Engineering Insurance 211012 PDF

ENGINEERING
INSURANCE
PRESENTED BY:
N. VAIDYANATHAN B.E(MECH),D.O.M.,M.I.E.,F.I.V.,F.I.I.I.S.L.A.,M.I.R.M(UK)
CHARTERED ENGINEER, INDUSTRIAL VALUER AND LOSS
ADJUSTOR, DIRECTOR, INDIAN SURVEYORS PVT LTD
CEO, ENCOUNSEL ENGINEERS
MUMBAI
Email id: vaida17@gmail.com

1
ORIGIN OF ENGINEERING
INSURANCE
IT DATES BACK TO THE EARLY PART

OF INDUSTRIAL REVOLUTION IN UK
STEAM BOILER ASSURANCE
COMPANY WAS FORMED IN 1858 AND
STARTED ACCEPTING PREMIUMS
TOWARDS DAMAGES DUE TO
BOILER EXPLOSIONS
2
Engineering Insurance
Section 1: Introduction to Engineering
Insurance
Types of cover
Area of application
Underwriting factors to consider
MACHINERY A REVIEW
INTERNAL COMBUSTION ENGINES
INTERNAL COMBUSTION ENGINE
MACHINERY A REVIEW
TYPES:
1. RECIPROCATING ENGINES BY GAS,
PETROL, DIESEL
2. TURBINE ENGINES= GAS TURBINES
3. JET ENGINES = JET ENGINES
=ROCKETS
MACHINERY A REVIEW

An internal combustion engine is any
engine that operates by burning its fuel
inside the engine. In contrast a steam
engine burns its fuel outside the engine.
The most common internal combustion
engine type is PETROL powered. Others
include those fueled by diesel, hydrogen,
methane, propane, etc.
9
MACHINERY REVIEW
What Is A Boiler?
A boiler is defined as "a closed vessel in
which water or other liquid is heated,
steam or vapor is generated, steam is
superheated, or any combination thereof,
under pressure or vacuum, for use external
to itself, by the direct application of energy
from the combustion of fuels, from
electricity or nuclear energy."
10
MACHINERY REVIEW
What Is A Water Tube Boiler?

A water-tube boiler is a type of boiler in
which water circulates in tubes heated
externally by the fire. Water-tube boilers
are used for high-pressure boilers. Fuel is
burned inside the furnace, creating hot gas
which heats up water in the steamgenerating tubes
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Water Tube Boiler
12
WATER TUBE BOILERS
13
WATER TUBE BOILERS
14
MACHINERY REVIEW
WATER TUBE BOILER
15
MACHINERY REVIEW
VULCANISERS
16
VULCANISERS
Rubber vulcanization machines strengthen

raw rubber by chemically treating it, end
result being that the rubber becomes
harder and stronger. Vulcanized rubber
does not melt on heating. This sulphur
treated rubber is used to make cables,
cords and other heat resistant rubber end
products. Vulcanized rubber is used in
many industries including automobiles.
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MACHINERY REVIEW
AIR COMPRESSORS
18
AIR COMPRESSORS
A mechanical device used to provide highpressure condensed air for a variety of

tasks. An air compressor is generally
composed of three parts: a motor, an air
pump, and an air storage tank. An air
compressor is a mechanical device that
increases the pressure of air
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MACHINERY REVIEW
EXCAVATORS
20
EXCAVATORS
An excavator is an engineering vehicle consisting of an

articulated arm (boom, stick), bucket and cab mounted on
a pivot (a rotating platform, ) atop an undercarriage with
tracks or wheels. Excavators are used in many roles:
Digging of trenches, holes, foundations
Material handling
Demolition
General grading/landscaping
Heavy lift, e.g. lifting and placing of pipes
Mining
River dredging
21
MACHINERY REVIEW
CHEMICAL PLANT
22
CHEMICAL PLANT
A chemical plant is an industrial process plant

that manufactures (or otherwise processes)
chemicals, usually on a large scale. Chemical
plants use special equipments, units, and
technology in the processes. Other kinds of
plants, such as polymer, pharmaceutical, food,
and some beverage production facilities, power
plants, oil refineries or other refineries, natural
gas processing and biochemical plants.
23
FIRE TUBE BOILERS
A fire-tube boiler is a type of boiler in which

hot gases from the fire pass through one or
more tubes within the boiler. A fire tube
boiler can be either horizontal or vertical. A
fire-tube boiler is sometimes called a "smoketube boiler" or "shell boiler" or sometimes
just "fire pipe". This type of boiler was used
on virtually all steam locomotives in the
horizontal "locomotive" form
24
FIRE TUBE BOILERS
25
MACHINERY REVIEW
TOWER CRANES
26
TOWER CRANES
Tower cranes are a common fixture at any

major construction site. The construction
crew uses the tower crane to lift steel,
concrete, large tools like acetylene torches
and generators, and a wide variety of other
building materials.
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MACHINERY REVIEW
28
HEAVY DUTY GOODS LIFT
MACHINERY REVIEW
29
ELECTRICALLY OPERATED TRAVELLING CRANE (EOT)
E. O. T. CRANES
A crane is a mechanical lifting device equipped

with a winder, wire ropes and sheaves that can be
used both to lift and lower materials and to move
them horizontally. Cranes are commonly
employed in the transport industry for the
loading and unloading of freight; in the
construction industry for the movement of
materials; and in the manufacturing industry for
the assembling of heavy equipments.
30
MACHINERY REVIEW
BELT CONVEYORS
31
BELT CONVEYORS
BELT CONVEYOR means a conveying device

that transports material from one location to
another by means of an endless belt that is
carried on a series of idlers . A belt conveyor
consists of two or more pulleys, with a continuous
loop of material - the conveyor belt - that rotates
about them. One or both of the pulleys are
powered, moving the belt and the material on the
belt forward.
32
MACHINERY REVIEW
BUCKET ELEVATORS
33
BUCKET ELEVATORS
A series of cups, or buckets usually attached to a belt or

chain that goes up and around an axle and back down
again, inside a shaft. It consists of:
Buckets to contain the material;
A belt or chain to carry the buckets and transmit the
pull;
Means to drive the belt;
Accessories for loading the buckets or picking up the
material, for receiving the discharged material, for
maintaining the belt tension and for enclosing and
protecting the elevator.
A bucket elevator can elevate a variety of bulk materials
from light to heavy and from fine to large lumps.
34
JAW CRUSHERS
The Jaws in the machine
crushes the Lumps into
small pieces, mainly in
Cement, Steel plants
35
MACHINERY REVIEW
REACTION KETTLES
36
MACHINERY REVIEW
PRESSURE VESSELS
37
PRESSURE VESSELS
Any type of vessel or container which is designed

to hold liquids or gases under pressure. Pressure
vessels are used in a variety of applications.
Examples : diving cylinder, recompression
chamber, distillation towers, autoclaves and
vessels in mining or oil refineries and
petrochemical plants, nuclear reactor vessel,
habitat of a space ship, habitat of a submarine,
pneumatic reservoir, hydraulic reservoir under
pressure, storage vessels for liquified gases such
as ammonia, chlorine, propane, butane and LPG.
38
SCRUBBERS
TO REMOVE DUST
AND OTHER
SUSPENDED AND
UNWANTED
PARTICLES IN THE
AIR
39
MACHINERY REVIEW
PUMPS
40
PUMPS
A mechanical device generally driven by a

prime mover, and used for raising fluids
form a lower to a higher level or for
circulating fluid in a pipework. A pump is a
device used to move gases, liquids or
slurries.
41
MACHINERY A REVIEW
ELECTRICAL MACHINES
DIRECT CURRENT / ALTERNATING
CURRENT
ROTATING EQUIPMENTS:
ELECTRIC MOTORS/GENERATORS
STATIONERY EQUIPMENTS:
TRANSFORMERS/CAPACITORS/
SWITCH GEARS
42
MACHINERY A REVIEW
ELECTRICAL MOTORS
43
MACHINERY A REVIEW
DIESEL GENERATING SETS
44
D. G. SETS
Diesel engine is the prime mover, which drives an

alternator to produce electrical energy. In the
diesel engine, air is drawn into the cylinder and is
compressed to a high ratio (14:1 to 25:1). During
this compression, the air is heated to a
temperature of 700900C. A metered quantity of
diesel fuel is then injected into the cylinder, which
ignites spontaneously because of the high
temperature and this drives the engine
45
D.G.SETS
DG Set as a System
A diesel generating set should be considered as a
system since its successful operation depends on
the well-matched performance of the
components, namely:
a) The diesel engine and its accessories.
b) The AC Generator.
c) The control systems and switchgear.
d) The foundation and power house civil works.
e) The connected load with its own components
like heating, motor drives, lighting etc.
46
MACHINERY A REVIEW
DIESEL GENERATING SETS
47
MACHINERY REVIEW
A transformer transfers electrical energy between

two circuits. It usually consists of two wire coils
wrapped around a core. These coils are called
primary and secondary windings. Energy is
transferred by mutual induction caused by a
changing electromagnetic field. If the coils have
different number of turns around the core, the
voltage induced in the secondary coil will be
different to the first. Transformers are mainly
used to convert one voltage to another.
48
ENGINEERING INSURANCE
TRANSFORMERS
49
SWITCH GEARS AND PANELS
50
SWITCH GEAR
The term switchgear, used in association

with the electric power system, or grid,
refers to the combination of electrical
disconnects, fuses and/or circuit breakers
used to isolate electrical equipment.
Switchgear is used both to de-energize
equipment to allow work to be done and to
clear faults downstream.
51
SWITCH GEAR PANELS
52
MACHINERY REVIEW
INDUCTION FURNACES
53
INDUCTION FURNACE
An induction furnace is an electrical furnace in

which the heat is applied by induction heating of
a conductive medium (usually a metal) in a
crucible placed in a water-cooled alternating
current solenoid coil. Most modern foundries use
this type of furnace Induction furnace capacities
range from less than one kilogram to one
hundred tonnes capacity, and are used to melt
iron and steel, copper, aluminium, and precious
metals.
54
MACHINERY REVIEW
OIL OR GAS FIRED FURNACES
55
MACHINERY REVIEW
BALL MILL
56
BALL MILL
Horizontal, cylindrical mill that rotates and

grinds materials into raw feed (raw mill) or
cement (finish mill) at a cement plant. The
grinding media are various sizes of
hardened steel balls that break down the
material on impact. A ball mill is a type of
grinder used to grind materials into
extremely fine powder for use in paints,
pyrotechnics, and ceramics.
57
MACHINERY REVIEW
VIEW OF KILN OF CEMENT PLANT
58
MACHINERY REVIEW
VIEW OF CHEMICAL PLANT
59
MACHINERY REVIEW
VIEW OF DIARY PLANT EQUIPMENT
60
MACHINERY REVIEW
VIEW OF BREWERY PLANT EQUIPMENT
61
MACHINERY A REVIEW
TYPICAL INSTALLATION OF PLANT:

1. PETROCHEMICAL PLANT
COMPRESSORS/TURBINES/BOILERS
HEAT EXCHANGERS/PUMPS/
TRANSFORMERS/MOTORS/
CONTROL PANELS/ CABLES
REACTORS
62
MACHINERY A REVIEW

In a Petrochemical Plant the feedstock
(generally natural gas or petroleum liquids)
is converted into fertilizers, and/or other
intermediate and final products such as
olefins, adhesives, detergents, solvents,
rubber and elastomers, films and fibers,
polymers and resins, etc.
63
MACHINERY A REVIEW

64
MACHINERY A REVIEW

CEMENT FACTORY:
ROTARY KILNS/BALL MILLS/
CEMENTMILLS/BLOWERS/
CONVEYORS/MIXERS/BLENDERS/
CRANES
65
MACHINERY A REVIEW

CEMENT FACTORY:
An integrated facility that prepares the raw mix,

feeds it to the pyro-processing system (kiln), and
then grinds the clinker from the kiln system into
various cement products. Finished cement is
stored in large silos on site or bagged for small
quantity use. The cement is shipped by truck, rail
or barge to customers, or to regional terminals
for customer pick-up. Most cement plants have
quarries located nearby to supply the limestone
and other raw materials.
66
MACHINERY A REVIEW

PROCESS PLANTS:
BOILERS/SUPERHEATERS/PUMPS
REACTORS/COMPRESSORS/
TRANSFORMERS/CONDENSORS
ECONOMISERS/VACCUM PLANTS
MIXERS/CRUSHERS/ FILTERS
67
MACHINERY A REVIEW

PHARMACEUTICAL PLANTS:
PRESSURE VESSELS/DIGESTORS
AGITATORS/GRANULATORS/DRUMS
HEATERS/BOILERS/TABLET MAKER
A/C AND REFREGERATION PLANTS
68
PROPOSAL FORM
INSPECTION BY INSURERS
ACCEPTANCE OF PROPOSAL
PERIOD OF INSURANCE
CLAIMS
TYPES OF POLICIES
69
PROPOSAL FORM IMPORTANCE

Description of property to be insured and
nature of trade or process of profession of
the insured.
Basic data by which Insurer receives
information about risks to be insured
70
TYPES OF POLICIES:
CONSTRUCTION PHASE POLICIES:
1.CONTRACTORS ALL RISK POLICY(CAR).
2.ERECTION ALL RISK & MARINE
ERECTION POLICY (EAR) ALSO KNOWN AS
STORAGE CUM ERECTION POLICY (SCE)
3.MARINE CUM ERECTION POLICY(MCE)
4.CONTRACT WORKS POLICY (CW)
5.ADVANCE LOSS OF PROFITS (ALOP) OR
DELAY IN STARTUP (DSU).
71
TYPES OF POLICIES:
OPERATION PHASE POLICIES:
1.MACHINERY BREAKDOWN (MBD)
2.BOILER & PRESSURE PLANT (BPP)
3.MACHINERY LOSS OF PROFIT(MLOP)
4.CONTRACTORS PLANT &
MACHINE(CPM)
5.ELECTRONIC EQUIPMENT (EEI)
6.DETERIORATION OF STOCKS (DOS)
72
INTEREST
ALOP
INSURERS
PROFITS
M.DAMAGE
PREMIUM
MAIN & SUB

CONTRACTORS
INVESTMENTS
INSURED
PREMIUM
FUNDERS
LOANS
PROJECT
INSURANCE
PROJECT
73
CONTRACTORS ALL RISK POLICY:

PURPOSE
COMPREHENSIVE PROTECTION
AGAINST LOSS OR DAMAGE IN
RESPECT OF CONTRACT
WORKS, CONSTRUCTION, TPL,
74
THIS IS A SPECIALLY DESIGNED

POLICY TO PROTECT THE INTEREST
OF CONTRACTORS WORKING ON
CIVIL ENGINEERING PROJECTS
SUCH AS BRIDGES, BUILDINGS,
PLANT ETC. THIS PROVIDES ALL
RISK COVER.
75
76
77
BRIDGE UNDER CONSTRUCTION
78
TUNNEL UNDER CONSTRUCTION
79
PIPELINE UNDER CONSTRUCTION
80
WIND MILL UNDER CONSTRUCTION
81

THIS COVERS DWELLING HOUSES,
COLONIES,WARE
HOUSES,COMMERCIAL
COMPLEXES,THEATERS, SILOS,
WATER TOWERS, BRIDGES, SEWER
SYSTEMS,ROADS, RAILWAYS,
RUNWAYS, HANGERS ETC.
82

THIS COVERS FIRE, LIGHTNING,
EXPLOSION, FLOOD INUNDATION,
WINDSTROM, EARTHQUAKE,
LANDSLIDE,THEFT, BURGLARY,
ACCIDENTAL DAMAGE, BAD
WORKMANSHIP, NEGLIGENCE,
MALICIOUS ACTS, COLLAPSE, IMPACT,
ACT OF TERRORISMCAN ALSO BE
EXTENDED TO COVER THIRD PARTY
LIABILITIES
83

THIS IS MADE UP OF 2 SECTIONS
NAMELY:
1. MATERIAL DAMAGE
2. THIRD PARTY LIABILITY
84

1. MATERIAL DAMAGE
SUM INSURED TO BE EQUAL TO ESTIMATED
TOTAL ERECTED VALUE, INCLUSIVE OF
MATERIALS, WAGES, CONSTRUCTION COSTS,
FREIGHT, CUSTOMS DUTIES, ETC
PREMIUM ADJUSTMENT IS DONE, ON
COMPLETION OF CONSTRUCTION AT ACTUAL
COSTS
PERIOD OF INSURANCE ADJUSTABLE
DEPENDING OF COMPLETION OF THE PROJECT.
THE COVER STARTS ON UNLOADING OF THE
GOODS AT THE SITE TILL ERECTED AND
COMMISSIONED
85

1. MATERIAL DAMAGE
CLAIM BASIS:
A) REPAIR CHARGES OF DAMAGES REIMBURSED
B) TOTAL LOSS ACTUAL VALUE LESS SALVAGE
REIMBURSED
C) COST OF ALTERATIONS, ADDITIONS,
IMPROVEMENTS NOT REIMBURSED.
D) UNDER INSURANCE APPLIED IF APPLICABLE
E) SALVAGE VALUE DEDUCTED
F) EXCESS DEDUCTED
86

ADD ON OR SUPPLEMENTARY COVERS:
CONSTRUCTION PLANT & MACHINERY
CLEARANCE OF DEBRIS
SURROUNDING PROPERTY
AND THIRD PARTY LIABILITY
87

CONSTRUCTION PLANT & MACHINERY
THIS HAS TO BE INSURED AS A SEPARATE
ITEM IN THE SCHEDULE AT THE
REINSTATEMENT VALUE
THIS POLICY EXCLUDES LOSS OR DAMAGE
CAUSED BY ITS OWN MECHANICAL OR
ELECTRICAL BREAKDOWN.
88

SURROUNDING PROPERTY:
APPLIES TO LOSS OR DAMAGE TO
PROPERTY LOCATED ON OR ADJACENT TO
THE SITE BELONGING TO OR HELD IN CARE
CUSTODY, BY THE INSURED
IF OCCURING ONLY AND DIRECTLY DUE TO
ERECTION/CONSTRUCTION OF ITEMS
INSUSRED.
89

CLEARANCE OF DEBRIS:
COST OF CLEARANCE AND REMOVAL OF
DEBRIS, IF THE CLAIM IS ADMISSIBLE, IS
REIMBURSABLE BY THE INSURERS
DEBRIS MEANS DEBRIS ONLY FROM THE
INSURED PROPERTY
90

THIS IS THE OPTION OF THE INSURED
THIS COVERS THE LEGAL LIABILITY OF THE
INSURED TO PAY COMPENSATION FOR
ACCIDENTAL LOSS OR DAMAGE TO PROPERTY OF
OTHER PERSONS AND FATAL/NON FATAL INJURIES
TO ANY PERSONS
SUBJECT TO LIMIT OF THE INDEMNITY SPECIFIED
SUBJECT TO EXCESS FOR THIRD PARTY PROPERTY
CLAIMS.
91

EXCLUSIONS:
LIABILITY FOR BODY INJURY TO
EMPLOYEES/WORKMEN OF THE INSURED OR ANY
CONNECTED WITH THE PROJECT
LOSS OR DAMAGE TO PROPERTY HELD UNDER
TRUST BY THE INSURED
LIABILITY BY TRANSPORT
DAMAGES DUE TO FAULTY DESIGN
92
CONTRACTORS ALL RISK POLICY (CAR) VS

ERECTION ALL RISK POLICY (EAR)
CAR IS LINKED WITH CIVIL ENGINEERING WORKS
SUCH AS BUILDINGS, BRIDGES ETC
EAR IS LINKED WITH ERECTION OF PLANT AND
MACHINERY, EQUIPMENT, STRUCTURES WITHOUT
CIVIL ENGINEERING WORK.
INSURER CAN OPT FOR BOTH THE ABOVE POLICIES
TO COVER ALL ASPECTS OF PROJECT
ESTABLISHMENT. OR TAKE A COMBINATION OF
THE ABOVE UNDER CONTRACT WORKS POLICY
93
ERECTION ALL RISK INSURANCE

PURPOSE
COMPREHENSIVE PROTECTION AGAINST

RISKS INVOLVED IN THE ERECTION OF
MACHINERY, PLANT AND STEEL
STRUCTURES OF ANY KIND AS WELL AS TP
CLAIMS OR BODILY INJURY ARISING IN
CONNECTION WITH THE EXECUTION OF
AN ERECTION PROJECT
94
ERECTION ALL RISK INSURANCE
95
MARINE CUM ERECTION INSURANCE:
THIS IS A COMPOSITE POLICY COVERING

MARLINE INLAND TRANSIT RISKS AND
ERECTION RISKS IN ONE
THIS COVERS STARTS FROM THE MOMENT
THE EQUIPMENTS LEAVE THE
MANUFACTURES WORKS OR WAREHOUSE
TILL REACH THE SITE OF ERECTION
INCLUDING STORAGE AT SITE, DURING
ERECTION.
96
IMPLEMENATION OF PROJECTS: PROGRESS CHART

INSURANCE PERIOD CAR/EAR
MARINE
PLAN
TRANSIT
ONSITE STORAGE
PRE
COMMERCIAL
HANDLING
TRIALS DEBUG
TESTS
PRODUCTION
ERECTION
MAINTENANCE
INSURANCE PERIOD -MCE
SCHEDULED DATE
OF COMMENCEMENT
97
FABRICATOR
LOCAL
SUPPLIER
INTERMEDIATE
STORAGE
IMPORTS
TRANSPORT
MARINE (IMPORTS)
MARINE (LOCAL)
MARINE LOP
SITE
PORT
INTERMEDIATE
OFFSITE
STORAGE
ADDITIONAL
TRANSIT
CONSTRUCTION
MCE
EAR (SCE)
CAR
TPL
CPM
ALOP
OPERATION
FIRE
FLOP
MB
BOILER
MLOP
EEI
CIVIL CONST
STORAGE
ERECTION
TESTING
COMMN.
98
MACHINERY BREAK DOWN

POLICY (MBD)
PURPOSE
ACCIDENT POLICY FOR PLANT, MACHINES
AND MECHANICAL EQUIPMENT.
INDEMNITY FOR SUDDEN AND UNEXPECTED
LOSS OR DAMAGE
THE COVER
ALL DAMAGE OF AN ACCIDENTAL NATURE
THAT IS NOT EXCLUDED.
AT WORK, REST, OR DURING MAINTENANCE
99
MACHINERY BREAK DOWN POLICY

(MBD)
PURPOSE
ACCIDENT POLICY FOR PLANT, MACHINES
AND MECHANICAL EQUIPMENT.
INDEMNITY FOR SUDDEN AND UNEXPECTED
LOSS OR DAMAGE
THE COVER
ALL DAMAGE OF AN ACCIDENTAL NATURE
THAT IS NOT EXCLUDED.
AT WORK, REST, OR DURING MAINTENANCE
100

POLICY (MBD)
101

POLICY (MBD)
Perils covered:
Loss or damage to machinery due to
accidental electrical or mechanical
breakdown. It reimburses the Insured
for the cost of repairs or replacement of
machinery of like nature.
102

(MBD)
All types of industrial machines, both

mechanical and electrical can be covered.
Insurance can be taken by individual owner,
or a company which owns or having financial
interests on the machines
103
MACHINERY BREAK DOWN POLICY (MBD)
EXCLUDED UNDER MB POLICY

(DECLINED LIST OF MACHINES)
Stone Crushers
Rolling Mill-Stands, Pedestal bearing etc.
Raymond Mill
PVC lined, Rubber lined and such other lined vessels
Radios, Tape Recorders, TV Sets and Electronic and
Electrical measuring instruments
Any Imported Machinery which cannot be repaired in the
country
104
EXCLUDED UNDER MB POLICY

(DECLINED LIST OF MACHINES)
Cupolas and Oil fired furnaces
Pumps-with glass, graphite, rubber impellers
Pipe lines
Computers and other Electronic Equipments (To underwrite under
Electronic Equipment Insurance Policy)
Portable and Mobile Equipments
Urea Scrubber,
)
LP Scrubber,
)
Ammonia Scrubber,
) in Fertilizer- appearing in group IV
Ammonia Storage Tanks )
105
Sum Insured:
The sum insured worked out should represent

the present purchase value of a similar new
machine including all expenses such as
customs duty, freight, taxes, excise, erection
and commissioning charges, whatever
applicable
106
Sum Insured:
The detail of each machine/equipment, such as

make, Sr No, model, capacity and year of make or
name plate details
Electronic machine/equipment are not covered
under this policy.
What is electric and what is electronic machine?
107

Exclusions:
Turbine/turbo generators, unless inspected by the Insurers
Faulty material/workmanship
Action due to centrifugal forces
Failure of lubrication/oiling
Failure of safety devices
Electrical short circuiting/insulation failure resulting in fire
108

Exclusions: CONTD
Abrupt/sudden stoppage of connected

machinery
Entry of foreign bodies into the running
machinery
Inexperienced operations/error in judgment
of operator
109

Exclusions: CONTD
Fire and special perils damages

Gradually developed flaws, defects, cracks,
fractures
Failure due to normal wear and tear
Pre existed faults/defects, which were known
to the Insured
110

Exclusions: CONTD
Excess amount as mentioned in Policy

Exchangeable parts, non-metallic parts,
operating medias, non-metallic lining/coating
(listed in coming slides)
Failure due to faults/defects for which
manufacturer/supplier/repairer is responsible
though a contract or law
111

(MBD)
ADD -ON -COVERS on additional
premium
Damage to foundation of machinery
Damage to oil in electrical apparatus
Express freight covering air freight/holiday
extra rates/overtime charges.
112

(MBD)
ADD -ON -COVERS on additional
premium
Additional custom duty payable while reimport
Third party liability due to the machinery
breakdown
113

(MBD)
Loss or damage to following are not reimbursable

Rubber belts, ropes, chains, rubber tyres, dies,
moulds, blades, cutters, knives, shears, exchangeable
tools, engraved/impression cylinders, objects made
of glass, porcelain, ceramics, lubricating oils, fuels,
catalyst, refrigerant, felts, wires, sieves, fabrics,
packing materials, heat resisting or insulating lining,
parts not made of metal
114
Loss or damage to following are not reimbursable
Material change
Alteration/modification/addition
Deletion, if any
Change in the operating conditions
Loss of Profit can be linked with the above policy
115
MACHINERY BREAK DOWN WITH LOSS OF PROFIT

(MBD-LOP). OR MLOP
PURPOSE
PROTECTS THE CONSEQUENTIAL LOSS OF REVENUE

CAUSED BY PRODUCTION STOPPAGE DUE TO PLANT
BREAKDOWN, COVERED UNDER MACHINERY
BREAKDOWN POLICY
THE COVER
LOSS OF PROFIT FOLLOWING PERILS COVERED

UNDER MB.
BASED ON AGREED INDEMNITY PERIOD (IP) AND

TIME EXCESS (TE)
116
MACHINERY BREAK DOWN WITH LOSS OF PROFIT

(MBD-LOP). OR MLOP
PROVIDES INDEMNITY AGAINST
A. LOSS OF PROFIT
B. INSURED STANDING CHARGES
C. INCREASED COST OF WORKING
L.O.P CANNOT BE STAND ALONE. IT IS NOT
NECESSARY THAT ALL ITEMS OF PLANT/OR
EQUIPMENTS OF INSUREDS FACTORY SHOULD BE
COVERED UNDER THE MLOP POLICY. INSUREDS
SELECTED MACHINERIES ARE LISTED IN THE
SCHEDULE.
117
MACHINERY BREAK DOWN WITH LOSS OF

PROFIT (MBD-LOP). OR MLOP
INDEMNITY PERIOD:
THE PERIOD COMMENCES ON THE DATE OF
THE ACCIDENT AND TERMINATES WHEN
PRODUCTION REACHES ITS ORIGINAL
LEVEL EXISTED BEFORE THE ACCIDENT
IT IS THEREFORE TO SPECIFY THIS PERIOD
WHICH IS DIFFERENT FROM THE POLICY
PERIOD
118
MACHINERY BREAK DOWN WITH LOSS OF PROFIT (MBD-LOP).

OR MLOP
TIME EXCLUSION:
TIME EXCLUSION IS THE PERIOD FOR WHICH LOSS IS NOT
PAYABLE
THIS MAY VARY BETWEEN 7 AND 14 DAYS
EXPLOSIVE/PETROCHEMICAL/POWER PLANTS -14 DAYS
FERTILISER PLANTS OTHER CHEMICAL PLANTS -14 DAYS
OTHER INDUSTRIES 7 DAYS
THEN THE INDEMNITY PERIOD COMMENCED AFTER THE
EXPIRY OF THE TIME EXCLUSION IMMEDIATELY AFTER THE
OCCURRENCE OF ACCIDENT.
TO NOTE THAT THERE IS NO EXCLUSION OF SUCH NATURE IN
FIRE LOP
119
ADVANCE LOSS OF PROFITS/DELAY IN

START-UP INSURANCE. (ALOP)
PURPOSE
INDEMNIFIES THE ACTUAL LOSS OF GP AS A

RESULT OF DELAYED COMMENCEMENT OF
BUSINESS OPERATION CAUSED BY
ACCIDENT COVERED UNDER EAR / CAR
POLICY
THE COVER
STANDING CHARGES,
INCREASED COST OF WORKING
120
ADVANCE LOSS OF PROFITS/DELAY IN START-UP

INSURANCE. (ALOP)
ALOP IS A COVERAGE NORMALLY INCORPORATED
AS AN ADDITIONAL SECTION TO THE MATERIAL
DAMAGE UNDER CAR/EAR POLICIES.
IT INDEMNIFIES THE INSURED FOR THE ACTUAL
LOSS SUSTAINED DUE TO A DELAY IN
COMMENCEMENT OF COMMERCIAL OPERATIONS.
THE DELAY MUST BE CAUSED BY THE DIRECT
PHYSICAL LOSS OR DAMAGES ADMISSIBLE UNDER
THE MATERIAL DAMAGE OF CAR/EAR POLICIES
121
ADVANCE LOSS OF PROFITS/DELAY IN START-UP INSURANCE.

(ALOP)
SUM INSURED: SINCE NO PREVIOUS TRADING
ACCOUNTS/DATA ARE AVAILABLE FOR ARRIVING AT THE
REALISTIC AMOUNT AS SUM INSURED, IT IS GENERALY BASED
ON THE FOLLOWING ASSUMPTIONS:
ANNUAL GROSS PROFIT = NET PROFIT+ STANDING CHARGES
OR TURNOVER-VARIABLE COSTS
DEBT SERVICE CHARGES (PRINCIPAL+INTEREST)
FIXED OVERHEAD CHARGES
INTEREST CHARGES
LOSS OF RENTAL
122
ADVANCE LOSS OF PROFITS/DELAY IN START-UP INSURANCE.

(ALOP)
EXCLUSIONS:INSURERS NOT LIABLE UNDER THIS
ENDORSEMENT FOR DELAYS DUE TO:
EARTH QUAKE, VOLCANIC ERUPTION, TSUNAMI, FLOODS
UNLESS SPECIFICALLY AGREED UPON IN WRITING
LOSS OR DAMAGE TO SURROUNDING PROPERTY
ANY RESTRICTION IMPOSED BY PUBLIC AUTHORITY, NON
AVAILABILITY OF FUNDS ETC
ALTERATIONS/ADDITIONS/IMPROVEMENTS ETC
ANY LOSS DUE TO FINES, BREACH OF CONTRACT FOR LATE
OR NON-COMPLETION OF ORDERS OR ANY PENALITIES OF
WHATEVER NATURE
123
CONTRACTORS PLANT AND

MACHINERY(CPM)
The Insurance of all types of Contractor's Plant
Machinery and Equipments (including those
governed by the Motor Vehicles Act or rateable
under Motor Tariff) engaged for work at any
specified location in India, shall be subject to these
General Regulations.
124
CONTRACTORS PLANT AND MACHINERY(CPM)
PURPOSE
FOR CONTRACTORS PLANT AND

MACHINERY DURING EAR/CAR, OR ON
ANNUAL BASIS
THE COVER
SIMILAR TO SCOPE OF MB BUT EXCLUDES
INTERNAL BREAKDOWN
POSSIBLE APPLICATIONS
FOR EXECUTION OF EAR/CAR PROJECTS
WORK, REST OR DURING MAINTENANCE
125

MACHINERY(CPM)
126

The Policy Schedule will necessarily include a list of all
items of Contractor's Plant, Machinery and Equipments,
indicating separate value against each item. Any additions
or deletions in these items during the Policy period of 12
months can be done on short period basis.
Policy schedule may also include more than one locations
(projects sites) with separate list of Contractors Plant ,
Machinery & Equipment at each location (Project site).
Here also any addition or deletion of different locations or
any items of CPM equipments may be done on short
period basis.
127

Many a times items of Contractor's Plant, Machinery and
Equipments require to be shifted from one location
(project site) to another location (project site). The risks
during transit (any mode) from one location to another
location is outside the scope of this policy and should be
covered separately, if required, in the Marine Department.
However, the risk during shifting of items of Contractors
Plant, Machinery and Equipments, in connection with
work at a project site from one point of the project site to
another point in the same project site, is deemed to be
covered within the scope
128

MACHINERY(CPM)
SUM INSURED
It is a requirement of this insurance that the Sum
Insured shall be equal to the cost of replacement
of the insured property by new property of the
same kind and same capacity, which shall mean
its replacement cost including freight, dues and
customs duties if any and erection costs.
129

BASIS OF INDEMNITY
No deduction shall be made for depreciation in respect of
parts replaced, except those with limited life, but the value
of any salvage will be taken into account. If the cost of
repairs as detailed hereinabove equals or exceeds the
actual value of the machinery insured immediately before
the occurrence of the damage, the settlement shall be made
on the basis provided for in below.
130

BASIS OF INDEMNITY
In cases where an insured item is totally destroyed the
Insurers will pay the actual value of the item immediately
before the occurrence of the loss, including costs for
ordinary freight, erection and customs duties if any,
provided such expenses have been included in the sum
insured, such actual value to be calculated by deducting
proper depreciation from the replacement value of the
item. The Insurers will also pay any normal charges for
dismantling of the machinery destroyed but the salvage
shall be taken into account.
131

Each Machinery should be entered separately with
necessary specifications as mentioned in schedule
Full description with identification no. Etc. of each and
every equipment with valuation should be declared.
The Sum Insured must be calculated on the present day
new replacement value of the Machinery to be insured
including provision for packing, freight and also value
of foundations, erection costs, customs duty, etc., to
afford full protection under the Policy.
132

MACHINERY(CPM)
If any of the Machines is a `Stand by' this fact
should be mentioned.
All Portable Machines must be so designated.
All items in the open must be so described
separately.
Transit risks from site to site will be excluded.
133

MACHINERY(CPM)
ENDORSEMENTS:
1. ESCALATION CLAUSE
2. OWNER'S SURROUNDING PROPERTY
4. EXPRESS FREIGHT
5. AIR FREIGHT
134
BOILER & PRESSURE PLANT INSURANCE

COVERS ALL STEAM GENERATING PLANTS,
PRESSURE VESSELS
ANY VESSEL WHICH HAS PRESSURE ON ACCOUNT
OF STEAM CAN BE COVERED UNDER THIS POLICY
COVERS EXPLOSION OR COLLAPSE, OTHER THAN
FIRE
DAMAGES TO SURROUNDING PROPERTY OF THE
INSURED
LAIBILITY TO THIRD PARTY PROPERTY DAMAGE
135

COVERS:
NO INSURANCE IS ACCEPTED WITHOUT
VALID CERTIFICATE FROM BOILER
INSPECTORATE
BABY BOILERS ARE ACCEPTED AT 50%
LOADING
WASTE HEAT, RECOVERY BOILERS
ACCEPTED AFTER INSPECTION
136
FOR RECOVERY BOILERS, THE BASIC

RATE IS INCLUDING EXPLOSION DUE TO
SMELT WATER REACTION.
THE BASIC RATE IS APPLICABLE UPTO
THE AGE STIPULATED
THE BASIC RATE WILL HAVE TO BE
INCREASED @ 0.005 PER MILLE PER YEAR
FOR EACH YEAR IN EXCESS OF THE
STIPULATED AGE.
137

CONTD. FROM EARLIER SLIDE
EXAMPLE FOR AGE OF BOILER AT THE TIME OF

INSURANCE IS SAY 30.AND STIPULATED AGE IS 25
AND THE BASIC RATE IS 1.20
RATE = 1.20 + 0.005 X (30-25)
= 1.20 + 0.025
= 1.20 + 0.025 = 1.225 PER MILLE
138
FOR BOILERS NOT CERTIFIED BY THE BOILER

INSPECTORATE THE RATE TO BE LOADED BY 50 %
FOR TPL AND SURROUNDING PROPERTY THE RATE
APPLICABLE WILL BE 25 % OF THE RATE
APPLICABLE
BOILERS, WHICH MAY BE FIRED BY OIL OR GAS
ALTERNATIVELY, SHALL BE RATED AS GAS-FIRED
BOILERS.
139

BOILER ANY FIRED CLOSED VESSEL
GENERATING STEAM UNDER PRESSURE
PRESSURE PLANT- UNFIRED CLOSED VESSEL
OF STEAM, GAS, FLUID PRESSURE
COLLAPSE SUDDEN DISTORSION OF ANY
PART OF BOILER OR PRESSURE PLANT
EXPLOSION SUDDEN AND VIOLENT
TEARING APART OF STRUCTURE OF BOILER
OR PRESSURE PLANT WITH FORCIBLE
EJECTION OF CONTENTS
140

EXCLUSIONS:
PRE-EXISTING DAMAGES/FAULTS
LOSS OR DAMAGES FOR WHICH THE
MANUFACTURER OR USER IS
RESPONSIBLE
LOSS DUE TO ALTERATION OF FUEL
SYSTEMS
141

EXCLUSIONS:
FIRE, RIOT, STRIKE
GRADUAL DEVELOPMENT OF CRACKS
DEFECTS DUE TO LEAKAGE/CORROSION
LOSS DUE TO HYDRAULIC TEST
LOSS DUE TO CHEMICAL EXPLOSION
142

EXCLUSIONS:
THERMOFLUID SYSTEM NOT COVERED.
143
ELECTRONIC EQUIPMENT INSURANCE

COVERS COMPUTERS WITH ALL
ATTACHMENTS SUCH AS CPUS, KEYBOARDS,
MONITORS, PRINTERS, UPS.
EDP EQUIPMENTS
ELECTROMEDICAL EQUIPMENTS
TELECOMMUNICATION EQUIPMENTS
PROCESS COMPUTER SYSTEMS
SIGNAL AND TRANSMISSION UNITS
144
145
146

SECTION 1. COVERS THE BASIC
EQUIPMENTS
SECTION 2. EXTERNAL DATA MEDIA
(OPTIONAL)
AND SECTION 3. INCREASED COST OF
WORKING (OPTIONAL)
147

SECTION 1 EQUIPMENT
COVERS ALL RISKS, INCLUDE
ELECTRICAL MECHANICAL
BREAKDOWNS, IMPACT, WATER
DAMAGES, CARELESSNESS, THEFT,
FIRE AND ALLIED PERILS
148

SECTION 2- EXTERNAL DATA MEDIA
ALL DATA MEDIA OF EXTERNAL
NATURE ARE COVERED KEPT WITHIN
THE PREMISES
149

SECTION 3.- INCREASED COST OF
WORKING
IT INDEMNIFIES INSURED FOR ALL
ADDITIONAL COSTS INCURRED TO
ENSURE CONTINUED DATA
PROCESSING ON SUBSTITUTE
EQUIPMENT
150

EXCLUSIONS FOR EQUIPMENT SECTION
THE EXCESS STATED IN THE SCHEDULE
LOSS OR DAMAGE CAUSED BY FAILURE OR
DEFECTS EXISTING AT THE TIME OF
COMMENCEMENT OF INSURANCE.
LOSS OR DAMAGE CAUSED BY FAILURE OR
INTERRUPTION OF ANY GAS, WATER OR ELECTRIC
SUPPLY
LOSS OR DAMAGE CAUSED DUE TO WEAR AND
TEAR, EROSION, CORROSION, GRADUAL
DETERIORATION DUE TO ATMOSPHERIC
CONDITIONS.
151

EXCLUSIONS: FOR EQUIPMENT SECTION
LOSS OR DAMAGE FOR WHICH THE
MANUFACTURERS ARE RESPONSIBLE BY LAW OR
UNDER CONTRACT.
LOSS OR DAMAGE TO RENTED OR HIRED
EQUIPMENT FOR WHICH THE OWNER IS
RESPONSIBLE
LOSS OR DAMAGE TO BULBS, VALVES, RIBBONS,
TAPES, BELTS ETC
AESTHTIC DEFECTS, SUCH AS SCRATCHES, DENTS
CONSEQUENTIAL LOSS OF ANY KIND
152

EXCLUSIONS: FOR EXTERNAL MEDIA
SECTION
THE EXCESS STATED IN THE SCHEDULE
ANY COST ARISING FROM FALSE
PROGRAMMING, PUNCHING OR
INADVERTENT CANCELLING OF DATA
CONSEQUENTIAL LOSS OF ANY KIND
153

EXCLUSIONS:INCREASED COST OF WORKING
SECTION
COSTS INCURRED DURING TIME EXCESS PERIOD
COSTS FOR REPLACEMENT OF DATA MEDIA
COSTS ARISING OUT OF LACK OF FUNDS CAUSING
DELAY IN REPAIR OR REPLACEMENT
LOSS OF MARKET OR OTHER

CONSEQUENTIAL LOSSES
154
SUMMARY:
CONSTRUCTION PHASE:
CONTRACTORS ALL RISK POLICY(CAR)
ERECTION ALL RISK POLICY(EAR) OR STORAGE
CUM ERECTION (SCE)
MARINE CUM ERECTION (MCE)
CONTRACT WORKS (CW)
CONTRACTORS PLANT AND MACHINERY (CPM)
INVOLVING ERECTION MACHINERY, SUCH AS
EXCAVATORS, ROAD ROLLERS, CRANES ETC
ADVANCE LOSS OF PROFIT (ALOP)
155
SUMMARY:CONTD..
OPERATIONAL PHASE:
MACHINERY BREAKDOWN (MBD)
BOILER & PRESSURE PLANT (BPP)
MACHINERY LOSS OF PROFIT
(MLOP)
ELECTRONIC EQUIPMENT
INSURANCE (EEI)
156
RISK MANAGEMENT:
THE PRESERVATION OF ASSETS
AND EARNING POWER FROM LOSS
OR DESTRUCTION
RISK IDENTIFICATION
RISK EVALUATION OR ASSESSMENT
RISK MITIGATION
RISK CONTROL
RISK FINANCING
157
RISK MANAGEMENT PROCESS

IS THERE A RISK ?
YES
NO- NO ACTION
IDENTIFY & QUANTIFY

IS IT SIGNIFICANT OR CAN IT BE SELF-INSURED
IT CAN BE ACCEPTED
NO ACTION
YES
COST THEREOF ACCEPTABLE?
YES
NO, IT IS SIGNIFICANT
CAN IT BE PREVENTED?
NO
CAN IT BE AT LEAST MINIMISED?
COST ACCEPTABLE ?
PROCEED TO SPEND AND INSTAL

NO
THE PREVENTIVE MACHINERY/
YES-INSTALL
METHODS
IS RESIDUAL RISK ACCEPTABLE?
YES
(CARRY OWN RISK)
NO - INSURE
158
ANY QUESTIONS?
159
THANK YOU
Email id: vaida17@gmail.com
160

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ENGINEERING

Email id: vaida17@gmail.com

IT DATES BACK TO THE EARLY PART

INTERNAL COMBUSTION ENGINES

INTERNAL COMBUSTION ENGINE

INTERNAL COMBUSTION ENGINE

INTERNAL COMBUSTION ENGINE

INTERNAL COMBUSTION ENGINES

What Is A Water Tube Boiler?

Water Tube Boiler

WATER TUBE BOILERS

WATER TUBE BOILERS

WATER TUBE BOILER

Rubber vulcanization machines strengthen

A mechanical device used to provide highpressure condensed air for a variety of

An excavator is an engineering vehicle consisting of an

A chemical plant is an industrial process plant

FIRE TUBE BOILERS

A fire-tube boiler is a type of boiler in which

FIRE TUBE BOILERS

Tower cranes are a common fixture at any

HEAVY DUTY GOODS LIFT

ELECTRICALLY OPERATED TRAVELLING CRANE (EOT)

A crane is a mechanical lifting device equipped

BELT CONVEYOR means a conveying device

A series of cups, or buckets usually attached to a belt or

Any type of vessel or container which is designed

A mechanical device generally driven by a

Diesel engine is the prime mover, which drives an

A transformer transfers electrical energy between

SWITCH GEARS AND PANELS

The term switchgear, used in association

SWITCH GEAR PANELS

An induction furnace is an electrical furnace in

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Horizontal, cylindrical mill that rotates and

VIEW OF KILN OF CEMENT PLANT

VIEW OF CHEMICAL PLANT

VIEW OF DIARY PLANT EQUIPMENT

VIEW OF BREWERY PLANT EQUIPMENT

TYPICAL INSTALLATION OF PLANT:

TYPICAL INSTALLATION OF PLANT:

TYPICAL INSTALLATION OF PLANT:

TYPICAL INSTALLATION OF PLANT:

TYPICAL INSTALLATION OF PLANT:

An integrated facility that prepares the raw mix,

TYPICAL INSTALLATION OF PLANT:

TYPICAL INSTALLATION OF PLANT:

PROPOSAL FORM IMPORTANCE

MAIN & SUB

CONTRACTORS ALL RISK POLICY:

CONTRACTORS ALL RISK POLICY:

THIS IS A SPECIALLY DESIGNED

CONTRACTORS ALL RISK POLICY:

CONTRACTORS ALL RISK POLICY:

CONTRACTORS ALL RISK POLICY:

BRIDGE UNDER CONSTRUCTION

CONTRACTORS ALL RISK POLICY:

TUNNEL UNDER CONSTRUCTION

CONTRACTORS ALL RISK POLICY:

PIPELINE UNDER CONSTRUCTION

CONTRACTORS ALL RISK POLICY: