When machinery breakdown is needed
Critical for businesses dependent on continuous mechanical equipment:
- Manufacturers — central machinery, presses, CNC, conveyor systems.
- Data centres — UPS systems, generators, chillers, CRAC units.
- Hotels — central plant (boilers, chillers, lifts, cogen).
- Hospitals — central plant, medical equipment, sterilisation.
- Marine operators — main engines, auxiliary engines, generators.
- Refrigerated logistics — cold-chain failure exposure.
- Manufacturing on Jurong Island — chemical plant, refineries, petrochemical.
What's covered
A Singapore machinery breakdown policy covers sudden and accidental physical loss or damage to insured plant from:
- Internal mechanical breakdown (gear failure, bearing failure, shaft fracture).
- Electrical breakdown (motor burnout, transformer failure, switchgear failure).
- Operational accidents (overload, overspeed, water hammer).
- Defects in casting, material, design (with resulting damage covered).
- Insulation failure causing electrical breakdown.
- Sudden hydraulic pressure failure.
- Boiler and pressure-vessel explosion.
PAR vs machinery breakdown
Two cover types for property risk, designed to interlock:
Property All Risk (PAR)
Covers external causes of damage — fire, water, theft, accidental impact, malicious damage. Excludes mechanical and electrical breakdown.
Machinery breakdown
Covers internal causes — mechanical and electrical breakdown of the machine itself. Excludes external causes (those are PAR).
For manufacturing operations, data centres and hotels with central plant: carry both. The seams between the two are managed by aligned policy excesses and shared insurer (or coordinated insurers).
Business interruption extension
Equipment breakdown without BI cover often costs more in lost trading than the equipment itself:
- Critical-path equipment in a factory: weeks of downtime per failure.
- Custom chillers in a data centre: 6+ weeks lead time on replacement.
- Central transformer in a hotel: 8-12 weeks lead time.
- Marine main engine: months for major overhaul.
Machinery Loss of Profit (MLOP) extension covers gross profit loss during the indemnity period (typically 12-24 months for industrial, 36 months for heavy industry with custom-build plant). Sum insured = annual gross profit × indemnity period.
Sum insured and inspection
Sum insured per item should equal new-for-old replacement cost at current prices. For specialist plant with long lead times, factor in expedite costs and rapid-replacement premiums.
HSB and similar specialist writers include inspection services as part of the policy — periodic surveys of insured plant, condition monitoring, predictive analytics. These reduce premium and improve uptime in their own right.