Engineering insurance

In the market, "engineering" names a family of policies held together by shared knowledge, that of machines and structures, rather than by a single peril. The carriers that write it share loss data and wordings through IMIA, and its roots go back to the nineteenth-century boiler inspection companies, which insured what they had inspected. The family splits in two. Project policies last as long as a construction job: contractors' all risks for civil works, erection all risks for equipment, with its testing and maintenance period, and advance loss of profits paying the margin of a delayed start-up. Operational policies take over, written annually: machinery breakdown and its business interruption, contractors' plant and equipment, electronic equipment (control rooms, PLCs, IT, with data restoration costs). The boundary between the two is taking-over, and that is where disputes start: a failure the day before falls under the erection deductible, the day after under the machinery breakdown one. What the market calls power generation insurance is this family applied to plants in operation: a program combining property damage, machinery breakdown and business interruption for a thermal or hydro plant or a renewable fleet, underwritten on a technical file (running hours, overhaul history, spare parts holdings). The underwriter thinks in critical machines and replacement lead times: a main transformer with an eighteen-month build time sets the business interruption exposure more than its value does. Wording questions look alike from one policy to the next: LEG or DE clauses for defects, a serial loss clause when the same part fails on several machines.

• IMIA, International Association of Engineering Insurers