Machinery Insurance (Maschinenversicherung)
Machinery insurance covers unforeseen, sudden damage to operational machinery and technical plant caused by internal operational faults or operating errors.
Comparison profile
- Trigger
- All risks
- Insured interest
- The insured's operational machinery, mechanical plant, and technical equipment during ongoing operation, following successful commissioning.
- Rating basis
- Replacement value of insured machinery, Machine type, age, and technology, Maintenance and condition-monitoring standard, Claims experience
- Typical limits
- Sum insured based on new replacement value per machine or plant, often with sublimits for individual high-value units.
- Typical deductibles
- Per-occurrence deductible, generally scaled to machine value and criticality, higher for rotating and pressure equipment.
- Target segments
- Industry, Manufacturing and process plants, Energy and utilities
Insured events
- Material and casting defects
- Design and construction defects
- Operating and handling errors
- Short circuit and electrical faults
- Centrifugal force and mechanical breakdown
Key exclusions
- War and nuclear energy
- Fire, lightning, and explosion (covered under property insurance)
- Wear and tear, corrosion, and gradual deterioration
- Losses recoverable under a manufacturer's or supplier's warranty
- Consequential loss beyond business interruption extensions
Concept
Machinery insurance covers unforeseen, sudden physical damage to operational machinery, mechanical plant, and technical equipment occurring during ongoing operation. Unlike traditional fire insurance, machinery insurance primarily responds to internal operational faults such as material defects, design defects, operating errors, or centrifugal force damage that are not attributable to external natural hazard events.
Distinction from Construction and Erection Insurance
While construction and erection all risks insurance (CAR/EAR) covers risks during the construction and installation phase of a project, machinery insurance generally begins only after the plant has been successfully commissioned and accepted, and accompanies the machinery throughout its entire operational phase.
Relevance for Business Interruption Cover
In practice, machinery insurance is frequently combined with business interruption insurance (machinery breakdown BI), since a machinery breakdown typically leads not only to repair or replacement costs but also to substantial loss of income due to production downtime; technical risk assessment in this line relies significantly on the maintenance standards and upkeep concepts applied to the insured plant.
Comparison and delineation
Machinery insurance is the internal-cause counterpart to property all risks, which typically excludes breakdown perils such as material defects, design faults, and operating errors for machinery while covering external events like fire and natural hazards. The two covers are therefore complementary rather than substitutable and are commonly placed together to close the gap between external and internal causation. Machinery insurance picks up where construction and erection all risks (CAR/EAR) leaves off, taking over once the plant has been commissioned and accepted. Combined with machinery breakdown business interruption, it also indemnifies the resulting production downtime rather than only the repair cost.