Policy is issued for covering loss or damage to Plant and Machinery such as Boilers/Pressure Plants with auxiliaries, electrical equipment like alternators/generators/motors/rectifiers/switchgear/transformers/mechanical plant/machinery including engines, pumps, process machinery, blowers, compressors, refrigeration plant, turbines, machine tools and presses, lifting equipment like lifts, hoists, cranes, conveyers. Policy covers unforeseen and sudden physical loss or damage by any cause (other than exclusions) while it is at work or at rest or while being dismantled for cleaning or overhauling or during cleaning or overhauling, during subsequent erection/reassembly or while being shifted within the insured premises. Loss producing event could be (a) Electrical short circuit, arcing, failure of insulation, malfunctioning of control circuits etc., (b) Mechanical e.g., faulty material, casting, vibrations, maladjustments, loosening of parts, abnormal stress, centrifugal forces, defective lubrication, failure of protective devices, (c) External/accidental e.g., entry of foreign body, impact, collision, etc. Sum Insured need be current new replacement value including transportation to site, duty, erection or installation cost. However, Policy does not cover Fire Policy risk and perils.

A clause in a machinery Insurance contract providing that, in case of loss to a machine consisting of several parts, the Insurer will not be liable for more than the insured value of the part to which loss occurs.

The main object of machinery leasing insurance is to protect the leasing company’s interest as the owner of installations and machinery leased for a certain number of years under various leasing contracts. It also covers the interests of the lessee, however. It is an all risks cover with the same scope as that of Electronic Equipment Insurance. The type of machines and equipment automatically insurable by declarations under the contract, which is in the form of a master policy. Installations are insured with an automatic extension of the annual cover up to a maximum of five years, the usual length of a leasing contract. The individual value of the leasing contracts, which are automatically covered on declaration, is subject to a limit per insured location.

Policy covers business interruption losses consequential upon material damage as defined in the respective policies. The indemnity is provided against loss of net profit, loss of insured standing charges and increased cost of working. Insured has the option to select the key items of the Plant where stoppage would seriously interrupt the business, e.g., steam boiler, turbo alternators, transformers, major process machinery and so forth for Material damage + Loss of Profit. It is a condition under MLOP that a claim must first be admitted under the concurrent material damage (Machinery or Boiler) Insurance policy before a claim becomes admissible under the MLOP. However, if no payment is made solely as a result of an excess under the material damage policy, i.e., the liability admitted, the MLOP loss will be admissible.

Are (i) Cessation of work which is similar to the exclusions under RSMTD Clause of Standard Fire and Special Perils Policy i.e., mere inaction by employees in furtherance to demands; (ii) Failure of utilities like water, gas and power supply (iii) Operation of the plant beyond design specification and capacity ratings. (iv) Normal wear and tear (v) Defective design (vi) Leakage of overflow of contents is not considered a direct damage. Hence, excluded. (vii) Seepage and Pollution. However, deliberate damage to insured property in order to prevent or mitigate the pollution hazard or threat resulting directly from a damage to property insured is covered. Excluded property is similar to Industrial All Risks Insurance. Add On covers available. Capital addition to the extent of 5% automatically covered. Shut down and startup costs covered. The policy also covers increase or decrease in value up to 10% without any adjustment in premium. Business interruption and marine covers follow the coverage under the respective policies.