial or total damage to construction equipment caused by covered perils. The insured equipment is completely covered irrespective of the state it is in:
- At work,
- At rest, or
- Being dismantled for overhauling, cleaning or maintenance
The insured can also insure specific plant or machinery based on their requirements.
This insurance covers a civil contractor’s plant and machinery from sudden damage, loss or destruction caused by any external peril unless specifically excluded. Some of the covered events are :
- Fire and lightning
- Theft & burglary
- Riots, Strikes, Malicious Damage (RSMD)
- Storm, Tempest, Cyclone, Flood, Inundation (STFI)
- Subsidence, landslide, rockslide
- Accidental external damage while at work or rest at the site due to faulty handling, impact, collapse, or dropping
Apart from physical damage to plant and machinery, there are several other hazards that plague construction sites. Contractors can add the following add-on covers to expand their protection :
- Third Party personal injury & property damage
- Damage to surrounding property
- Clearance and removal of debris
- Express freight, air freight, holiday & overtime charges.
- Additional Custom Duty
- Escalation of cost
- Earthquake cover
- Terrorism cover
Certain events and risks are excluded from coverage under a Contractor’s Plant and Machinery Insurance policy. Some of them are :
- Loss or damage due to electrical or mechanical breakdown/failure
- Pre-existing defects
- Loss of or damage to replaceable parts and attachment such as bits, drills, batteries, etc.
- Loss or damage due to explosion of any boiler or pressure vessel
- Loss of or damage to vehicles designed and licensed for general road use unless they are exclusively used at the construction site
- Loss or damage to hull and machinery of waterborne vessels or crafts, unless they are specifically insured
- Loss or damage due to wear and tear, gradual use, and normal atmospheric conditions
- Damage for which the supplier or manufacturer is responsible
- Any kind of transit risk
- Loss of or damage to plant and/or machinery working underground.
- Loss or damage discovered only at the time of taking an inventory or during routine servicing
General Exclusions :
- The Excess (amount of money to be borne by the insured) stated in the policy schedule
- War and related perils
- Ionizing radiation and nuclear perils
- Consequential loss of any kind
- Willful act or negligence of the insured
- Contractual liability or manufacturers guarantee
A Contractor’s Plant and Machinery Insurance policy can greatly reduce the degree or risks that civil construction projects are exposed to. Providing protection to both movable and fixed equipment, this policy can ease the contractor’s burden for repairs or replacement in the event of accidental damage.
How does a business cover the sudden breakdown of its fixed plant or machinery? Through a Machinery Breakdown Insurance policy.