Boilers and pressure plants are essential components of many industries, providing heat and generating steam for various processes. However, they also pose significant risks if not properly maintained or operated. To mitigate these risks, it is crucial to have the right insurance coverage in place.
Many people often confuse boiler explosion policy (BEP) with boiler and pressure plant (BPP) policy. While BEP covers explosions specifically related to boilers, BPP policies provide broader coverage for both boilers and pressure plants. So what exactly do we mean by a boiler and a pressure plant?
A boiler is a fired closed vessel used for heating purposes. It contains a fire that generates heat to produce steam through the application of heat to fuel such as coal, oil, or gas. The generated steam must be under higher than atmospheric pressure to be classified as a boiler.
On the other hand, a pressure plant refers to an unfired closed container that operates under high-pressure conditions using steam, gas, or another fluid without any combustion process taking place inside. In simple terms, while boilers generate steam through combustion of fuel within them, pressure plants rely on external sources like stored pressurized fluids.
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Now let's delve into the specifics of boiler and pressure plant insurance policies:
1.Coverage: The main focus of these policies is on covering damage resulting from explosions or collapses of industrial boilers or other types of pressured vessels.
2. Damage: This includes repairs required due to explosion-related damages.
3. Surrounding Property: Any damage caused by the explosion or collapse that impacts nearby property.
4. Third-party Liability: Covers liability claims arising from accidents caused by malfunctioning equipment.
Exclusions:
While BPP policies offer comprehensive coverage against specific perils associated with boilers and pressured vessels; some exclusions apply:
1.Fire & Allied Perils: Damage due to fire incidents falls under standard fire insurance policies.
2. Breakdowns: Machinery breakdowns fall under machinery breakdown (MBD) insurance.
3. Gradual Developing Flaws: Issues that occur gradually over time, like corrosion or wear and tear, are generally not covered.
4. Contractual Liability: Damages for which a manufacturer or repairer is responsible under warranty terms.
5. War Group Perils & Willful Negligence: Losses caused by acts of war or intentional negligence are excluded.
Warranties:
BPP policies typically come with certain warranties, which must be adhered to for coverage to apply. The three primary warranties include:
1. Annual Inspection: All boilers and pressure plants must undergo an annual inspection by designated authorized inspectors appointed by the appropriate government authority. Failure to comply may result in claim denials.
2. Competent Operator: Only individuals holding a valid certificate of competency issued under the relevant national boiler regulations can operate boilers and pressure plants.
3. Written Permission from Competent Authority: In addition to inspections, written permission from competent authorities is necessary before operating boilers or pressured vessels.
Add-On Covers:
Insurance companies also offer add-on covers to enhance BPP policies based on specific needs:
- Express Freight Cover
- Holiday Overtime Wages
- Air Freight Cover
It's important to note that these additional covers may attract separate premiums depending on the insurer's discretion and rating criteria.
Declaration Requirements:
To ensure adequate coverage, policyholders need to declare certain information while obtaining BPP insurance:
1. Insured Boiler/Pressure Plant Value: The current replacement value of insured equipment should be declared accurately.
2. Surrounding Property Exposure Limitation (typically 25%): Declarations regarding surrounding property exposure help insurers assess potential damage risks adequately.
3. Third-party Liability Limits Selections
By complying with these declaration requirements, policyholders can avoid issues of underinsurance during claims settlements.
In summary, boiler and pressure plant insurance provides essential protection against explosions, collapses, damages to surrounding properties due to malfunctioning equipment, and third-party liabilities. While BPP policies cover a wide range of perils associated with boilers and pressured vessels, it's crucial to understand the exclusions
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