Contractor's plant and machinery insurance is a specialized policy designed to provide coverage for various types of equipment used in construction projects. This type of insurance is divided into two categories: construction-related equipment and material handling equipment.

Construction-related equipment includes excavators, road rollers, wet mix hot mix plants, concrete pumps, graders, pavers, and DG sets. These are all essential tools used in the construction industry. On the other hand, material handling equipment comprises cranes, forklifts, conveyors, chain pulley blocks, and more. It covers a wide range of both owned and hired equipment.

It's important to note that this list is not exhaustive as there are numerous types of machinery covered under this policy. The specific categorization may vary depending on the tariff rates provided by different insurers. Whether an item falls under material handling or construction category doesn't make much difference as they have separate rates mentioned in the tariff.

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Coverage under Contractor’s Plant and Machinery Insurance

The coverage provided by contractor's plant and machinery insurance starts from successful commissioning at the site. However, transit is not covered under this policy; it only becomes effective once the machinery is assembled or commissioned at the construction site. In some cases where large machinery arrives at the site in parts requiring installation before commissioning can occur.

When issuing a contractor's plant and machinery policy, it should be done only in favor of the owner or financial institutions with an interest in protecting their investment. The insured sum must represent the present-day replacement value of a similar new item inclusive of freight duty tax costs.

This condition ensures that if any damage occurs to the insured property during its operational lifespan due to unforeseen events like fire or theft resulting in total loss or partial damage beyond repair/repairable limit then insurer will indemnify such loss subject to terms & conditions mentioned within contracts/plant/machinery policies respectively but without depreciation applied over market value unless otherwise agreed upon between both parties beforehand via written consent form either part could challenge said agreement if not abided by.

It is crucial to understand that for machinery costs less than 5% of the total project cost or Rs. 25 lakhs, whichever is lower, separate contractors plant and machinery policy must be taken. This provision has been put in place to avoid confusion under project insurance policies where insurers prefer a clear distinction between the two types of coverage.

However, even if contractors' plant and machinery are covered under the main CAR/EAR (Construction All Risks/ Erection All Risks) policy, specific rules and regulations will still apply. A separate clause will be included under this policy outlining terms and conditions related to settlement of claims concerning contractors plant and machinery.

What is policy excess in CAR policy?

Policy excess refers to the amount that needs to be paid by the insured before any claim can be settled. The insurance company may charge increased excess based on their discretion; however, it should always be discussed with the insured prior to its implementation. If an insurer applies higher access without written consent from the client, it can be challenged as per guidelines provided by IRDA (Insurance Regulatory Development Authority).

In case of collision involving two pieces of equipment covered in a single loss event, only one excess shall apply - the higher one among them. Similarly, for additional covers such as debris removal or other associated damages incurred during a collision incident involving multiple machines or surrounding property damage claims would also have only one applicable excess according to tariff provisions set forth by insurance companies.

Additionally, there may be separate access charges applied for air freight and additional custom duty when they form part of an insured's coverage requirements beyond standard tariff rates outlined within contracts/plant/machinery policies depending upon agreed terms stipulated therein individual agreements between both parties involved at time contract inception but subject change over duration validity thereof unless specified otherwise explicitly stated beforehand via written consent form either party could challenge said agreement if not abided by accordance with IRDA guidelines

Contractors' plant and machinery insurance plays a vital role in protecting the valuable equipment used in construction projects. It safeguards against unforeseen events, providing financial coverage for repair or replacement costs.

Who needs CAR policy?

Any one of the following parties can individually or jointly take CAR policy -

  • Construction firms
  • Equipment rental companies
  • Financial institutions investing in the project

In case of equipment/machine replacement, do I need to inform the insurer?

In order to obtain CPM insurance, the insured must provide the serial numbers of all machines at his disposal. If any machines are replaced, the insurer must be informed immediately.

Read more about CPM Insurance

Read more about EAR Insurance