What is Contractors’ plant and Machinery Insurance

What is Contractors’ Plant and Machinery Insurance?

This policy protects the contractors’ plants and machinery like drilling machines, rollers, and dumpers that work on the construction sites. It covers both movable and immovable machines while working or at rest or if it is dismantled for cleaning purposes.

Why is it necessary?

Construction businesses do very tough work in very dangerous regions like mine area. Hence, there is always a risk of major accidents or failure in the functioning of these giant machines. This may lead the contractor to a huge financial loss. The loss may be so high that, it may force the contractor to close the business, and also he/she may fall into huge debt. Contractor’s plant and machinery insurance protect such businesses with huge risks involved financially.

So, when you have this policy, you can run your construction business with peace of mind as all the machinery and plants are covered by the policy.

Who should buy Contractor’s Plant and Machinery Insurance?

Any of the following categories can buy this policy individually or jointly.

1. Owners of plants or machinery: – The owners of plants and machinery should buy this policy so that the insurer will compensate the loss or damage of the machinery due to any cause covered under the policy.

2. Banks and financial institutes: – Banks and other financial institutes, which invest in the project should also buy this policy.

3. User of the machinery: – Contractor, who uses those heavy machines for the project should buy this policy.

Features of Contractor’s Plant and Machinery Insurance

• This policy covers both mobile and immobile machines.
• It protects the working machines, machines at rest or dismantled for cleaning or overhauling purpose.
• It provides coverage for both partial and total damage to the machinery.
• This insurance covers the loss according to the current market value.
• The premium depends upon the type of equipment and the location of the operation.
• Generally, its tenure is 1 year. After that, you can renew it. But you can also opt for a shorter duration.
• The policy is applicable for one or more locations in the India.
• You can also opt for the coverage of only some selected equipment.

Sum insured

The total sum insured depends upon the cost of replacements of parts with new parts. This replacement cost includes ordinary fright, customs duty, and other charges if applicable. 

Premium amount

 It depends upon the type of equipment, location of use, and risk involved.

What is covered under Contractor’s Plant and Machinery Insurance?

Many companies cover the contractors’ plants and machinery from loss or damage due to any of these reasons under this policy.

• Fire, theft, burglary
• Riots, strikes, or any other such situations
• Terrorism
• Earthquake, storm, cyclone, flood, inundation

The damage or loss of machines like bulldozers, rollers, drilling machines, cranes, excavators, etc. are covered under this policy.

It covers the machines while working, at rest, or dismantled for cleaning or overhauling purpose.

Add-on covers

You can get these additional coverages by paying some extra premium.

• Injuries or property damage to the third party
• Clearance and removal of debris
• Escalations
• Terrorism
• Additional custom duty
• Owner’s own surrounding property damage
• Machines kept on floating vessels or crafts
• Dismantling and shifting to a new location

Some companies may cover some of these add-ons in their basic policy.

What is not covered under Contractor’s Plant and Machinery Insurance?

In the following conditions, the damage or loss of the machinery is not covered under this policy.

• Intentional damage 
• Damage due to negligence in maintenance
• Electrical or mechanical breakdown, overload, and internal explosion
• Damage due to explosion in any pressure vessel or boiler
• Damage to the replaceable parts like saws, drills, and knives as these face a higher rate of depreciation due to regular use
• Deterioration due to lake of use
• Loss or damage of machinery for which supplier or manufacturer is responsible
• Damage or loss due to nuclear reaction, war, or other war-like situations
• Damage due to total or partial immersion in tidal water
• Consequential loss
• Damage during a machine test
• Pre-existing damages or faults
• Damage to waterborne vessels and vehicles like ships and submarines due to use on the road
• Machines working underground (except tunnel boring machines)
• Vehicles designed for normal on-road use

How to buy the right Contractors’ Plant and Machinery Insurance?

Consider the following aspects while purchasing contractors’ plants and machinery insurance to get the best policy.

1. Insured amount: – You must look into the coverage amount before purchasing the policy. An adequate coverage amount is very much necessary. Because a huge amount of money is at risk in this type of business.

2. Coverage: – Look carefully at what is covered in the policy. Buy the policy that covers all your requirements. Do not opt for coverage for the machines you do not have. Because this may increase the premium amount.

3. Extra benefits: – Although most required benefits are provided by the standard policy, you should look into some extra benefits like 24X7 assistance before buying the policy to get the best out of all the benefits.

4. Claim process: – Purchase a policy that provides an easy and fast claim process, so that at the time of policy claim, you will not face any problems or any delay.

Contractors Plant and Machinery Insurance claim process

Follow the steps given below while claiming your insurance.

• First, inform your insurer immediately after the loss or damage in writing through mail or through a phone call at the toll-free number as mentioned in your policy.
• Fill out a claim form completely and sign it.
• Inform the police in case of loss or damage due to any theft or burglary.
• Preserve evidence like photographs, if any.
• The company will send a surveyor to inspect the situation. Give full cooperation to the surveyor.
• Deposit the claim form and all the required documents and evidence to the company.
• After verification and getting feedback from the surveyor, the company will approve your claim. 

Note: – If you have a contractor’s plant and machinery insurance, you may still need to operate the machines carelessly. Take all the required steps to minimize the losses. This policy will only cover damage or loss after taking all the precautionary steps.

Documents needed to claim Contractor’s Plant and Machinery insurance

• Duly filled claim form
• Policy copy
• FIR copy if needed
• Evidence of the event, if any

You may need some other documents according to the requirements of the policy.

FAQs

1: What does CPM stand for in Insurance?

A: CPM stand for Contractor’s Plant & Machinery Insurance

2: What is Contractors’ Plant and Machinery Insurance?

A: This policy protects the contractors’ plants and machinery, like drilling machines, rollers, and dumpers, that work on the construction sites. It covers movable and immovable machines while working or at rest or if it is dismantled for cleaning purposes.

3: Why are Contractors’ Plant and Machinery Insurance necessary?

A: Construction businesses do very tough work in dangerous regions like mine. Hence, there is always a risk of major accidents or failure in functioning these giant machines. Contractors’ Plant and Machinery Insurance may lead the contractor to a huge financial loss. The loss may be so high that it may force the contractor to close the business, and they may fall into huge debt. Contractor’s plant and machinery insurance protects such businesses with huge risks involved financially.

4: Who should buy the Contractor’s Plant and Machinery Insurance?

A: Any of the following categories can buy this policy individually or jointly.

• Owners of plants or machinery
• Banks and financial institutes
• The user of the machinery

5: What is covered under the Contractor’s Plant and Machinery Insurance?

A: Many companies cover the contractors’ plants and machinery from loss or damage due to these reasons under this policy.

• Fire, theft, burglary
• Riots, strikes, or any other such situations
• Terrorism
• Earthquakes, storms, cyclones, floods, inundation

The damage or loss of machines like bulldozers, rollers, drilling machines, cranes, excavators, etc., are covered under this policy.

It covers the machines while working, at rest, or dismantled for cleaning or overhauling purpose.

6: What is not covered under the Contractor’s Plant and Machinery Insurance?

A: In the following conditions, the damage or loss of the machinery is not covered under this policy.

• Intentional damage 
• Damage due to negligence in maintenance
• Electrical or mechanical breakdown, overload, and internal explosion
• Damage due to explosion in any pressure vessel or boiler
• Damage to the replaceable parts like saws, drills, and knives as these face a higher depreciation rate due to regular use.
• Deterioration due to lack of use
• Loss or damage of machinery for which supplier or manufacturer is responsible
• Damage or loss due to nuclear reaction, war, or other war-like situations
• Damage due to total or partial immersion in tidal water
• Consequential loss
• Damage during a machine test
• Pre-existing damages or faults
• Damage to waterborne vessels and vehicles like ships and submarines due to use on the road
• Machines working underground (except tunnel boring machines)
• Vehicles designed for normal on-road use

7: What is the duration of this cover? 

A: The duration of this cover is 1 year, and you will need to renew this policy yearly if you want to continue with its benefits.

8: Do I always have to update my insurance provider about any changes in my contact details?

Ans: Yes, it’s really important to inform the insurer about any changes in your contact details, as it will ensure the timely delivery of all the services sent to you.

9:   Is there any cancellation charge for canceling the policy? 

A: You can cancel the policy by providing a written notice. In this case, you will get a premium refund after deducting some charges, which is vary from insurer to insurer.

10: How much premium do I need to pay?

A: The premium amount is determined by some criteria, types of risk, including risk exposure and the insurer’s underwriting standards.

11:Is theft covered in Contractors’ plant and Machinery Insurance?

A: Yes, Theft is covered under Contractors’ plant and Machinery Insurance

12: How to make a claim in contractor’s plant and machinery insurance?

A: In the event of any loss or damage, follow the below steps to get the claim

• Inform the insurance company immediately about your loss or damage.
• full cooperation to the surveyor deputed by the insurance company 
• Submit duly filled claim form, along with necessary documents.
• After verification and getting feedback from the surveyor, the company will approve your claim.

13: What documents are needed to claim the Contractor’s Plant and Machinery insurance?

A: The documents given below are needed while claiming your insurance

• Duly filled claim form
• Policy copy
• FIR copy if needed
• Evidence of the event, if any

You may need some other documents according to the requirements of the policy.

14: How to buy the right Contractors’ Plant and Machinery Insurance?

A: Consider the following aspects while purchasing contractors’ plants and machinery insurance to get the best policy.

• Insured amount
• Coverage
• Extra benefits
• Claim process
• Claim settlement ratio of insurer

15: What are the add-on (riders) available under the CPM insurance policy?

A: Add-on Covers On payment of the additional premium, you can opt for the following covers: 

• Express freight 
• Air freight
• Owner’s surrounding property 
• Clearance and removal of debris 
• Additional custom duty
• Escalation 
• Earthquake 
• Third-party liability 
• Equipment mounted on floating vessel/craft 
• Terrorism