Why you should buy Contractor’s Plant and Machinery Insurance Policy?

Civil engineers will play an important role in the construction and execution of various kinds of projects. If there is damage or destruction of the project due to various reasons, it will lead to a great loss for engineers. Hence, Contractors Plant Machinery Insurance Policy can be subscribed to fulfill their needs in a very efficient manner.

What is CPM?

CPM stands for Contractor’s Plant and Machinery insurance. The insurance plan can be subscribed on annual basis. The insurance policy will cover various kinds of sudden and unforeseen losses.

If there is damage or loss of construction projects, the engineer should repair/restore the construction. The risk will be borne by the insurance carrier by paying a small premium by the insured.

The policy will cover construction machinery such as earth movers, cranes, and excavators as well. It will cover various kinds of tools used for the construction purpose.

Features of plant and machinery insurance

Damage to plants and machinery- The insurance policy will cover various kinds of damage to plants and machinery. The damage or loss that takes place on project sites will be borne by the insurer.

Option to cover selective machinery- The insurance carrier will give the option to choose selective machinery so that the cost of insurance will come down.

Benefits of Plant & Machinery insurance

The following benefits can be enjoyed by contractors by subscribing to Plant and Machinery insurance:

  • Protection of machinery- Engineer or contractor will depend upon machinery to execute various kinds of projects. In some cases, the contractors will hire machines as they are expensive. Some kinds of machines are used for specific operations only. Your business will be protected from losses by subscribing to the Plant & Machinery Insurance.
  • Physical damage of machinery- The damage occurred to the contractor’s machinery which is not excluded by the policy will be covered by the insurance plan.
  • Covers accidents- If there are accidents at the construction site, the loss that takes place through the accidents will be covered by the insurance policy.
  • Repair or replacement- The insurance carrier will cover the cost of repair or replacement of machinery as per the terms and conditions mentioned in the insurance plan.
  • Covers at work or rest- The machinery will be covered while it is being used or is in rest. Either of the cases will be covered by the insurance carrier. If the machinery is dismantled or being assembled as part of maintenance, the insurance claim cannot be made.
  • Extensions- In the event of an accident, there will various kinds of additional costs and they are covered under various ‘extensions’ to the insurance policy. Some of the extensions are damage to the surrounding property, air or freight charges towards the replacement of machinery, and removal of debris.

What are add-on covers?

Add-on covers are additional insurance coverage options by which you can cover risk factors which are not covered by the standard insurance policy.

You can subscribe to add-on covers by paying an additional premium.

The following risk factors can be covered:

  • Air freight
  • Third-party liability
  • Terrorism
  • Escalation
  • Custom duty
  • Premises surrounding the business
  • Removal of debris
  • Equipment mounted on craft or floating vessel
  • Terrorism


There are certain risk factors which are not covered by the Plant & Machinery Insurance.

  • Natural calamities- If there is loss due to natural calamities such as cyclone, flood, falling of tree or other acts of God, the insurance claim cannot be made.
  • Electrical and mechanical breakdown- The insurance policy will not cover the electrical and mechanical breakdown of the machinery.
  • Negligence of the operator- If there is gross negligence in the operation or storage of the machinery, the insurance carrier may reject the claim.
  • Wrong location- If the vehicle or machinery is damaged on public roads, the compensation is not applicable.
  • Deterioration- The normal wear and tear of machinery and the deterioration of the machinery due to lack of use will not be covered by the insurance plan.
  • Underground machinery- Underground machinery other than tunnel boring machines will not be covered by the policy
  • Nuclear perils- Nuclear perils or war-like situations will not be covered by the insurance policy
  • Machines at test phase- If the machine is undergoing testing, the loss or damage will not be covered by the policy.
  • Replaceable attachments- Various kinds of tools and replacement attachments such as drills, saw, bits and knives will not be covered by the policy. The wear and tear associated with these attachments will be very high. Hence, they are not included in the insurance coverage.
  • Damage due to the explosion- If there is damage due to the explosion of the boiler it will not be covered by the insurance policy.
  • Pre-existing damages- If there are pre-existing damages, they will not be covered by the insurance policy.
  • Manufacturing defects- If there is damage due to manufacturing defects or supplier, the coverage is not applicable.

You should understand various kinds of exclusions mentioned in the insurance policy. You will not be shocked to know later that your insurance claim is invalid when you are aware of the terms and conditions of the policy.

If there are risk factors which cannot be covered by Plant and Machinery Insurance Plan, it is worthwhile to explore another policy.

Who can buy CPM policy?

CPM policy can be bought by the following individuals or businesses:

  • Owner of the plant
  • Owner of Machinery
  • Banks and financial institutions
  • Contractor
  • The user of construction machinery
  • Tradesmen


How much premium you should pay to the insurance company?

The premium payable to the insurance carrier is directly proportional to the risk factors. It is also based on the underwriting requirements of the insurer.

What is the duration of the cover?

The duration of the cover is one year. To enjoy the benefits of the insurance plan, you should renew the policy after the end of the term.

How much the policy will pay for the insured?

The insurance policy will pay either the full cost or the partial loss as per the terms and conditions of the insurance policy. In case of total loss, the market value of the part or item before the occurrence of the loss will be paid to the insured. The depreciation of the part will be deducted from the payable amount.

Will the insurance company pay repair costs?

The insurance company will pay repair costs which include the cost of dismantling or re-erection. If the repair works are undertaken by the insured, the material cost and labor costs will be paid to the insured. The insurance carrier will also pay overhead expenses.

Will the insurance company apply depreciation?

Depreciation will be applied for parts which come with limited life.

Can the CPM be purchased by owners of the machinery?

Yes. CPM can be purchased by owners of the machinery or plant. If there is involvement of financier, it will be mentioned under the joint name.

What is insured by the Plant and Machinery insurance plan?

Equipment and Machinery present anywhere in India will be covered by the Plant and Machinery insurance plan.

How to buy Plant and Machinery insurance plan?

Before buying the plant and machinery insurance plan, you should assess the insurance requirements very carefully.

Description of items- You should provide a complete description of various items that should be included in the insurance policy. The name of the equipment, the value of the equipment and the number of items should be mentioned as per the instructions of the insurer.

Transit risks- The insurance policy will also cover various kinds of transit risks. If the machinery is being transported from one site to another site, it will be covered by the insurance policy.

Loading- Some insurance companies will charge a certain percentage on the basic of CPM to cover various kinds of additional risk factors.

Quotation from the insurance company

You should get a quote from two or more reputed insurance companies so that you can choose the best product as per your needs.

After comparing the features and the premium, you should settle for the best insurance company.

Obligations of the insured

  • Even though the insurance carrier will pay the damage or repair or replace the equipment and machinery, the insured should take reasonable care and should ensure that items are protected on a round-the-clock basis.
  • The officials of the insurance carrier can inspect the premises of the insured and the insured should co-operate with the insurer.
  • The insured should disclose relevant documents to the officials of the insurance carrier.


There are many benefits with a Plant & Machinery Insurance Policy. The contractor or engineer will be able to execute various kinds of projects when risk factors are covered by an insurance policy. The machinery and tools should be insured as per your requirements. You should also be aware of the exclusions mentioned by the insurance carrier. The best plant and machinery policy will protect the contractor from significant loss due to repair or replacement of machinery.