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Choose machinery and plant insurance

If you are running a manufacturing business some of your most important assets are likely to be your plant and engineering equipment. Since these items can be damaged or stolen relatively easy, make sure that your insurance covers these areas so that your business is not interrupted.

Failure to cover these items means that your manufacturing capacity may be wiped out altogether in some disaster.

Ideally you should be looking to ensure that your cover protects your equipment from:

Theft and vandalism
Fire, smoke, explosions
Earthquakes or other such major natural disasters such as floods
Water or oil leakage
Concurrent damage caused by extinguishing building fires etc

Policies covering your plant will be set at a certain amount, either as estimated by you, or categorised by the insurance company. There are two main types of cover:

Old-for-New - items are replaced at their current market value
Indemnity Cover - the insurance company will take into account general depreciation

Be careful to check which type of cover the insurance company is proposing - obviously the former is a far better option, but it can be more expensive.

Some policies in this area have special features depending on what the plant being insured actually does and if it has a higher risk of being damaged or destroyed. If you want to keep your insurance premium to a minimum, ask the insurer about leaving off special features, or try raising the excess.

When taking out machine/plant insurance you should consider how much your plant is worth before shopping around for an appropriate policy. If you are getting an Old-for-New policy, make sure to value your equipment at its replacement value, not its actual value (which will take into account wear and tear). Don't forget to examine any limitations and upper limit pay-outs before purchasing the insurance and check whether you are covered for accidental damage.

When you have chosen the best policy for your business, make sure that you do not give any inaccurate or false information when applying for insurance. This will make your policy invalid when trying to make a claim. Check your policy frequently and update it if necessary as your situation changes.

Check your excess limitation, especially for money, valuables and single articles and try to negotiate a discount on the strength of any of these.

As with any contract, always read the small print and documentation thoroughly. If you don't, you are leaving yourself open to the insurer's opt-out clauses.

Action Checklist:

Shop around to make sure that you are getting the best value from a policy
Select an insurer with experience in your area. They will then have a real appreciation of your actual needs and the requirements of your equipment
Check out any quality issues with your insurer - how long on average do they take to settle claims, have they a reputation for contesting claims etc
Keep your insurance policies up-to-date and set at the right level. When something vital like your plant is damaged or needs replacing it is essential that you do this as quickly as possible to avoid losing business

This is a guide. It may be helpful for you to speak to an advisor in commercial insurance. E&OE