Pharmaceuticals ยท plant & machinery
Machinery Breakdown Cover for Pharmaceutical Plants
A pharmaceutical plant's largest uninsured exposure is often a motor. Machinery breakdown is the cover most plants assume their fire policy provides, and it does not.
Key takeaways
- A fire policy responds to fire. A compressor that fails from an internal electrical fault has not had a fire, and the claim is declined.
- For pharma the consequential exposure is larger than the machine: a cold-chain failure spoils stock whose value dwarfs the equipment that failed.
- Deterioration of Stock cover is a specific extension and is not automatic with a machinery breakdown policy.
- Validated and qualified equipment cannot simply be replaced like for like; re-validation time belongs in the business interruption indemnity period.
The gap the fire policy leaves
Standard fire and special perils policies exclude the machine's own breakdown. They cover what fire does to plant, not what plant does to itself. Machinery breakdown insures sudden and unforeseen electrical or mechanical failure in operation, at rest, or during cleaning and overhaul.
Cold chain and deterioration of stock
Where refrigeration fails, the loss is rarely the compressor. It is the batch. Deterioration of Stock extends machinery breakdown to the stock spoiled by the failure, and it is rated on the value at risk in the affected chambers, so the declaration has to reflect actual holdings rather than an annual average.
Re-validation is part of the downtime
Replacing qualified equipment in a regulated plant is not a purchase, it is a qualification exercise. IQ, OQ and PQ take time, and that time is downtime. A business interruption indemnity period set without it will expire before production resumes.
Frequently asked questions
Is machinery breakdown included in a fire policy?
No. It is a separate cover, and the assumption that fire includes it is the most common gap we find in plant programmes.
Does it cover wear and tear?
No. It covers sudden and unforeseen failure. Gradual deterioration, and the maintenance you should have done, are excluded.
What about the stock lost when a chiller fails?
Only if Deterioration of Stock is added. It is an extension, not a default.
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