What is CPM Insurance Policy?
- DetailsWritten by PolicyBazaar -
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Updated date : 07 December 2020
Contractors Plant and Machinery Insurance or CPM insurance is an all-risk insurance policy that provides coverage for the plant and machinery of a contractor for a specific worksite. Machinery and plants such as forklift trucks, bulldozers, compressors, drilling machines, etc. are most of the time used in rough conditions and hence they are more vulnerable to damage. Breakdown of these machineries can pause the completion of the on-going project and hence may put other things at risk. In such a situation, the CPM policy comes as a rescue. Under this policy, the contracts get coverage against any unforeseen and sudden physical damage or loss to his/her plant and machinery.
Advantages of a CPM Insurance Policy
At any plant site, the contractor is completely dependent on machinery and plant work. Physical loss or damage to these machinery and plants can lead to heavy loss as these machinery and plants need huge investment.
Insurance of such machinery and plants can keep the contractor relaxed because his/her machinery and plants are safeguarded against any damage or loss. Mentioned below are some of the advantages of a CPM Insurance policy:
- Provides coverage against damage and loss to insured plants and machinery or equipment of construction due to an accident that arises because of external perils such as accidental damage, fire, burglary, riot, etc.
- Most of the CPM insurance policies cover the replacement of the machinery according to its current replacement price.
- A CPM insurance policy as well provides the freedom to the contactor to select the plant and machinery & equipment of his/her site of work.
The general inclusions of a CPM insurance policy are as follows:
- Provides coverage for insured machinery and plant against any physical damage due to any reason unless that reason is specifically excluded.
- The CPM insurance policy is issued as per the current replacement value of the machinery.
- Most CPM insurance plans offer complete or partial cover or total damage to equipment and machinery.
- The policy can be purchased after the successful commission of the machinery.
- Provides coverage for all the insured items, whether they are at rest or work or they are being dismantled for overhauling or cleaning purposes.
An add-on cover or rider can be purchased for adding more coverage to the selected insurance plan. Generally, add-on covers are available by paying some extra amount. The add-ons provided by a CPM insurance policy are:
- Owners surrounding policy
- Additional customs duty
- Removal and clearance of debris
- Express freight
- Shifting and dismantling to a new location
- Escalating of cost
- Liability of third-party
- Damage or loss due to mechanical or electrical breakdown or failure
- Pre-existing damages and faults
- Damage or loss of replaceable parts like drills, bits, cutting edges or knives, saw blades, molds, dies, etc.
- Damage or loss because of the explosion of the pressure vessel or boiler subject to fluid pressure or internal steam or because of any internal combustion engine.
- Damage or loss to the plant that is insured machinery and plant because of:
- Nuclear and war perils
- Wilful negligence/ act of the insured
- Manufacturers guarantee or contractual liability
- Consequential liability or loss of any description or kind
- Damage because of terrorism risk
- Damage for which the supplier or manufacturer is responsible
- Transit risks
Duration of the Policy:
This policy is generally renewed on an annual basis.
Summing It Up!
A CPM insurance policy provides a big relief to the contractors as their machinery and plants are safeguarded against any damage or loss. So, being an owner of heavy machines used in construction or being an owner of a plant, or the users of heavy construction equipment or contractors must purchase this insurance policy.
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