Industrial Special Risks Insurance can provide protection for significant machinery and plant exposures, but machinery breakdown should not be assumed to be automatically covered under every ISR policy.

The treatment depends on the insurer, wording and policy schedule.

What is machinery breakdown? #

Machinery Breakdown Insurance is designed to address certain sudden and unforeseen physical damage to machinery or equipment arising from internal causes.

Examples can include damage associated with:

• Mechanical failure.
• Electrical failure.
• Pressure equipment failure.
• Certain internal breakdowns.
• Other insured machinery events.

The actual definition and scope vary between insurers.

Is machinery breakdown part of Material Damage cover? #

Not necessarily.

An ISR policy may:

• Include machinery breakdown.
• Provide it through an extension.
• Apply a specific sublimit.
• Cover only certain machinery.
• Exclude machinery breakdown altogether.

The policy schedule and endorsements need to be checked.

Why is this important for manufacturers? #

For businesses heavily dependent on machinery, the physical cost of repairing equipment may only be part of the exposure.

A breakdown can also cause:

• Production delays.
• Lost turnover.
• Additional operating costs.
• Spoilage.
• Delayed customer orders.

Where appropriate, the associated Business Interruption exposure should also be considered.

Webber Insurance can review the machinery values, breakdown cover and Business Interruption arrangements together.