Contractors Plant & Machinery Insurance

Insurance coverage for contractors against breakdown of their machinery and equipment.

Contractors Plant & Machinery Insurance

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Almost all projects involve using various kinds of equipment and machinery. The type of equipment may change according to a project's nature, location, and stage in the process. Contractors’ Plant and Machinery Insurance, aka CPM insurance, is a type of all-risk insurance that covers a contractor's equipment being used at the site. 

Some commonly used equipment for such projects are forklift trucks, bulldozers, compressors, drilling machines etc. These machines are susceptible to damage considering nature of the work and sites they’re used for and at. The failure of these machines could delay the completion of the current project and jeopardise the whole timeline. 

The Contractor’s Plant and Equipment insurance policy saves the day in such circumstances. This policy provides coverage to the contract holder against any sudden, unexpected physical damage to or loss of their equipment.

Who needs Contractor’s Plant and Machinery Insurance Coverage?

The Contractor’s Plant & Machinery Insurance may be purchased by any of the following parties, individually or jointly:

  • Owner of the machinery and infrastructure. 
  • Financial institutions and banks investing in the project. 
  • Contractor or person using construction equipment. 

Why Buy Contractor’s Plant and Machinery Insurance Policy? 

Contractors are reliant on equipment and plant operations at any work site. Since these equipment and facilities need significant investments, physical loss or damage might result in substantial losses.

With a Contractor’s Plant and Machinery Insurance Policy, you can feel at ease knowing that their financial interest associated with the equipment is protected against loss or damage. So, without worrying about the equipment, you can focus more on what's important - managing and completing the project on time.

Several benefits of CPM Insurance coverage are listed below:

  • This insurance is designed to provide protection for machinery and equipment, both in operation and at rest, from accidental damage due to unexpected events, exclusive of mechanical and electrical breakdowns.
  • It is applicable to all corporate entities, regardless of the size and type of their operations.
  • Optional extensions like the 72-hour rule are available to cover occurrences such as natural disasters, expenses in connection with claims processing, theft by the user, release of the subrogation right, and loss payee.
  • Extensions can also be added to cover strikes, riots and civil unrest.

Possible Risk Scenarios 

If not stated otherwise, Plant and Equipment Insurance protects a civil contractor's equipment from unexpected damage, loss or destruction by any external risk. Several of the risk factors are as follows:

  • Lightning and fire
  • Theft and break-in
  • Rallies, strikes, and malicious damage 
  • Storms, Cyclones, Floods, and Inundation 
  • Landslides, rockslides, and subsidence
  • Accidental external damage brought on by improper handling, an impact, a collapse, or a drop while you're working or resting at the location.

Major Inclusions of Contractors Plant and Machinery Insurance Policy

The major inclusions of a plant and machinery insurance policy for contractors are as follows:

  • Protection from the financial impact of natural disasters and other acts of God.
  • Compensation for costs incurred in the filing of a claim.
  • A clause that groups losses occurring within 72-hours of a single event as one claim, with a single deductible.
  • Relief from the responsibility of recovering damages from another party (Waiver of subrogation). 
  • Insurance for losses due to riots, labor disputes, and civil unrest.

Major Exclusions of Contractors Plant and Machinery Insurance Policy

The major exclusions of a Plant and Machinery Insurance Policy for contractors are as follows:

  • Failure due to mechanical or electrical breakdown.
  • Existing defects and harm.
  • Damage brought on by a pressure vessel or boiler explosion.
  • Vehicles that are intended for regular on-road use and are properly licenced.
  • Replaceable components and accessories like drills, knives, bits, saws, moulds, etc. That naturally has a greater rate of wear or depreciation.
  • When the machinery or plants are on a public road.
  • Equipment deterioration brought on by inactivity.
  • Consequential damage
  • Damage brought on by terrorism.
  • Damage that the manufacturer or supplier is liable for.
  • Insured or insured's representative's negligence or malicious behaviour.
  • Underwater vehicles or vessels.
  • Damage or loss brought by partial or complete submersion in the tides.
  • Other subsurface machinery besides tunnel boring machines
  • War or warlike activities, nuclear threats.
  • When a test is being run on the system.

Factors Affecting the Price of Contractors Plant and Machinery Insurance Policy

Your CPM insurance prices depend upon the following:

  • The types of machines you cover 
  • The locations where they are operated
  • Risks and any extensions you choose. 

Read the insurance's exclusions thoroughly in addition to the cost because they can vary from one policy to another. Evaluate the procedures needed in repairing or replacing a machine to determine whether you need any extensions.

Contractors benefit greatly from contractors plant and machinery insurance policies because their financial interests are protected from damage or loss. Hopefully, now you have a clear idea of what these insurance policies are and how they can benefit you in running your business smoothly. So, make an informed decision and grow your business with Policybazaar UAE.


Q1. What is Contractors Plant & Machinery Insurance?

Ans: Contractors Plant & Machinery Insurance financially covers the plant and machinery used in construction, engineering, or any other project from any unforeseen loss or damage. The policy covers contractor-owned or rental plants and machinery from all types of risk and losses.

Q2. Am I eligible to obtain Contractors Plant & Machinery Insurance coverage?

Ans: If you are a contractor with your own or rented plant and machinery, you can get Contractors Plant & Machinery Insurance. With this policy, contractors can avail of important financial protection that they need against hefty financial losses related to their plants and equipment.

Q3. What benefits will I get in the Contractors Plant & Machinery Insurance?

Ans: You can avail of the following benefits from the Contractors Plant & Machinery Insurance -

  1. Financial protection against potential risk in the machinery 
  2. Continuity of operations ensured
  3. Reducing the liability of the contractor
  4. Minimising financial losses
  5. Saves the extra cost of hiring additional equipment and more
Q4. How will my premium be determined in the Contractors Plant & Machinery Insurance?

Ans: The premium for a Contractors Plant & Machinery Insurance plan is determined by considering factors like the nature and type of machinery, the sum insured value, risk assessment, percentage of the insured value of equipment, and other related terms.

Q5. What exclusions can I expect in Contractor Plant & Machinery Insurance?

Ans: The Contractor Plant & Machinery Insurance plans generally don’t cover risks and losses related to regular wear and tear, mechanical errors, over-time deterioration, electrical breakdowns, wars, terrorism attacks, and nuclear threats.

Q6. What elements are covered in Contractor Plant & Machinery Insurance?

Ans: Contractors Plant & Machinery Insurance usually covers any type of accidental damage or loss of plant and machinery, burglary, losses due to breakdown, machinery failure, transit risks, and errors on the part of operators.