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Contractor's Plant and Machinery Insurance

For machinery owners and contractors, this policy provides compensation against potential losses due to equipment damage.

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What Is

Contractor’s Plant and Machinery Insurance?

Contractor's plant and machinery insurance (CPM) is a specialized insurance for contractors and construction companies. It protects against damage or loss to the machinery and equipment used in construction sites and factories. It covers a wide range of both owned and hired-in equipment such as:

Bulldozers

Loaders

Cranes

Compressors

Generators

Excavators

It also covers third-party claims against property damage and bodily injury caused at the insured construction site during the tenure of the policy.

Features of Contractor’s Plant and Machinery Insurance

It is designed for covering loss or damage to various plants and machinery used on construction sites

Most of the policies have the option to cover only selected machinery under the policy

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

Who Needs

Contractor’s Plant and Machinery Insurance?

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

Contractors and construction companies
Equipment rental companies
Individual equipment owners
Bank and financial institutions investing in the project

Why Get

Contractor’s Plant and Machinery Insurance?

Construction contractors rely heavily on machinery and equipment for their work. Some contractors choose to rent these machines, while others own them. However, if any of these machines get damaged or lost during construction, it can lead to a significant financial loss because these machines require a substantial investment.

A CPM (Construction Plant and Machinery) policy provides insurance coverage for the damage or loss of construction equipment such as compressors, cranes, bulldozers, and excavators. This coverage applies to accidents caused by external events like fires, riots, strikes, vandalism, storms, floods, earthquakes, and so on. Whether the equipment is actively being used, undergoing maintenance, or simply at rest, this insurance policy protects against both partial and total damage.

Coverages & Exclusions in

Contractor’s Plant and Machinery Insurance

CoveragesExclusions

Contractor’s plant and machinery (CPM) insurance provides coverage for the risks associated with machinery and equipment used by contractors in construction projects. Here are some common coverages typically included in this insurance policy:

Clearance and Removal of Debris

In the event of a covered loss, this add-on coverage provides reimbursement for the costs incurred in removing debris resulting from the damage to insured machinery and equipment.

Transit Coverage

This coverage extends protection to the insured machinery and equipment during transit, including loading and unloading, between different project sites or locations.

Plant and Machinery Cover for Physical Damage

This coverage protects the insured contractor against accidental physical loss or damage to the insured machinery and equipment. It includes coverage for covered perils such as fire, theft, flood, vandalism, accidental damage, and more. This coverage applies to items in use or at rest, or when they are being dismantled or cleaned, or when they are subsequently erected.

Some common exclusions typically found in contractor’s plant and machinery (CPM) insurance policies in India:

Mechanical or electrical failure or breakdown.
Pre-existing flaws and damages.
Losses resulting from the explosion of a pressure container or boiler.
Vehicles developed and licensed for regular on-road use.
When the factories or machinery are located on public highways.
Deterioration of machinery owing to inactivity.
Replaceable accessories and parts, such as knives, bits, drills, saws, cutting edge parts, molds, and so on, which have a greater rate of depreciation or wear by default.
Crafts or vessels used on the water.
Damage or loss caused by partial or total immersion in tidal surges.
Nuclear threats, war, or war-like activity.
When the machine is being tested.
Underground machinery other than tunnel boring equipment.
Any type of indirect loss.
Damage caused by terrorism.
Negligence or deliberate behavior by the insured or his representatives
Any damage for which the supplier or manufacturer is accountable.

Add-on Coverage

Third-party Liability

This add-on coverage protects the insured contractor against legal liabilities arising from bodily injury or property damage caused to third parties due to the insured machinery and equipment's operations. It includes coverage for legal defense costs and settlement amounts.

Express Freight Cover

This add-on coverage compensates for the additional cost of express freight charges incurred to replace or repair insured machinery and equipment in the event of a covered loss. By providing this coverage, the policy ensures that the contractor can quickly obtain the necessary machinery or equipment to resume work and minimize project disruptions.

Escalation of Cost

This add-on cover ensures that in the event of a covered loss, the insured contractor is reimbursed for the increased expenses of repairing or replacing damaged machinery or equipment. As a result of inflation or price changes on the market, project costs may escalate.

Air Freight

This add-on coverage compensates the cost of transporting insured machinery and equipment by air in the event of a covered loss. A good example of this coverage is when time is of utmost importance and the quickest way to minimize delays is to transport the machinery or equipment by air.

Contractor’s Plant and Machinery Insurance Examples

Incident 1Incident 2

Damaged Machinery Claim at BMRCL Site

Bangalore Metro Rail Corporation Limited (BMRCL) deployed nine Tunnel Boring Machines (TBM) last year to dig tunnels between Dairy Circle and Nagawara. Rudra, one of the Tunnel Boring Machines (TBMs) faced a huge pile of garbage which caught the cutter head of the machine, preventing it from moving. Luckily, 6 months later, the machine achieved a breakthrough and tunneled towards Langford Metro station.However, in such cases, there is a high probability that the machine can have severe damage. Not only this, there could be multiple instances such as landslides, earthquakes, or fire incidents which can also lead to damage to the heavy machinery used in construction projects. Here, the Contractor's Plant & Machinery (CPM) Insurance Policy comes to the rescue of the contractor. The policy covers the cost of repairs or replacement of the damaged machinery.

About Contractor’s Plant and Machinery Insurance

What is the full form of CPM insurance?

What is floater cover in CPM policy?

What is the difference between peril and coverage?

What perils are covered under the contractor’s plant and machinery insurance?

What is the duration of the contractor's plant and machinery insurance policy?

Is plant and machinery a liability or asset?

Who can take the contractor's plant and machinery insurance policy?

What are the additional add-ons one should purchase along with this policy?

Is it necessary to always update my insurance provider when my contact information changes?

How to make an insurance claim for contractor’s plant and machinery?

Should I inform the company if my old machine/equipment is replaced by a new machine of the same type and model?

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This is an article by YouStory written by Palak Agarwal and published on October, 2022

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