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Machinery breakdown insurance
Internal breakdown of a machine, a transformer or a production line is not usually covered by the property damage policy. Machinery breakdown insurance covers that risk.
Key points
Machinery breakdown insurance covers internal breakdown of machines, equipment and industrial installations, damage that the property damage policy does not normally cover. It can be extended to include business interruption while the machine is out of action.
It covers sudden and unforeseen damage to machinery from internal causes: electrical faults, operator error, defects in materials or assembly, lack of lubrication or breakage due to centrifugal force, among others, depending on the policy.
What it covers
Repair or replacement
The cost of repairing the damaged machine or, if that is not possible, replacing it.
Electrical damage
Short circuits, power surges and other internal electrical faults.
Operator error
Damage caused by the lack of skill or negligence of the staff operating the machine.
Business interruption following breakdown
Optionally, the margin lost while the machine is out of action.
What to check before taking it out
The schedule of machinery
Which equipment is insured and the sum insured for each item.
Replacement value
The sum insured must match the cost of an equivalent new machine.
Exclusions
Normal wear and tear and routine maintenance are not covered.
The deductible
The part of each claim borne by the business.
Frequently asked questions
How does it differ from the property damage policy?
The property policy covers external causes, such as fire or water. Machinery breakdown covers breakage due to internal causes within the machine itself.
Does it cover wear and tear?
No. Wear and tear from use and routine maintenance are excluded.
Can downtime be included?
Yes, with machinery breakdown business interruption cover.
Which machines can be insured?
Production machinery, electrical and electronic equipment and installations, depending on the policy.
How is the sum insured set?
Using the new replacement value of each machine, to avoid underinsurance.
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