Contractor's Plant and Machinery Insurance (CPM)

What is Contractor's Plant and Machinery Insurance?

Contractor's plant and machinery insurance (CPM) is a specialized insurance for contractors and construction companies. It protects against damage or loss to the machinery and equipment used in construction sites and factories. It covers a wide range of both owned and hired-in equipment such as:

Bulldozers
Loaders
Cranes
Compressors
Generators
Excavators

It also covers third-party claims against property damage and bodily injury caused at the insured construction site during the tenure of the policy.

Features of Contractor's Plant and Machinery Insurance:

It is designed for covering loss or damage to various plants and machinery used on construction sites
Most of the policies have the option to cover only selected machinery under the policy
The insurance premium depends on the type of equipment, use of equipment, location, and risk you are entailing

Why do you need Contractor's Plant and Machinery Insurance?
Construction contractors rely heavily on machinery and equipment for their work. Some contractors choose to rent these machines, while others own them. However, if any of these machines get damaged or lost during construction, it can lead to a significant financial loss because these machines require a substantial investment.

A CPM (Construction Plant and Machinery) policy provides insurance coverage for the damage or loss of construction equipment such as compressors, cranes, bulldozers, and excavators. This coverage applies to accidents caused by external events like fires, riots, strikes, vandalism, storms, floods, earthquakes, and so on. Whether the equipment is actively being used, undergoing maintenance, or simply at rest, this insurance policy protects against both partial and total damage.

What will Contractor's Plant and Machinery Insurance cover?

Contractor’s plant and machinery (CPM) insurance provides coverage for the risks associated with machinery and equipment used by contractors in construction projects. Here are some common coverages typically included in this insurance policy:

Clearance and Removal of Debris

In the event of a covered loss, this add-on coverage provides reimbursement for the costs incurred in removing debris resulting from the damage to insured machinery and equipment.

Transit Coverage

This coverage extends protection to the insured machinery and equipment during transit, including loading and unloading, between different project sites or locations.

Plant and Machinery Cover for Physical Damage

This coverage protects the insured contractor against accidental physical loss or damage to the insured machinery and equipment. It includes coverage for covered perils such as fire, theft, flood, vandalism, accidental damage, and more. This coverage applies to items in use or at rest, or when they are being dismantled or cleaned, or when they are subsequently erected.

What's not covered?

Some common exclusions typically found in contractor’s plant and machinery (CPM) insurance policies in India:

Mechanical or electrical failure or breakdown.
Pre-existing flaws and damages.
Losses resulting from the explosion of a pressure container or boiler.
Vehicles developed and licensed for regular on-road use.
When the factories or machinery are located on public highways.
Deterioration of machinery owing to inactivity.
Replaceable accessories and parts, such as knives, bits, drills, saws, cutting edge parts, molds, and so on, which have a greater rate of depreciation or wear by default.
Crafts or vessels used on the water.
Damage or loss caused by partial or total immersion in tidal surges.
Nuclear threats, war, or war-like activity.
When the machine is being tested.
Underground machinery other than tunnel boring equipment.
Any type of indirect loss.
Damage caused by terrorism.
Negligence or deliberate behavior by the insured or his representatives
Any damage for which the supplier or manufacturer is accountable.

Who needs a Contractor's Plant and Machinery Insurance?

Anyone of the following parties can take CPM insurance, either individually or jointly

Contractors and construction companies
Equipment rental companies
Individual equipment owners
Bank and financial institutions investing in the project

FAQs

What is floater cover in CPM policy?

The 'floater cover' typically refers to a type of coverage that provides protection for a contractor's movable machinery and equipment. This coverage is designed to safeguard the insured items located at different places against various risks and perils they may be exposed to.

What is the difference between peril and coverage?

A peril refers to a specific event or circumstance that may cause damage, loss, or harm to the insured property or individual. Perils can include natural disasters like fire, flood, and earthquake, as well as human-caused events like theft, vandalism, or accidents.
Coverage, on the other hand, refers to the protection provided by an insurance policy against specific perils. It outlines the scope and extent of financial reimbursement or assistance that an insurance company will offer in the event of a covered loss or damage.

What perils are covered under the contractor’s plant and machinery insurance?

The typical perils that may be covered under CPM insurance include:

Accidental damage
Earthquake
Fire and lightning
Theft and burglary
Flood and inundation
Storms, cyclones, and tempests
Damage caused by intentional acts of vandalism, sabotage, or malicious actions by third parties

What is the duration of the contractor's plant and machinery insurance policy?

Typically, CPM insurance policies are issued for a specific period known as the policy term. Generally, this depends on how long the project will last, or how long the equipment and machinery will be in use. It can range from short-term policies that cover a specific small project over a specified time frame, to long-term policies that provide coverage for long-term projects/contract periods.

Is it necessary to always update my insurance provider when my contact information changes?

Yes. It is always important to inform the insurer of any changes in your contact information. This will ensure that you will receive all correspondence promptly.

How to make an insurance claim for contractor’s plant and machinery?

Please follow the steps mentioned below-

Inform your broker instantly. They will handhold and guide you through the entire claim settlement process.
Give the surveyor of the insurer your complete cooperation.
Submit a completed claim form along with any necessary documents to show the financial loss caused by the accident.

Should I inform the company if my old machine/equipment is replaced by a new machine of the same type and model?

Yes. When the CPM insurance is issued, the insured needs to provide the serial numbers of the machines at his disposal. If the machines are replaced, the insurer must be informed immediately.