Machinery Breakdown Insurance

When the steady hum of machinery grinds to a halt, there are ensuing losses that pinch your business's profits. This policy from Bharti AXA is further to a machinery breakdown policy wherein additionally a claim is made for the loss of profits caused by the aforementioned breakdown. It covers consequential losses arising out of unforeseen accidental physical loss or damage to machinery. The concerned machinery should be covered under a machinery breakdown policy and the admission of a claim under the material damage policy is a prerequisite for admission of a claim under the loss of profits policy.

Scope of Cover

The cover provided under this Policy shall be limited to loss of gross profit due to
(a) Reduction in output and
(b) Increase in Cost of Working and the amount payable as indemnity thereunder shall be
1. In respect of Reduction in output: the sum produced by applying the rate of gross profit to the amount by which the output during the indemnity period shall in consequence of the damage fall short of the standard output.
2. In respect of Increase in Cost of Working; the additional expenditure (subject to provision of memos) necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in output which but for that expenditure would have taken place during the indemnity period in consequence of the damage, but not exceeding the sum produced by applying the rate of gross profit to the amount of the reduction thereby avoided.
Less any sum saved during the indemnity period in respect of such of the Insured Standing Charges as may cease or be reduced in consequence of the damage.
Provided that if the sum insured by this item be less than the sum produced by applying the rate of gross profit to the annual output, the amount payable shall be proportionately reduced.

Exclusions

This Policy excludes any loss resulting from interruption of or interference with the business directly or indirectly attributable to any of the following causes -

i) Willful act or willful neglect or gross negligence of the Insured or his responsible representatives.
ii) Loss or damage to machinery or other items which are not listed in the list of machinery insured even if the consequence of material damage to an item indicated in the list of machinery insured is involved.
iii) Loss or damage caused by any faults or defects existing at the time of commencement of this insurance within the knowledge of the Insured or his responsible representatives whether such faults or defects were known to the Company or not.
iv) Shortage, destruction, deterioration and spoilage of or damage to raw materials, semi finished or finished products or catalyst or operating media (such as fuel, lubricating oil, refrigerant, heating media and the like) even if the consequence of material damage to an item indicated in the list of machinery insured is involved.
v) Any restrictions on reconstruction or operation imposed by any public authority.
vi) An extension of the normal repair period for more than 4 weeks on account of -
a) the inability to secure or delays in securing replacement parts, machines or technical services.
b) the inability to carry or delays in carrying out repairs.
c) the prohibition to operate the machinery due to import and/or export customs & other restrictions or by statutory regulations.
vii) transport of parts to and from the Insured?s premises.
viii) Alterations improvements or overhauls being made while repairs or replacements of damaged or destroyed property are being carried out.
ix) War, invasion, Act of foreign enemy, Hostilities or Warlike Operations (whether war be declared or not), Civil War
x) Mutiny, Civil Commotion assuming the proportion of or amounting to a popular rising, military rising, insurrection, rebellion, revolution, & military usurped power.
xi) Nuclear power reactions and Radiations.