Contractors’ Plant and Machinery Insurance
What is Contractors’ Plant and Machinery Insurance?
Contractors’ Plant and Machinery Insurance, commonly known as CPM insurance, offers financial protection for machinery and equipment used at construction sites.
Construction machinery comes with a high price tag, ranging from a few thousands to several crores. Here is a quick look at some of the heavy equipment.
- Mini Excavator - Approximately ₹1 Lakh to ₹47 Lakhs
- Crane - Approximately ₹9000 to ₹2.41 Crores
- Bulldozer - Approximately ₹1.60 Lakhs to ₹1.62 Crores
Damage to high-value plant and machinery, such as cranes, excavators, stone crushers, mixing plants, or bulldozers can lead to significant financial losses.
CPM insurance covers the cost of repair or replacement in the event of physical loss or damage to plant and machinery, including theft. This coverage applies when the machinery is in use at construction sites, at rest, or while being maintained.
TATA AIG offers a comprehensive Contractors’ Plant and Machinery Insurance policy with a high sum insured that covers a wide range of machinery and equipment. It offers flexibility, multiple coverage options, and a hassle-free claims process, all in one policy.
Who Should Buy Contractors’ Plant and Machinery Insurance?
A CPM policy is essential for any business owner or company that deploys or uses machinery at construction sites. It is particularly important for the following categories of users:
Individual Machinery Owners
To reduce the out-of-pocket expenses incurred for repair or replacement costs due to unexpected damages.
Contractors/ Users of the Machinery
To pay for the applicable cost as they are liable for damages, whether they own the machinery or have hired it from another company.
Construction Company Owners
For financial protection of the machinery and equipment used across multiple project locations.
Machinery Rental Company Owners
To secure their rented-out equipment from unforeseen incidents at construction sites.
Real Estate Developers
To secure the machinery used in large-scale construction projects to avoid disruptions.
Financial Institutions (Banks)
To cover potential losses if financed machinery is damaged and the borrower is unable to repay.
Why is CPM Insurance Required?
Essential for the Construction Industry
Machinery used in the construction industry is high in value and exposed to various risks. Any damage can result in significant financial losses, which can be covered by the Contractors’ Plant and Machinery Insurance.
Protection Against Unexpected Risks
Unforeseen events like accidental damages can affect the machinery and the workmen operating them. CPM insurance covers the repair or replacement costs for the machinery. Additionally, with a Workmen’s Compensation Insurance plan, you can ensure protection for your workers from such job-related incidents.
Supports Project Continuity
Damage to the plant and machinery can disrupt project timelines. Contractors’ Plant and Machinery Insurance helps in restoring the operations to reduce the delay and ensure smooth and timely project execution.
Supports Financial Obligations
If machinery is damaged and the project work is disrupted, financial obligations, such as loan repayments, may be affected. Machine insurance policy helps resume project work to ensure steady income for meeting the financial commitments.
Features of TATA AIG Contractors’ Plant and Machinery Insurance
Coverage for High-Value Machinery
Designed to protect expensive machinery with a higher sum insured.
Exclusive Protection
Covers physical loss or damage to selected machinery used at construction sites.
Full Replacement Cover
Sum insured is based on the cost of replacing the property with a new one of the same type, including transport, customs duties, and erection charges.
Flexible Location Options
Choose coverage for a single site, selected locations within a city, or across India with a floater policy.
Annual Policy Term
Insurance for machinery is available as a yearly policy with the option to renew annually.
Customisable Coverage
Choose the coverage for selected machinery and determine the sum insured as per your needs.
Optional Add-ons
Enhance your policy with add-ons like Escalation Clause, Express Freight, Third-Party Liability, Earthquake Cover, and more.
Focus on High-Value Machinery
Suitable for cranes, mixing plants, stone crushers, pavers for asphalt, pumps, motors, compressors, vibrators, excavators, bulldozers, loaders, and more.
Benefits of Contractors’ Plant and Machinery Insurance
Comprehensive Coverage
Covers machinery against most types of risks, except for those specifically excluded in the policy.
Cost-Effective Solution
Offers protection for high-value machinery at an affordable premium. This helps in reducing the financial burden of owning or operating expensive machinery.
Flexibility
Choose which machinery to cover, the coverage location (whether single site or multiple locations), and determine the sum insured.
Support for Multiple Stakeholders
Protects all parties involved in the project, including the owner, contractor and financial institutions with a stake in the machinery.
Covers Additional Costs
Covers custom duties, transportation, and erection charges, in addition to the coverage for repair or replacement of damaged equipment.
What is Covered Under TATA AIG Contractors’ Plant and Machinery Insurance
Coverage for Physical Loss or Damage
Covers physical loss or damage to the plant and machinery while in use, at rest or under maintenance at the construction site.
Repairs Carried Out at a Repair Shop
Covers the cost of restoring the machinery, including expenses for dismantling, re-erection, freight to and from the repair shop, and applicable customs duties.
Repairs Carried Out on the Insured’s Premises
Covers the cost of materials and wages incurred for repairs at the insured’s location. It also covers reasonable overhead charges.
Total Loss Coverage
Covers the depreciated replacement value of the item in case of total destruction, including expenses for dismantling, erection, transport and customs duties.
Please note: Inclusions under the insurance for plant and machinery are subject to the policy terms and conditions. Please refer to your policy document for detailed information.
What is Not Covered Under TATA AIG Contractors’ Plant and Machinery Insurance
Standard Policy Exclusions
- Excess amount payable by the insured.
- Consequential loss or liability
Mechanical, Electrical, and Operational Issues
- Loss or damage due to electrical or mechanical breakdown, breakage, freezing of coolant and similar issues.
- Loss or damage during testing, operation, or when equipment is used for purposes other than intended.
Replaceable Parts and Specific Scenarios
- Loss of or damage to replaceable parts, such as drills, saw blades, moulds, etc.
- Issues found only during routine servicing or inventory.
- Loss or damage due to the explosion of any boiler or internal combustion engine.
Damage to Specific Equipment and Vehicles
- Loss or damage to vehicles designed for general road use.
- Loss or damage to the hull and machinery of waterborne vessels or crafts.
- Loss of or damage to plant and machinery working underground.
Transit and Location-Based Exclusions
- Loss or damage to the machinery while in transit outside the construction site. A Marine Insurance Policy can cover equipment in transit.
- Loss or damage due to partial or total immersion in tidal waters.
Pre-existing Conditions and Natural Deterioration
- Loss or damage due to defects existing at the time of purchase.
- Loss or damage due to natural wear and tear, corrosion, rust, etc.
War, War-like Events, and Nuclear Perils
- Loss or damage arising from war, invasion, mutiny, civil commotion, etc.
- Loss or damage due to nuclear reaction or nuclear radiation.
- Terrorism, unless specifically covered.
Negligence and Third-Party Issues
- Loss or damage due to a willful act or negligence
- Loss or damage for which the supplier or manufacturer is responsible
Please note: This list of exclusions under construction machinery insurance is not exhaustive. For the complete list, please refer to the policy document.
Contractors’ Plant and Machinery Insurance Add-ons
Escalation Clause
Covers the increased cost of repair or replacement of damaged equipment beyond the sum insured, due to inflation or other specified factors.
Express Freight
Covers the additional expenses incurred for transporting machinery or equipment through express services.
Air Freight
Covers the additional cost of transporting machinery or equipment via air transport to reduce project delays.
Owners Surrounding Property
Covers damage or loss caused to the owner’s property due to the plant and machinery at the construction site.
Third-Party Liability
Covers third-party liabilities arising from third-party bodily injuries or property damage caused by the insured plant, machinery, or equipment.
Additional Customs Duty
Covers additional customs duties payable, which are not covered under the standard CPM policy.
Removal of Debris
Covers the cost of removing debris resulting from damage to the insured plant and machinery.
Earthquake
Covers repair or replacement costs for the damaged equipment or machinery due to an earthquake.
Terrorism
Covers loss or damage caused due to acts of terrorism when specifically opted for in the policy.
Floater
Covers machinery operating at multiple locations within the city or across India under a single Plant & Machinery Insurance policy.
How is the Premium Calculated for Contractors’ Plant and Machinery Insurance?
The cost of a CPM Insurance policy depends on various factors related to the machinery, how it is used, and the level of risk involved. Here are the key factors that affect your Plant Insurance cost.
Sum Insured
The sum insured is the maximum amount payable in case of a claim. A higher sum insured leads to a higher premium.
Type of Machinery Covered
Premiums vary based on the type and value of the equipment. High-value equipment will attract higher premiums.
Risks Involved
If your machinery and equipment are exposed to greater risks during operation, the premium will be higher.
Location of Operation
The type of location, terrain and geographical risks can impact the premium. Hilly regions or flood-prone areas may lead to higher premiums.
Usage of Equipment
If the machinery is used intensively or in high-risk activities, the Business Equipment Insurance premium is bound to increase.
Eligibility Criteria to Buy Contractors’ Plant and Machinery Insurance
Any individual business owner, contractor, or company using machinery at construction sites is eligible to buy insurance for plant and machinery, subject to the following conditions:
- The plant, machinery, or equipment must have a valid purchase invoice and registration.
- It should be in proper working condition at the time of purchasing the policy.
- The equipment must be operated as per the safety and operational guidelines.
- Any existing damages or previous claims must be disclosed.
Documents Required to Buy CPM Insurance
Duly filled proposal form
KYC documents, such as Proof of Company Registration, PAN, Aadhaar, etc.
Details of the construction site location
List of machinery and equipment with detailed specifications, such as make, model, year of manufacturing and quantity.
Purchase invoices for the equipment
Rental agreements, if applicable
Previous insurance coverage details, if applicable
How to Choose the Right Contractors’ Plant and Machinery Insurance?
The right CPM policy for your business should offer adequate coverage for your plant and machinery, customised to your needs, and at a reasonable cost. Here are a few key factors to consider.
Assess Protection Needs
List the machinery and equipment that need to be insured and assess their current value. Consider the potential risks. For example, a crane operating near a water body may face flood-related damages.
Determine Coverage and Inclusions
Check the sum insured and coverage features of the CPM Insurance policy. Review the policy document for conditions applicable to the inclusions.
Review Policy Exclusions
Every policy has certain exclusions. It is related to specific situations or risks that are not covered. Read through the policy document for complete details on exclusions.
Customise
Choose between the coverage for a single site and multiple locations, and include add-ons to customise the CPM policy specific to your business needs.
Determine the Premium
Ensure that the Business Equipment Insurance provides adequate protection while aligning with your budget. Premium for heavy equipment can be higher, however, it can save you from major unexpected expenses.
Why Should You Purchase Contractors’ Plant and Machinery Insurance through TATA AIG for Business?
Wide Coverage Options
Get protection for machinery and equipment used at a single site, multiple locations or across India.
Optional Add-ons
Customise your CPM policy with add-ons that align with your equipment and its usage at the construction site.
Smooth Claim Process
Get a hassle-free claim experience with minimal documentation and simple steps for faster settlement.
Expert Assistance
Get professional support to secure the plant and machinery with the right coverage to reduce potential losses.
Digital Convenience
Manage your Plant and Machinery Insurance easily through our TATA AIG app or contact us for any assistance digitally.
Brand Reputation
Trust in our strong legacy with our 20 years of service in the insurance industry and a reputation built on reliability.
How to File a CPM Insurance Claim?
Notify TATA AIG
Inform TATA AIG about the incident as soon as possible, both over the phone and in writing. Refer to our contact us page for further details.
Prepare for Surveyor Assessment
Once notified, we will assign a surveyor to evaluate the damage to your plant and machinery. Preserve the damaged items and ensure they are available for inspection.
Submit Documents
Submit all the necessary documents required to process your Plant & Machinery Insurance claim. The surveyor will guide you on the specific documents needed during the inspection.
Claim Settlement
We will verify your claim and the submitted documents. Once approved, the claim amount will be settled as per the policy terms and conditions.
Key Takeaways
For business owners and companies engaging in construction projects, CPM Insurance is essential to ensure financial protection for machinery and equipment. In the event of an unexpected incident, the CPM policy covers the repair or replacement costs for machinery damage and helps resume project work without major delays.
TATA AIG offers a range of SME Insurance products to safeguard businesses against unforeseen events that could disrupt operations and impact financial stability.
For construction-based businesses, CPM insurance complements SME offerings by protecting the machinery that forms the backbone of a construction project.
