Machinery breakdown insurance
Taking care of machinery breakdown insurance claims is not an easy job. I share my experience about taking care of the machinery breakdown insurance claim process to get compensation from the insurer. This experience is related to machinery breakdown insurance for a diesel engine that we have done preventive maintenance (major overhaul).
Some years ago, I worked in a Service Team to do repair, maintain and operate Diesel/gas engine generator set. In a year, we may got 500 Service jobs. Our mechanics have done a major overhaul followed by load test and commissioning. The diesel engine was said to have been operating properly and delivered to the customer. We gave warranty to the customer for 6 months and we bought a machinery breakdown insurance for 6 months.
During the warranty period, we got call from customers about the failure of diesel engines. We sent the mechanic to customer premises to investigate. Mechanics prepared a report about damaged parts, chronology of damage and causes of damage. Based on the report, we found the cause of the damage due to operational negligence.
The basic thing about insurance coverage, the insurance company only bear the damage caused by operational negligence. The insurance company will not be liable for damages caused by an imperfect major overhaul or the failure of spare parts used during major overhaul. Imperfect major overhaul is the responsibility of “Service company”, whereas spare part failure is the responsibility of OEM. These two things are not covered in machinery breakdown insurance.
The insurance company could just send their mechanic or technical expert to investigate the damage to the diesel engine or just to validate our technical report. At this stage, we faced a technical discussion to find the cause of the damage. We must have a deep understanding of technical matters, such as material properties, diesel engine working systems and maintenance procedures. We managed to convince the insurance company that this damage – technically – is covered in the machinery breakdown insurance policy.
The next stage was about financial discussion. We were asked to prepare a quotation for replacement or repair of diesel engines. Total repair cost include spare parts cost, manpower costs and shipping costs. After several times of discussion and verification of documents, finally, the insurance company agreed to make reimbursement of diesel engine repair costs.
Insurance claims process is not an easy thing. As long as we have a strong technical understanding and strong evidence, we can get through this machinery breakdwon insurance process well.
Below are some condition that not covered under Machinery breakdown insurance by Tokio Marine:
- War, civil war and any act of terrorism
- Radioactive and nuclear energy risks
- Loss or damage caused by pollution or contamination
- Fire, lightning and chemical explosion
- Acts of god
- Theft and burglary
- Pre-existing conditions
- Wear and tear