Machinery breakdown insurance covers precisely what a fire or contents policy excludes: damage that arises from within, without anything having happened from outside.
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In brief
An ordinary business contents or business interruption insurance works with perils that strike the machine from outside: fire, lightning, storm, burglary, water. If something breaks inside the machine itself — a gearwheel that fractures, a bearing that seizes, a control board that burns out, an employee who starts the wrong programme — there is no external peril to point to and that policy does not pay. Machinery breakdown insurance fills exactly that gap: sudden and unforeseen physical damage to the machine itself, including where the cause lies within the item.
The causes covered generally include inherent defect, faults in material, construction and casting, short circuit and overvoltage, overheating, parts working loose, centrifugal force and operating errors by your own staff. That last point is precisely the difference from a warranty: a supplier makes good his own mistake, but not that of your operator.
The bill often lies not in the component but in the downtime. The business interruption after machinery breakdown extension pays for the loss of gross profit during the indemnity period. On a line with one critical machine that extension is the actual product; the repair of the machine is then the smallest item. If equipment is on site, also look at Construction all risks (CAR) insurance, which has its own regime during installation and testing.
The structure of the cover in three parts, with an overview per situation below.
Liability
Third-party liability for plant and machinery
Damage you cause to others with the machine.
Compulsory on public roads
Also during work
Cables and pipes separately
The machine itself
Own-damage cover
Damage to the machine, the body and the attachments.
Fire and storm
Theft from the site
Overturning and collision
Extensions
Extensions
What you add separately.
Inherent defect and machinery breakdown
Transport to the site
Hired plant
What is covered
Situation
Third-party liability for plant and machinery
Own-damage cover
Damage to a building or a parked car next to the site
Yes
No
Theft of the machine from the building site
No
Provided that
Fire and storm damage
No
Yes
Inherent defect in the hydraulics or the engine
No
Provided that
Damage to the item you are working on with the machine
No
No
Wear and deferred maintenance
No
No
Mobile plant is a motor vehicle within the meaning of the WAM and needs third-party liability insurance on public roads; non-mobile plant does not. Damage to cables and pipes is generally only covered if the excavation notification has been made and the trial trenches have been dug. The item you work on with the machine falls under the care, custody and control exclusion.
This overview is general in nature and is not personal advice. What is actually covered, including exclusions, limits and the excess, is set out in the policy conditions and the insurance card (verzekeringskaart) of the insurer; you receive both before you take out cover. Taking out cover without advice? Then read what execution only means for you.
Where things go wrong in practice
Four points that make the difference between a policy that pays out and one that does not.
Wear is the dividing line, not the defect
Every machinery breakdown policy excludes gradual deterioration: wear, corrosion, attack, drying out, limescale and ageing. The insurer pays for the sudden consequence, not for the worn part that was the cause. If a bearing seizes because the lubrication had been inadequate for months, you bear the bearing yourself and the policy pays for the consequential damage to the shaft and the housing. Your maintenance records decide which side of that line your case falls.
Consumable parts and tooling are outside the cover as standard
Parts which by their nature are replaced regularly are not included: cutting tools, dies, rolls, screens, filters, belts, hoses, refractory linings, oil, coolant and batteries. Also, damage arising solely to those parts themselves is excluded. If the damage extends to the base part of the machine, that consequential damage is usually insured. Have the boundary between replaceable part and machine part recorded when you apply.
Base the indemnity period on the delivery time
With specialist or bespoke machines the decisive factor is not the repair but the wait for a part. An indemnity period of 52 weeks looks generous, but is too short for a single production line with a long delivery time. Establish for each machine who the supplier is, whether parts are still available and whether a reconditioning alternative exists, and set the period accordingly.
Warranty, maintenance contract and policy each cover something different
A supplier who puts right a construction fault under warranty does so on the basis of the contract; if the fault stems from your own operation or the warranty period has expired, there is no party to recover from. Insurers exclude damage which a third party must pay under contract or by law — if that obligation no longer exists, the policy comes into play. Keep terms of delivery and maintenance reports; they determine who is first in line.
What does your premium depend on?
Replacement value as new and type of machine — The replacement value of each insured item is the basis; a CNC machining centre, a compressed air installation and a refrigeration compressor each have their own pattern of losses.
Age and reconditioning history — The older a machine is, the higher the chance of an inherent defect and the lower the availability of parts, and both feed through into the premium.
Intensity of use and shift work — A machine running three shifts clocks up in one year the operating hours of several years of single-shift use and is under greater strain.
Maintenance regime and records — Preventive maintenance following the manufacturer's schedule, with recorded vibration or oil analysis, reduces both the risk and the scope for argument after a loss.
Indemnity period for business interruption — The period chosen has to match the delivery time of critical parts; the longer the period, the higher the premium for the downtime section.
Redundancy in the production line — If there is a second machine or an alternative route, the downtime loss is limited and that weighs in acceptance.
Insurers weigh these details differently. That is why comparing pays off.
How we arrange it
You request a quoteWe take stock of your activities, turnover and wishes.
We compareseveral insurers, on premium as well as conditions.
You receive a proposalWith an explanation of the differences and the exclusions.
We arrange the switchIncluding cancellation, so there is no gap in cover.
Customers rate our service on four aspects: personal service, service delivery, availability and the outcome. The reviews are collected and published by NH1816 and come from customers who have actually taken out a policy with Finass Advies B.V. or reported a claim.
What is the difference from my contents or fire insurance?
A contents policy covers perils that strike the machine from outside, such as fire, storm, water and burglary. Machinery breakdown covers damage arising within the machine itself: inherent defect, fracture, short circuit, overheating and operating errors. So the two barely overlap. In the event of fire the loss falls under the fire policy, even if the fire started in the machine.
Is damage caused by an operating error by my employee covered?
Yes, that is one of the core causes of this cover: the wrong programme, an incorrect setting or improper use by your own staff falls within it. The exception is damage caused intentionally or through wilful recklessness. If the employee had demonstrably not been instructed for the machine, the insurer can call the payment into question.
Does the policy pay for my lost turnover during the repair?
Only with the business interruption after machinery breakdown extension. The basic cover pays for the repair or replacement of the machine and nothing more. The extension pays for the loss of gross profit within an agreed indemnity period, which you have to base on the delivery time of parts and not on the repair time itself.
Why does the insurer point to wear in my claim?
Because gradual deterioration — wear, corrosion, attack — is excluded in every policy. The loss adjuster looks for the moment at which the damage occurred suddenly. The worn part that was the cause is at your expense; the consequential damage to the rest of the machine usually is not. Complete maintenance records are your strongest argument in that discussion.
Finass Verzekert is a trading name of Finass Advies B.V. We advise on and arrange non-life insurance on the basis of an objective analysis of several insurers, and receive commission for this from the insurer, which is included in the premium. You pay no separate advice fee. Before you take out cover, we establish your wishes and needs.
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