What is Plant & Equipment Insurance and Why You Need One

Posted by Ivandrea Ollero on July 19th, 2019

If you’re a farmer, contractor, or a miner, it’s crucial to consider great insurance for your plant or equipment for protection of your business against different risks. This is why plant and equipment insurance became a big help for covering damages of an accidental nature attacking machines and equipment as a result of water, fire, storm, fall, theft, or any other malicious damage. 

However, this insurance doesn’t cover breakdown with internal machinery damages unless these are due to an external cause of an accidental nature covered by this plant and equipment insurance. 

If you want to know more about what plant & equipment insurance offers and why it’s important, then keep on reading! 

Understanding Plant & Equipment Insurance

This is the type of insurance that offers cover for a scale of construction equipment including cranes, portable tools, and bobcats. This is such an important part of your business and job, making sure that you have this kind of cover to protect yourself against possible damage, breakdown, theft, and the like. Plant and equipment insurance can cover both fixed and mobile equipment as well as indoor or outdoor plant.

Types of Plant & Equipment Covered (But Not Limited To)

1. Mobile Construction Machinery/ Contractor’s Plant 

• Dump trucks 

• Bulldozers 

• Loading Vehicles 

• Excavators 

• Floating excavators 

• Scrapers

• Road-surfaces 

• Rollers 

• Mobile Cranes 

• Mobile Drilling Machinery 

 2.  Stationary Equipment 

• Asphalt mixers

• Tower cranes and hoists 

• Electrical generators and transformers for building sites 

• Concrete processing plants 

• Gravel processing plants 

• Conveyor systems 

• Concrete batching plants 

  3.  Temporary Buildings 

• Workshops 

• Office buildings

• Storage building

• Accommodation huts and stationary caravans

• Any temporary buildings erected by the site contractor to allow construction work to be executed productively. 

Benefits of Plant & Equipment Insurance 

Plant and equipment commonly comprise a substantial part of a building contractor’s investment. Accidents may happen and it can result in the mishap of plant or equipment or which cause extreme damage can have a serious effect on your business. 

A contractor depends on being able to quickly handle great losses without having to be so problematic to costs. Companies in small and medium-sized in particular are very prone to the consequences of such losses: 

• Having limited convoy of vehicles and equipment used at complete capacity make it impossible to replace a nonfunctioning plant with reserved machines. 

• The losses sustained cannot be entirely covered due to inadequate financial reserves. 

Plant & Equipment Insurance vs. Machinery Breakdown Insurance 

A lot of businesses and contractors think that these two are just the same but they are not. Machinery breakdown insurance primarily caters its coverage for internal damage to stationary and mobile plant and equipment caused by, for instance, putting an excessive load on engines, hydraulic systems, bearings, gears or machine frames. 

It is not recommended to insure plant and machinery under this type of insurance unless an insurance company has experts in this area. But if you don’t, then it’s best that you avoid this type of insurance and its policy should be limited to cover external damage to plant and equipment. Why? Machinery breakdown insurance normally results in losses for the insurer. 

Here are the reasons why: 

• There is an exclusion if damage originated purely from wear, however, these are still indirectly compensated by the insurer when, for instance, worn parts fracture and he will be called to compensate for the evolving losses on other parts. 

• The heavy working conditions may generate wear and tear, expanding the likelihood of Machinery breakdown claims. 

• The large part of the normal maintenance costs connected with terribly serviced machines via costs incurred for damage repairs is not enough to be indirectly covered since the premium rates for the Machinery breakdown insurance are not enough. 

Limitations of Plant & Equipment Insurance 

This insurance will not cover a lot of items including electrical or mechanical breakdown, boiler explosions, gross negligence, or initial defects or any damage for which the manufacturer is responsible, nor does it cover vehicles damaged on public-use roads. 

Be vigilant when it comes to checking your policy and review other exclusions. Pre-existing defects may be covered by manufacturer warranties; apart from being protected from these risks require distinct types of insurance. 

Author Bio: Ivandrea Ollero is a daytime writer for Insurance Advisernet NZ, one of the largest and most trusted General Insurance businesses in New Zealand, providing leading insurance products, technology, and policy wordings. She is also a content crafter who researches and writes custom content about travel, fashion, finance, business, home improvements, health, and beauty, in order to provide helpful information and tips for her readers. Ivandrea graduated from St. Scholastica's College, Manila, with a Bachelor's Degree in Broadcast Journalism in 2016.