9 Reasons Why You Need Engineering Insurance


A standard commercial insurance policy will cover damage to machinery from an insured event such as fire, flood or theft. But it doesn’t cover your equipment if it’s damaged in any other way.

To protect your business from production halting and lost income, Engineering Insurance cover is necessary. Engineering Machinery policies cover events like breakdown due to a mechanical or electrical defect or an electrical burnout of plant and machinery.

Additionally, an Engineering Business Interruption policy will cover any resultant financial loss. The length of the indemnity period should represent the length of time that it will take to repair the damage and for turnover or revenue to return to normal levels.

Nine reasons why you may need Engineering Insurance:

1. A property policy typically provides cover for perils such as fire, flood and theft
Whereas standalone machinery policies usually cover events such as mechanical failure, electrical short circuiting or motor burnout, as well as damage resulting from an accidental event, explosion or collapse.

2. Cover is suited to businesses of all sizes from a wide variety of sectors
Generally, machinery policies are written to suit a large range of risks, from small manufacturers dependent on one or two machines to large manufacturers with automated product lines.

3. People make mistakes
Unlike a material damage policy, a machinery policy will cover operator errors. For example, when a machine has been set up incorrectly and damages itself while in use.

4. Where liability has been admitted, a business may be able to receive money before it can start trading again
‘Payments on Account’ extensions are available for business interruption, meaning partial pay-outs will be provided before the end of the indemnity period.

5. A modern commercial building is dependent on management systems to control the working environment
Cover can include interruption due to failure of building management systems, such as lighting, access control, lifts, air-con, heating, security, etc.

6. Machinery insurance can help businesses meet leasing companies’ requirements
Lease agreements often state that it is the lessor’s responsibility to repair or replace machinery if it is damaged or destroyed while in their care.

7. Financial stability can be safeguarded
Downtime for any business can result in a loss of income and/or additional expenditure. Your business may even start to have serious liquidity problems within a few weeks of essential machinery being unavailable. Engineering Insurance will protect you during those times.

8. Payments can be provided to avoid loss of business during the indemnity period
Depending on the operable covers available, additional costs to avoid or minimise financial loss, such as overtime or wages for temporary workers, can be paid.

9. Maintenance is no guarantee
You may be meticulous with inspections and maintenance programmes, but damage does happen, and the consequences can be catastrophic.

Can you afford NOT to have Engineering Insurance? Make sure you protect your business and get in touch today for advice.


Based on an article originally produced by Allianz Insurance.

Leave a Reply