Comprehensive machinery (CM) insurance

The trend in recent years has shown that more and more insureds are looking for “all risks” cover. Demand for classic “all risks” insurance with different independent policies is falling in the market as it offers insufficient clarity as far as gaps in cover and overlapping cover are concerned.

Main features of comprehensive machinery insurance

The new policy offers “all risks” cover of a predominantly engineering nature, particularly against machinery breakdown, fire, lightning and chemical explosion, as well as natural perils for the entire insured plant, with only a few property exclusions and excluded perils. In addition, optional business interruption cover can also be granted in respect of loss of profits, including increased cost of working, or in respect of specified standing charges (Section 2 of the policy). The cover is clearly described and easy to understand thanks to its structured content and layout. Important definitions are given at the beginning. The scope of cover is up to date and comprehensive, and can be adapted to the specific features of a risk by means of a series of clauses.

The cover of the Munich Re policy applies to mechanical and electrical equipment, as well as to buildings, including their contents, goods being processed, and stock. Cover is granted at the business locations specified in the policy, and also during transportation for the purposes of cleaning, renovation, repair or maintenance. Cover applies to the policyholders named in the policy: objects destroyed are indemnified at new replacement value. In the case of machines, these are indemnified at replacement value until they are five years old. Thereafter, indemnity for machines is limited to their current market value. The cover for business interruption provided under Section 2 of the policy essentially corresponds to the content of the machinery business interruption and fire business interruption policies.

Suitable objects

Suitable “objects” for this cover are the following:

– Power plants, transformer stations, power distribution systems

– Equipment at open-cast mines and ore-dressing plants

– Plants in the metalworking industry

– Plants in the steel production industry

– Cement factories, machines for the construction industry and stoneworking

– Breweries, bottling plants

– Transport and traffic systems

– Wastewater treatment plants

– Water supply systems

Unsuitable or less suitable objects

Less suitable objects are plants and equipment for which the fire risk dominates:

– Refineries

– Fertiliser factories

– Plants/facilities in the textile industry

– Warehouses

– Printing works, bookbinding works

– Microprocessor production plants

– Shopping centres

– Equipment in the automotive industry

Scope of comprehensive cover

Over and above the cover provided by machinery insurance, comprehensive machinery insurance also covers the following perils and costs:

– Fire, lightning and chemical explosion

– Fire brigade charges

– Impact of aircraft

– Theft

– Burglary

– Collapse and subsidence of buildings

– Flood, inundation

– Earthquake (only as an optional extra)

– Landslide

– Hurricane

– Volcanic eruption

– Inland transits

Premium calculation

Premiums are calculated on the basis of the rating for machinery breakdown and machinery business interruption insurance. For coverage in respect of fire and natural perils, the corresponding extra premiums for property and business interruption insurance are added. The premium determined by Munich Re experts is adapted very precisely to the risks in the various countries by taking account of all the factors of influence, thus providing a sound basis for satisfactory operation and further expansion of this particularly risky class of business

Machinery insurance/CMI comparison

Machinery insurance

– Cover at the insured location

– Insurance covers machinery and equipment

Comprehensive machinery insurance

– Cover at the insured location and during inland transits

– Insurance covers machinery and equipment

plus

buildings, contents, stock, goods being processed, and also capital

additions, increased costs of working, fire brigade charges, hazardous

substances, experts’ fees, removal of destroyed material

copied from Munich Re: Machinery insurance; Types of cover and policy conditions