Factors Affecting Plant and Machinery Insurance Premiums (CPM)

A lot of industries rely heavily on machinery and equipment for their operations. Given that most of these are capital intensive, businesses should have a contractor's plant and machinery insurance (CPM). While the higher the machinery price, the higher the premium demanded (in most cases), the risk associated can also influence the premium charged.

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Assessing the Risk Associated with the Operational Setting

Locations prone to natural disasters, political unrest, civil conflicts, and high crime rates carry a higher risk of property damage and business interruption. The risk assessment for locations with harsh environmental conditions leads to higher insurance premiums on account of the frequent maintenance and repair costs.

Machinery and equipment are susceptible to wear and tear, mechanical failures, and breakdowns, resulting in production delays, downtime, repair costs, and loss of revenue. Failure to follow proper maintenance and safety protocols can result in workplace accidents and cause occupational health issues for employees.

The probability of accidents is higher because of inadequate training, lack of personal protective equipment (PPE), and non-compliance with safety regulations. All of these can adversely affect the premium demanded by the insurer.

Evaluating Maintenance Practices and Schedules

Machinery and equipment come with guidelines for transport, storage, and use. Safety protocols ensure that machinery is operated per the recommended procedure, thereby minimising risks such as accidents, injuries, and occupational hazards. The plant should implement preventive measures to ensure the machinery and equipment are in good condition during storage or usage.

The insurer sends their representatives to assess the machinery in person. Their assessment can be a major factor in deciding the premium to charge for the insurance. For example, if the machinery is in good condition and taken good care of, the policyholder will have to bear a lower premium as the chances of its breakdown are lower compared to equipment which is not taken proper care of.

Another factor that majorly affects the CPM premiums is claims history. If the business has a history of raising claims, the insurer would be wary of that and naturally demand a higher premium. Similarly, if they find the risk management of the asset to be inappropriate, it would push them to charge more for asset indemnification.

Assessing Security Measures in Place for Machinery Protection

Given the high value of the item involved, the safety measures implemented in the unit also decide the premium. If the insurer is happy with the plant’s safety record, the coverage can be at a lower premium. If the asset has a history of safety violations or frequent accidents, the premium you would pay to cover it would be higher.

Like with most policies, there are a lot of optional coverage options for CPM, too. While these can affect the total premium outflow, these can also contribute to a more complete coverage for your plant and machinery.

Here are some popular add-ons for contractors’ plant and machinery insurance that most owners avail -

  • Third-party Liability
  • Owners surrounding policy
  • Debris clearance and removal
  • Express freight
  • Air freight
  • Dismantling and shifting costs
  • Escalation of cost
  • Earthquake
  • Additional customs duty

If the business opts for more add-ons, it will result in a rise in premium outflow for the CPM policy.

Also, the deductibles and their scope impact the final premium the policy buyer pays for the coverage. The variables depend on the asset size and the risk associated with it. These deductibles refer to an amount decided to be kept aside by the insurer and the insured during policy purchase.

These deductibles help curb the insurer's liability, resulting in lower premium demand from them to cover the asset. Also, when a claim is raised, the insured is liable to clear their side of the pre-decided deductible amount for the insurer to be liable for their part of the share.


Plant and machinery insurance premiums (CPM) are determined based on factors related to risk, location, regulation, maintenance practices, safety protocols, coverage options, and business operations. It is in the interest of the unit owners to make informed decisions and seek cost-effective and comprehensive insurance coverage. Policybazaar for Business offers multiple choices from the top insurance providers to help you find the best plant and machinery insurance policy for your specific needs.

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Policybazaar for Business - Plant Machinery Insurance - Customer Reviews
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4.5 March 02, 2022
Ideal Process
My insurance plan provides cover for all sorts of damages and injuries. I was looking for a plan like this. I have found it on a good price from Policybazaar.
4 February 26, 2022
No Spending Costs
With a sudden malfunction in the machinery, one of the worker broke a pack of bricks. We were able to get settlemnt for it from our insurance and were able to get a new set without spending costs.
4.3 February 22, 2022
Owner Property Coverage
As we were working on a site we took owner s surrounding property cover so that in case of mishap, we would be prepared for compensation.
5 February 18, 2022
Freight Insurance
As we had to transport certain equipment, we booked air freight insurance for it to secure it against any damages. The insurance was rather affordble.
4.5 February 14, 2022
Didnt Have To Pay Out Of Poacket
At one of the debreis removal sites, we had a slight accident and there was third party damages. Thankfully we had the insurance coverge with us and we didnt have to pay out of pocket for the damages.
5 February 10, 2022
Claim Settlement For Vandalism
My cranes and other equipment were vandalised at night. i was able to get a claim settlement for the damages.
5 February 09, 2022
Add Ons That Are Needed
We have added the add ons of owners property, debreis removal, earthquake and third party liability in our policy coverage which provides us the deal that we needed. We had bought it from PolicyBazaar on cheap premiums.
4.5 February 09, 2022
Protection Against Da For Low Premiums
The recent project started by our company involves the isage of heavy machineries. Sometimes machineries get damaged on their way to site or due to some other reasons. We have bought the contractos plant and machinery insurance to ensure the safety against such damages. we have bought it on PolicyBazaar with premiums at 1000 only.
4 February 01, 2022
Good Packages
Buying plant and machinary insurance has proven to be beneficial for us. It protects us against a lot of things stike, theft, accident, fire and amny other things. It is an amzing packaging.
4.3 January 31, 2022
Time Saving
We have a heavy machine comapny. We needed insurance for it but as we were too busy we couldnt have the liberty to go down to the insurance office. We looked up online and found PolicyBazaar. We chose the online procedure which not only saved us time but gave us what we needed.