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Machinery Breakdown

Sudden and unforeseen electrical or mechanical failure of plant in operation, at rest or during cleaning and overhaul. This is the gap a fire policy leaves open: a motor that burns out from an internal electrical fault is not a fire loss, and is not covered by the fire policy that most plants assume protects their machinery.

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Coverage at a Glance
Sudden & Unforeseen

Internal electrical and mechanical failure

Not a Fire Peril

The gap the standard fire policy leaves open

Surrounding Property

Extension for damage caused to nearby assets

Own Surrounding Plant

Third-party and own-property extensions available

Sudden& Unforeseen
FireGap Filled
ExtensionsAvailable
PlantSchedule Based
Coverage

What machinery breakdown answers for

A fire policy pays when a machine burns. It does not pay when a machine simply fails. This is the cover for electrical and mechanical failure of plant in operation.

Electrical and mechanical breakdown
Short circuit, insulation failure, overheating, seizure, vibration, centrifugal force and defective lubrication. Sudden and unforeseen failure of the machine itself, which the fire policy expressly excludes.
Operator error and faulty workmanship
Damage from careless operation, lack of skill, or defects in erection and installation that show up only when the plant runs.
Repair or replacement
Settled on a reinstatement basis where the sum insured reflects the cost of putting back a new machine of like kind and capacity, including freight, duty and erection charges.
Third party property damage
Some forms extend to damage caused to surrounding property by the failure, which on a large rotating machine can exceed the value of the machine itself.
Loss of profit following breakdown
Available as an extension on the same principle as fire business interruption, covering the gross profit lost while a critical machine is out of service.
Boilers and pressure plant
Explosion and collapse of boilers and pressure vessels is a separate but closely related section, and on an older installation it is the one worth reading carefully.
Advisory approach

Year of manufacture decides more than the sum insured does

This is the cover where a machine's age changes what is available rather than only what it costs. Beyond a certain age insurers restrict cover, apply higher excesses or decline the item outright, and the threshold differs between them. An itemised schedule with the year of manufacture against each machine is therefore the first thing we ask for, because a schedule that says only a total value cannot be placed properly.

The second thing that decides a claim is the sum insured basis. Reinstatement means what it would cost to buy that machine today, landed and erected, not the depreciated book value carried in the accounts. A schedule built from the fixed asset register almost always understates it, and the shortfall is applied proportionately to the claim.

Where a single machine is the plant, the loss of profit extension is worth more than the material damage section. A press or a furnace that takes four months to replace stops the factory for four months whether or not the repair bill is paid promptly.

FAQ

Common Questions

The fire policy responds to fire, explosion and the named perils, and expressly excludes the machine's own electrical or mechanical failure. Machinery breakdown covers exactly that exclusion. Neither substitutes for the other and a plant needs both.
It depends on the machine and the insurer. Cover on older plant is restricted, carries higher excesses, and past a threshold is often declined. Where it can be placed it is usually still worth having on any machine whose failure would stop production, which is a different question from the machine's book value.
The cost of replacing it today with a new machine of like kind and capacity, including freight, customs duty and erection. Not the written-down value in the fixed asset register, which is an accounting figure and has no bearing on what a replacement costs.
No. Gradual deterioration, wear, corrosion, scaling and the parts that are expected to be replaced in normal maintenance are excluded. The cover is for sudden and unforeseen failure, not for the consequences of deferred maintenance.
Yes, by a loss of profit following machinery breakdown extension. It works on the same gross profit basis as fire business interruption and needs an indemnity period matched to the real replacement lead time for that machine.
An itemised list of machines with make, model, year of manufacture and capacity, the sum insured per machine on a reinstatement basis, and the location of each.