Machinery Breakdown Insurance in the UAE

Machinery Breakdown Insurance is an engineering insurance product intended for businesses that depend on machinery and mechanical or electrical equipment. It may cover eligible sudden and accidental internal physical loss or damage to machinery listed in the policy schedule, subject to the issued limits, deductibles, conditions and exclusions.

Cover may be relevant to manufacturing facilities, processing plants, utilities, workshops, commercial buildings and other operations using fixed machinery. Each item’s description, capacity, age, value, location and use should be accurately declared and accepted by the insurer.

What Machinery Breakdown Insurance May Cover

Depending on the issued policy, eligible physical damage may arise from:

1. Mechanical breakdown: Sudden internal failure of insured mechanical parts when the cause is not excluded.
2. Electrical damage: Eligible damage associated with short circuits, electrical arcing or similar electrical events.
3. Operator error: Accidental damage resulting from an operating mistake, subject to the circumstances and policy conditions.
4. Pressure or centrifugal forces: Eligible accidental damage caused by abnormal internal forces within insured machinery.
5. Unexpected internal events: Other sudden internal physical damage that falls within the policy wording and is not excluded.

The policy may apply while insured machinery is working, at rest or temporarily dismantled for cleaning, inspection or overhaul at the declared premises, when permitted by the issued wording. Cover is not confirmed merely because equipment has stopped operating or requires repair.

Machinery That May Be Considered

Declared machinery and equipment may include:

1. Generators, transformers and electrical equipment.
2. Boilers, turbines, compressors and pumps.
3. Production lines and manufacturing machinery.
4. Heating, cooling and ventilation equipment.
5. Water-treatment and sewage-treatment machinery.
6. Food-processing, packaging and industrial equipment.
7. Lifts, escalators and other fixed mechanical systems.

Portable tools, mobile construction plant, road vehicles and electronic equipment may require separate insurance. Construction machinery operating at project sites may be more appropriately considered under Contractors’ Plant and Machinery Insurance.

Important Policy Conditions

1. Declared machinery: Only machinery included according to the policy schedule or agreed basis of cover may be insured.
2. Insured values: Values should follow the policy’s valuation basis and may need to reflect replacement by new machinery of the same type and capacity, including applicable freight, duties and installation costs.
3. Operational status: Machinery may need to have completed installation and commissioning successfully before Machinery Breakdown cover applies.
4. Maintenance: Manufacturer instructions, servicing schedules, inspections and statutory requirements should be followed.
5. Protective systems: Safety devices, alarms, cooling systems, surge protection and other required controls should remain operational.
6. Material changes: Changes to machinery, values, capacity, location, use or operating conditions should be disclosed to the insurer.

Common Exclusions and Limitations

Machinery Breakdown policies commonly exclude or restrict:

1. Wear and tear: Gradual deterioration, corrosion, erosion, fatigue, ageing or damage caused by normal use.
2. Known defects: Faults or damage known before the policy began.
3. Consumable parts: Belts, ropes, chains, filters, lubricants, tools and other parts subject to frequent replacement may be excluded.
4. External events: Fire, theft, flood and other external causes may require property insurance or another relevant policy.
5. Consequential loss: Lost income, reduced production, contractual penalties, delay and loss of market.
6. Excluded events: War, nuclear risks, deliberate acts, confiscation and other exclusions stated in the issued policy.

The cost of routine maintenance, correcting an existing defect or replacing an undamaged part is not automatically covered. Settlement may also take account of deductibles, depreciation, betterment, salvage and the applicable valuation basis.

Machinery Breakdown and Loss of Profits

Machinery Breakdown Insurance generally addresses eligible physical damage to insured machinery. It does not automatically cover loss of revenue, gross profit, standing charges or increased operating costs caused by the interruption.

These financial losses may require separate Machinery Loss of Profits Insurance. Such cover normally depends on insured physical damage being accepted under the underlying Machinery Breakdown policy and remains subject to an indemnity period, time excess, limits and declared gross-profit calculations.

What to Do After a Breakdown

1. Stop operating unsafe machinery and protect employees and other persons.
2. Take reasonable steps to prevent further physical damage.
3. Notify Al Buhaira Insurance as soon as reasonably possible.
4. Keep damaged machinery and components available for inspection.
5. Retain photographs, technical reports and maintenance records.
6. Keep repair estimates, invoices and the manufacturer’s assessment.
7. Do not authorise major repairs or disposal without prior agreement, except for urgent safety measures.

How to Request a Quotation

Businesses can submit initial details through Al Buhaira Insurance’s dedicated Machinery Breakdown quotation page. The assessment may consider the machinery type, age, value, capacity, use, maintenance arrangements, operating conditions, protective systems and previous claims.

A quotation does not confirm that cover has started. Insurance begins only after the required information has been reviewed, the offered terms have been accepted and the applicable policy documents have been issued.

Documents Required

The insurer may request documents and information such as:

1. Completed proposal or quotation form
2. Trade licence and company details
3. Machinery and equipment schedule
4. Makes, models, capacities and serial numbers
5. Manufacturing years and machinery ages
6. Replacement values, invoices or valuation documents
7. Premises and machinery-location details
8. Description of operations and equipment use
9. Maintenance contracts and service records
10. Inspection and testing reports
11. Safety and protective-system details
12. Previous insurance details and claims history
13. Requested deductibles and policy limits

Why Choose Al Buhaira Insurance?

1. Engineering insurance range: Machinery Breakdown Insurance is available within Al Buhaira Insurance’s engineering insurance products.
2. Dedicated quotation page: Businesses can submit initial company and machinery details online.
3. Machinery-based assessment: Quotations can consider the declared equipment, values, operations, maintenance arrangements and requested limits.
4. Policy enquiries: Customers may contact Al Buhaira Insurance regarding issued schedules, deductibles, conditions and endorsements.
5. Claims enquiries: Policyholders can report breakdowns and submit relevant information for assessment under the issued policy.

Frequently Asked Questions