Machinery breakdown insurance

Standard property covers protect machinery against external events: fire, explosion, storm, water damage. They do not respond to internal breakage, a snapped turbine shaft, a short circuit in a transformer, a seized compressor, an operating error that destroys a tool. Machinery breakdown insurance covers precisely such sudden, accidental damage of internal origin, on machines in service, after commissioning. It excludes wear and tear, corrosion, maintenance and defects covered by the manufacturer's warranty. Heir to nineteenth-century steam boiler insurance, where the insurer inspected as much as it paid, it remains an engineers' line: the underwriter assesses the age, maintenance and criticality of the equipment, and periodic inspections are often included in the premium. It extends into machinery breakdown business interruption cover, which pays for lost production during repairs. Parts lead time then becomes the decisive parameter: a large power transformer can take more than a year to manufacture, which turns a modest breakdown into a major business interruption loss. It takes over from erection all risks insurance once the equipment is handed over.