By Amrit Lal Meena, SBM, NIC

 MACHINERY INSURANCE (MI),

 BOILER & PRESSURE PLANT (BPP),

 ELECTRONIC EQUIPMENT INSC.(EEI),

 MACHINERY LOSS OF PROFIT (MLOP).

 Property covered: All Electrical and Non
electrical (Mechanical & Chemical) items like
Electric Motors, Transformers, Diesel
Generator Sets, Air compressors, Boilers,
Blowers, etc.
 Scope of cover : against sudden, accidental
loss due to vibration, maladjustments,
falling, Impact, collision and the like,
Obstruction or entry of foreign bodies, etc.
Losses from unforeseen and sudden
damage to machinery from following
causes:
 i. Faulty material, design, construction,
erection;
 ii. Vibration, malalignment,
maladjustment;
 iii. Defective lubrication, loosening of
parts, stress, explosion due to
centrifugal force, or internal pressure;
 iv. Failure of insulation and electrical
breakdown.
 v. Human failures like lack of skill, lack of
knowledge & mere negligence.
 The cover applies within the insured’s
premises specified in the policy while the
insured plant is covered under the following
situations:
 1. When it is at work or at rest.
 2. While being dismantled for cleaning or
overhauling.
 3. During cleaning and overhauling operation.
 4. When being shifted within the premises.


 1% of S.I. or subject to the minimum of

Rs. 2500/- against each claim.

Note:
 Sum Insured of the machine should be
declared as a whole and should not be
apportioned towards parts of machine.
 Risks covered
 Mechanical failures like Mal-alignment,
Mal-adjustment of parts, impact of foreign
elements, faulty operation, failure of safety
system/failure lubrication system,etc.
 Human failures like lack of knowledge, lack
of skill, mare negligence.
 Electrical equipments suffer Electrical
failures or breakdown losses due to "Short
circuit, Excess/surge Voltage, Voltage
fluctuations, Defective insulations, ….. " etc.
i. Fire and allied perils
§ internal fire due to electrical faults in electrical
equipment is covered.
§ explosion due to centrifugal force & internal
pressure is covered.
ii. War & Warlike perils
iii Nuclear risks
iv experiments or overload or similar tests
v. Gradually developing flaws, defects, cracks
vi. Normal wear and tear
vii. Wilful negligence
 viii. consequential loss
 ix. Defect in existence before insurance
 5. Special Exclusions
 i. Excess
 ii. Damage due to faults/defects for which
manufacturer is responsible
 iii. exchangeable parts, non metallic parts
(except electrical insulation), operating
media, coating of metal parts
 Sum Insured
 The S.I. of each individual item must represent its
new replacement value (current replacement value
) including transportation cost to site, custom
duty, insurance premium, other erection &
installation cost i.e. Sum insured = New value +
freight + customs & duties + other erection &
installation costs.
 Optional Items:
Cost of Civil Foundation & Oil in Transformer &
for
Swichgear
 Condition of Average is applicable for
underinsurance.
Indemnification
 Repair basis
 - No deduction for depreciation for parts with
unlimited life.
 Necessary bills and documents for repairs be
submitted.
 The value of salvage, under-insurance and
excess is deducted from loss.
 Total Loss Basis
 Actual value of item after applying depreciation
from the replacement value of item.
 NO POLICY TO BE ISSUED ON FIRST LOSS
BASIS
 NO POLICY TO BE ISSUED WITH A BONUS
CLAUSE
 NOT ISSUED ON AGREED VALUE BASIS
 VOLUME DISCOUNTS NOT AVAILABLE
 MINIMUM PREM. RS 100/-
 50% DISCOUNTS ON STANDBY EQUIPMENTS
(alternate working clause apply)
 Lockout/standstill period: no refund allowed
 STONE CRUSHERS,
 ROLLING MILL STANDS,
 ALL ELECTRONIC EQUIPMENTS, ANY AUDIO
VIDEO EQUIPMENTS,
 PIPE LINES,
 ANY IMPORTED MACHINE WHICH CAN NOT
BE REPAIRED IN TH COUNTRY.
BOILER AND PRESSURE
PLANT INSURANCE
 “INSURANCE IS AMONGST THE MOST
PRUDENT INVENTIONS OF MAN; IT MAKES
DISASTERS TOLERABLE.”

Albert Einstein
 BOILER: Fired Closed Vessel or combined
container piping system in which steam is
generated under pressure.

 PRESSURE PLANT: Unfired Closed Container

under steam gas or fluid pressure.
 Items covered: Boilers and Other Pressure
vessels (which generate pressure during
their normal operations)

 Scope of cover:
1) Explosion and Collapse Damage , other
than by fire ,to the Boiler &/or other
pressure Plant and to surrounding
property of the insured.
2) Legal liability for death, bodily injuries or
property of third party.
 Sum Insured - Current replacement value of
these items( to avoid under insurance).
 Escalation maximum to the tune of 25% of
S.I. can be opted by the insured.

EXTENSIONS OF BPP POLICY:-

 By payment of additional premium
,following risks be covered:
 i) Surrounding Property damage
 ii) Damage to third party
property,death/bodily injuries.
 Warranties: Boiler and Pressure plant comes
in statutory regulations. Following
conditions specifically apply to BPP:
 1. The insured boiler should be certified by Boiler
Inspector for use. Otherwise the premium rates to
be loaded by 50%for the current session only.
 2. Boilers being operated by Persons holding valid
certificates.
 3. Permission to use the boiler from the
authority(by the Boiler Inspector).
 Rating:-Basic rate is as per Guide
[Link] Premium be charged for
extensions like surrounding property
damages, third party liability/property
damage, etc.
 Exclusions:- Loss or damage due to -
 1. Fire and allied risks of standard fire
policy,
 2. Damage by chemical explosion except in
recovery boilers and waste heat boiler.
 3. Wear and tear, Wasting of boiler
materials.
 [Link] of individual tubes.
 Flue Gas explosion is covered
 Explosion due to smelt water reaction for
waste heat / recovery Boilers is covered.

 Excess: 5% of Claim amount Subject To

Minimum of Rs 10000/- per claim.
 Objects covered:
 Computers,Bio-medical equipments,X-ray equipments, Audio / Video
equipments, EPBAX,various Medical / equipments like Scanners,E.C.G. etc.

This is an all risks policy and covers namely the following risks:-
1. Damage due to carelessness, Negligence of employees
2. Fire, Lightning, Explosion, flood , Storm ,Earthquake etc
3. Damage due to moisture and humidity.
4. Riot, strike, Malicious damage
5. Burglary, Housebreaking or theft.
6. Electrical, Mechanical breakdown.

 COVER NOT GRANTED TO: Photo Copy machines, Dish Antenna, Any portable
electronic equipment like laptop computer, portable sonograph.

 ELECTRONIC EQUIPMENT INSURANCE

◦ This Policy comprise of three sections:-

◦ Sec I cover Material Damage to equipments only i.e. Physical/tangible part of machines
with auxiliaries like CPU,VDU(monitors),Printers, Key-board, Speakers, external Modems
– even the items which provide the computer environment like room air-conditioners,
UPSS, voltage stabilizers –all such items are insured against above risks.
 Sec II cover Material Damage to External Data
Media. The sum insured shall be the amount
required for replacing lost or damaged data
media by new material and for reproducing lost
information only for back-up data but not for
master data.
 Sec III covers Increased Cost of Working
following breakdown of equipments as covered
under Section I. The additional cost may be for
using substitute EDP equipment, for personal
expenses and cost of transportation of
materials.
 For sum insured of individual machine value
upto Rs. 1 Lac:-5% of the claim amount
subject to minimum of Rs.2,500/- for normal
claims.
 10% of the claim amount subject to minimum
of Rs.2,500/- for Winchester drive & Hard
disk claims.
1. For sum insured of individual machine
value above Rs. 1 Lac:- 5% of the claim
amount subject to minimum of Rs 2,500/-
for normal claims.
2. - 25% of the claim amount subject to
minimum of Rs 10,000/- for Winchester
Drive & Hard disk claims.
 Technical Survey : Is conducted of all
electronic equipments and computer
installations. This insurance cover is given
only for those equipments which have
completed at least 3 months trouble free
operations.

 Escalation maximum to the tune of 25% can

be opted by the insured.
 Loss /Damage due to
 1. Wear and Tear,
 2. Defects for which manufacturer is
responsible.
 3. Due to willful act of insured.
 4. War, Invasion and allied risks
2. Loss or damage to bulbs, valves, tubes etc.
3. Consequential loss of any kind in Section II
of policy. Any cost arising from false
programming, punching or inadvertent
canceling of information etc.
 1. Material Damage
 Repairs:-Indemnity is cost of repairs plus the
cost of dismantling and [Link]
deduction for depreciation for parts with
Unlimited life in case of repairs (i.e. for partial
loss ). The cost of any alterations,
improvements or overhauls shall not be
recoverable under the policy.
 2. External Data Media for floppies, discs
etc.
 Indemnity is for all expenses within a period
of 12 months from the date of
[Link] incurred will be for restoring
the insured external data media to a pre loss
[Link] from the date of loss , the sum
insured shall be reduced for balance policy
period unless the sum insured is reinstated.
 3. Increased Cost of working
 Indemnify the additional expenditure
following admissible loss in policy. This may
be in terms of hiring additional machines or
for using new premises to carry out the
work at higher cost.
 Discount for Fire Insurance:
 A) For equipments covered under E.E.I.
Policy as also under Fire Policy with all
extensions : A discount of 10% of the
applicable E.E.I. Rate (FOR SEC.-I ONLY);
 B) with some extensions only under Fire
Policy: 5% discount on Fire Rate (FOR SEC.-I
ONLY) .
 C) Without any extension (STFI OR RSDM):
7.5%
 WARRANTY –
 It is warranted that the Maintenance Agreement in force at
the inception of this policy is maintained during the
currency of this policy and no variation in the terms of the
Agreement shall be made without the written consent of
the Company being obtained.
 For the purpose of this warranty the word ‘Maintenance’
shall mean the following -

 Safety checks,
 Preventive maintenance
 Rectification of loss or damage or faults arising from
normal operation as well as from ageing.

MLOP
 This Policy covers Loss of Gross profits (
Consequential losses) following breakdown of
machine/s due to accidental.
This may so happen that after breakdown of a
critical machine the entire manufacturing
process comes to a halt .The actual cost for
replacing the damaged part may not be very
huge but following losses may follow:
 1. No profits as no production.
 2. Standing expenses like salary, interest, rent,
etc. are to be paid (EVEN AFTER THE LOSS & STOPAGE
OF PRODUCTION).
 3. Extra money may be required to start production from
an alternate place or with some alternative machines on
hire [which is known as INCREASED COST OF WORKING
(ICOW) ].
 All above losses are covered under Machinery
Loss of Profit insurance Policy.
 For claim to be paid in this policy, firstly the
claim should be admitted in the concurrent
Machinery Insurance Policy for Breakdown
(as per the MATERIAL DAMAGE PROVISO of
MLOP Policy) .
 Sum Insured:-Sum Insured is being fixed
keeping in view the expected Gross Profit
for year which is equal to Net Profit plus all
insured standing charges calculated on last
year’s annual A/C figures’ basis (i.e. this can
be determined from Gross Profit of the
previous year and including the trend for
increase or decrease expected in current
year of underwriting).
Premium Rate
 This depends on-(A)Relative importance
(normally expressed in %) of the insured
machines in relation to the final product &
in comparison to other machines. Stand-
by machinery will reduce the relative
importance,the interruption period and the
loss amount.
 (B) Indemnity Period &

 (C) Time Excess.

 (B)Indemnity Period(defined as the
Maximum Period of interruption
following breakdown of insured
machines for which insurer is liable. This
can be equal or less than the policy
period) i.e. the liability for payment of
loss due to reduction in turnover/output
during this period only, is accepted by
the insurer. Higher indemnity period
means higher liability for the insurers,
hence higher premium. Repair facility(
in-house/local) will reduce quantum of
loss in policy.
 (C) Time Excess in this policy is minimum
14 days.
 1. Time Excess( for all loss of profit policies
the stipulated deductible franchise are
always expressed in terms of number of
days (i.e. THE INITIAL STIPULATED NUMBER OF
DAYS’ PERIOD, DURING WHICH PERIOD THE LOSS
DUE TO REDUCTION IN TURNOVER/OUTPUT HAS
ALWAYS TO BE BORNE BY THE INSUREDS).
 2. Intangible losses such as loss of
market/goodwill which are not insurable
risks .
 3. Alterations, improvements or overhauling
made while repairing the insured machines.
 4. Willful or gross negligence of insured(s).