Contractor's Plant & Machinery Insurance

Since all the toughest jobs on any construction site are done by the equipment and tools, so any damage caused to these machinery can result in catastrophic loss. Therefore, contractor’s plant & machinery insurance are introduced in order to provide cover to the machinery and plants against any damage or physical loss.

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What is Contractor’s Plant & Machinery Insurance?

A contractor plant and machinery insurance policy is a legal contract between the policyholder and insurance company that provides financial coverage to the factory owners with big machines and manufacturing plant sites. In case any of the machine stops working can result into financial loss and this policy make sure to provide financial aid to the policyholder.

Salient Features of Plant and Machinery Insurance:

Following are the key features of the Plant and Machinery Insurance:

  • It is designed for covering loss or damage to various plants and machinery used on project sites.
  • There is an option to cover only selected machinery under the policy.

Why is It Required?

Every civil or building contractor is highly dependent on the machinery or plant for work. Some of the contractors hire these machinery or plants whereas some have their own. However, any damage or loss to any machinery involved in construction can result in a heavy loss as these machines represent a huge amount of investment.

Having plant and machinery investment keeps the contractor relaxed as his/her machinery are protected against any loss or damage. Therefore, building contractors are always recommended to opt for plant and machinery insurance. Some of the benefits that contractor gets with this insurance policy are:

  • Under this plan, most of the insurance providers broadly cover damage or loss incurred to the mobile constriction equipment like compressors, crane, bulldozer, excavators, etc. because of an accident arising due to external perils.
  • A contractor’s plant & machinery insurance plan remains operative for all the items insured, whether these items are at work, being dismantled for overhauling or cleaning purposes, or are at rest.
  • Provides complete coverage for both partial and total damage to machinery or equipment.
  • Insurance is offered as per the current replacement value of the machinery.

What does it cover?

The Plant and Machinery Insurance covers the following:

  • The plan broadly covers loss or damage to the contractor's construction mobile equipment, such as cranes, compressors, bulldozers and excavators due to an accident arising out of external perils.
  • The cover is operative while the insured property is at work or at rest, or being dismantled for the purpose of cleaning or overhauling, or during subsequent re-erection.

Add on Covers

On payment of additional premium, you can opt for the following covers:

  • Express freight
  • Air freight
  • Owner's surrounding property
  • Clearance and removal of debris
  • Additional custom duty
  • Escalation
  • Earthquake
  • Third party liability
  • Equipment mounted on floating vessel/craft
  • Terrorism

What is not covered in Plant and Machinery Insurance?

The common exclusions are:

  • Mechanical or electrical breakdown, breakage, or failure.
  • Pre-existing faults and damages.
  • Damages incurred due to the explosion of any pressure vessel or boiler.
  • Vehicles that are designed and licensed for normal on-road use.
  • Replaceable attachments and parts such as drills, knives, bits, saw, moulds, cutting edge parts, etc. which by default suffer from a higher rate of depreciation or wear.
  • When the plants or machinery are on public roads.
  • Deterioration of machinery due to lack of use.
  • Water-borne crafts or vessels.
  • Damage or loss incurred due to partial or total immersion in the tidal waves.
  • Machinery other than tunnel boring machines working underground.
  • Nuclear perils, war or warlike operations.
  • When the machine is undergoing any test.
  • Any kind of consequential loss.
  • Damage incurred due to terrorism.
  • Damage for which the supplier or manufacturer is responsible.
  • Negligence or willful act of the insured or insured’s representative.

Who can take the insurance?

Anyone of the following parties can take the insurance, either individually or jointly:

  • Owner of the plant and machines
  • Banks and financial institutions investing in the project
  • The contractor or the user of the construction machinery

Sum insured

The sum insured will be equal to the cost of replacement of each item by a new item of the same kind and capacity, which means current new replacement cost will include ordinary freight, customs duty, other charges if any, and cost of erection.


The premium depends on the type of equipment, use of equipment, location, and risk you are entailing.

How to make a claim?

In the event of any loss or damage, follow the below mentioned steps:

  • Inform insurance company immediately
  • Extend full cooperation to the surveyor deputed by the company
  • Submit duly filled claim form, along with necessary documents, to substantiate the financial loss suffered because of the accident

Contractor's Plant & Machinery Insurance-FAQ's

  • Q: What is construction plant & machinery insurance policy all about?

    Ans: This policy is specifically designed to safeguard building contractors and tradesman against any loss/damage caused to their plants and machinery. The construction machines represent a large investment and any kind of loss or damage caused to them can lead to a financial catastrophe. Construction Plant & Machinery insurance covers this cost and safeguards you against any loss of business machinery.
  • Q: What are the benefits offered by this policy?

    Ans: It provides a cover for the damage/loss of your machinery such as bulldozers, compressors, cranes, etc. The best part is, this insurance policy also covers them irrespective of the fact they are working or at rest, or have been dismantled for cleaning purposes
  • Q: How much premium would one need to pay?

    Ans: The premium amount depends on various factors such as risk exposure and the insurer’s underwriting requirements
  • Q: What is the duration of this cover?

    Ans: The duration of this cover is 1 year, and you will need to renew this police yearly if you want to continue with its benefits.
  • Q: Is there a list of exclusions we need to know about before signing up for this policy?

    Ans: This policy has certain major exclusions you should know before signing up for the policy. Few of them are: 1. Replaceable attachments and parts 2. Mechanical/electrical breakdown 3. The explosion of any pressure vessel or boiler 4. Waterborne crafts and vessels 5. Total or even partial immersion in tidal water 6. Acts of terrorism, war or civil war 7. Radioactive or nuclear energy/radiation emission 8. Wilful negligence 9. Damage caused due to underground working
  • Q: Is there any cancellation charge for cancelling the policy?

    Ans: Yes, you can get the policy cancelled by providing a written notice. In this case, you will get a refund of the premium subtracted by the amount for the period you were enrolled in the policy.
  • Q: Do I have to always update my insurance provider about any changes in my contact details?

    Ans: Yes, it’ really important to let the insurer know about any changes in your contact details as it will ensure timely delivery of all the correspondence sent to you.