Understanding Contractor Plant & Machinery (CPM) Insurance
In the construction and engineering sectors, heavy machinery and plant equipment represent significant investments and are critical to project success. However, these assets are also exposed to numerous risks, from operational damage and breakdown to theft and natural calamities. Contractor Plant & Machinery (CPM) insurance is a specialized policy designed to protect these valuable assets, ensuring business continuity and financial stability.
What is Contractor Plant & Machinery (CPM) Insurance?
CPM insurance is an "all risks" policy that provides comprehensive coverage for various types of machinery and equipment used in construction, civil engineering, and other similar operations. It protects against sudden and unforeseen physical loss or damage to the insured machinery, whether the equipment is at work, at rest, or being dismantled for cleaning or overhauling, or during subsequent re-erection.
Who Needs CPM Insurance?
This policy is essential for:
- Construction Companies: Owning or leasing heavy equipment like excavators, cranes, bulldozers, loaders, etc.
- Contractors: Involved in infrastructure projects, building construction, roadworks, etc.
- Plant Owners and Operators: Businesses that rely heavily on machinery for their day-to-day operations.
- Equipment Leasing Companies: To protect their assets leased out to clients.
Key Coverage Under CPM Insurance
CPM insurance typically covers a wide array of perils, including:
- Accidental Damage: Covers sudden and unexpected physical damage due to operational errors, collision, impact, overturning, etc.
- Fire and Allied Perils: Damage caused by fire, lightning, explosion, aircraft damage, riot, strike, malicious damage, flood, storm, cyclone, landslide, rockslide, etc.
- Theft: Loss or damage due to burglary or theft of the insured machinery.
- Mechanical and Electrical Breakdown: Covers damage resulting from sudden and unforeseen mechanical or electrical breakdowns. (Note: Wear and tear, gradual deterioration are usually excluded).
- Loss or Damage during Transit: Coverage for machinery while it is being transported to and from the worksite.
- Human Error: Damage caused by operator negligence or inexperienced handling.
Important Add-ons and Extensions
To enhance coverage, businesses can consider adding extensions such as:
- Third-Party Liability: Covers legal liability for accidental bodily injury or property damage to third parties arising from the operation of the insured machinery.
- Cost of Removal of Debris: Covers expenses for clearing debris after a loss.
- Airfreight: For urgent replacement parts or machinery.
- Increased Customs Duty: If replacement parts are imported.
- Earthquake Peril: Can be a crucial add-on depending on the geographical location.
Factors Influencing CPM Premiums
The premium for CPM insurance depends on several factors:
- Type and Value of Machinery: More complex, expensive, or specialized machinery will incur higher premiums.
- Age of Machinery: Older equipment might have higher rates due to increased risk of breakdown.
- Nature of Work/Industry: High-risk operations (e.g., tunneling, blasting) will have higher premiums.
- Location of Operations: Geographical and environmental risks of the worksite.
- Maintenance History: Well-maintained machinery may qualify for better rates.
- Claims History: A clean claims record can lead to discounts.
Protecting your valuable plant and machinery is crucial for the seamless execution of your projects and the financial health of your business. GS Insurance Services L.L.C. offers expert advice and tailored CPM insurance solutions from leading providers in the UAE. Contact us today to get a comprehensive quote and safeguard your assets.