Operational insurance under engineering insurance is generally for one year which is removable. Machinery insurance and Boiler Insurance are important engineering insurance.

Machinery Insurance :

Accidents under machinery insurance police occur more frequently than under any other insurance. The machinery insurance includes electrical equipment, oil firing equipment fans and blowers; mechanical plant including engines, turbines, blower’s compressors, pumps, machine tools and presses, lifting equipment including cranes with fixed installation, conveyors and lifts.

The perils insured are shock circuits, failure of insulations, malfunctioning of control and protection circuits, faulty materials, faulty design, faulty casting, vibration, loosening of parts, stress, centrifugal force, explosion due to internal / external pressure, failure of connected machinery, protection devices, etc and external factors causing breakdown and damage to insured machinery.

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Exclusions:

1. Fire, Lightning, theft, collapse of building, landslide flood, volcano, earthquake etc.

2. Damage occasioned by war and civil war, root, strike nuclear risks

3. Damage resulting from exponents or overload.

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4. Loss or damage caused by the willful act or gross negligence.

The purpose of the exclusions is to exclude the actual wastage wear or deterioration but not sudden and unforeseen damage to other parts resulting there from.

Claims:

The damage can be repaired. The basis of indemnification is the cost of restoration working order based on the customary daily rates of wages together with normal freight and erection costs.

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Where the insured item is totally destroyed or is a constructive total loss, the basis of indemnification is the market value of the item immediately before the accident plus the cost of removing the damaged machinery loss the value of the salvage

Policy Conditions:

The special conditions in this policy relate to proper maintenance of insured machinery and observance of manufacturer’s instructions.

All mechanical and electrical parts shall be inspected notice of material change in the risk, alterations etc. to an insured item, deviation from prescribed operating conditions and change of insurable interest so that the policy may be suitably endorsed.

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The machine will not be used except while being turned over periodically for maintenance purpose.

Rating:

The tariff is separately provided each for electrical machine, machinery in cold storage, major equipments, glass and graphite equipments and mechanical items.

Extension:

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The machinery insurance can be extended to cover third party personal injury and property risks, expenses incurred for overtime, express freight, cost incurred in the clearance and removal of debris and loss or damage to the existing surrounding property on payment of extra-premium.

The five policy covers loss or damage to machinery only if the loss or damage is attributable to fire or any of the extraneous perils covered by the fire policy. But where loss or damage has originates from breakdown, fire policy is of no avail.

This gap is made good by the machinery breakdown policy which provides indemnity against any unforeseen and sudden damage to the machinery by causes such as short circuit, action of centrifugal forces, shortage of water in boilers, faulty design bad workmanship, erection faults, lack of skill, carelessness, malicious damage etc. and also extended to cover some allied risks by payment of extra premium as given in extension clause.

Boiler and Pressure Plant Insurance:

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The boiler and pressure plant insurance covers boilers and pressure vessels and seeks to indemnify the insured against damage, other than by fire to the boilers and other pressure plants and to surrounding property of the insured, legal liability of the insured on accounts of bodily injury, fatal and non fatal to the person or damage to the property of third parties.

“Boiler” means any fired closed vessel or a combined container piping system in which steam is generated under pressure. Pressure Plant means any unfixed closed containers under steam gas or fluid pressure.

“Explosion” means the sudden and violent rendering or tearing a part of the permanent structure of a boiler or pressure plant or any part thereof by force of internal steam, gas or fluid pressure causing bodily displacement of the said structure and accompanied by the forcible enactment of its contents.

It is necessary that the boilers and pressure plant insured are inspected a normally by inspectors appointed by the appropriate statutory authority and that they are operated by attendants holding a valid certificate of competencies.

“Collapse” means the sudden and dangerous distortion of any part of a boiler or pressure plant by bending or crushing caused by steam, gas or fluid pressure.

“Flue Gas Explosion” means and explosion of ignited gases in the furnaces or flues of the boilers economizers and super heaters.

“Chemical Explosion” means and explosions arising out of chemical reaction in any plant.

The boiler and pressure plant insurance covers the losses or damages arising out of explosion, collapse, flue gas explosion or chemical explosion.

Warranties :

The boiler and pressure plants insured as inspected by inspectors appointed by the appropriate Government Authorities, they are operated by attendants holding a valid certificate of competency

Sum Assured :

Sum Assured will be new replacement value of the plant which is inclusive of freight and customs duties and erection cost. Wherever super heaters or economizers do not form an integral part of the Boiler installation, they should be described separately and specifically while completing the policy schedule.

The sum assured in respect of the insured’s own surrounding property damage and Third Party Liability may be fixed separately on a first loss bases

The other forms of operational insurance e.g. contractor’s Plant and Machinery (CPM) Civil Engineering Completed Risk (CECR) Electronic Equipment Insurance (EEI) and Deterioration of stocks (DOS) insurance are insured as described in Machinery Insurance and Boiler and Pressure Plant Insurance.

Loss of Profit Insurance:

As in the fire department, the interruption risk arising out of machinery breakdown can be covered under a loss of profits insurance policy taken in conjunctions with a basic machinery breakdown policy.

The cover is similar to what is granted in the fire department accepting that the period of indemnity is restricted to 9 months ordinarily and 12 months in special cases.