Machinery & Equipment Breakdown Insurance

What Is Machinery & Equipment Breakdown Insurance?

Machinery & Equipment Breakdown Insurance (sometimes called “engineering insurance” or “mechanical/electrical breakdown cover”) is designed to respond when insured equipment suffers a sudden and unforeseen breakdown - for example a motor failure, gearbox damage, electrical short, control panel fault, pump failure, compressor seizure, bearing failure, or an internal component breakdown that prevents the machine working safely.

In a steel manufacturing environment, the financial impact of breakdown is rarely limited to the repair invoice. It can include: emergency engineer call-outs, specialist parts with long lead times, overtime to catch up, outsourcing costs, missed delivery dates, and potential contractual penalties (where you have agreed them). For some businesses, the biggest cost is simply lost production capacity.

This is why many steel manufacturers and fabricators choose to arrange machinery breakdown alongside business interruption for machinery breakdown (sometimes described as “MLOP” – machinery loss of profits). That combination is designed to protect both the hardware and the income stream linked to the machine.

Not all breakdown policies are the same. The key is to insure the right items, set realistic sums insured or limits, and make sure you understand the conditions that apply (maintenance, inspections, and any excluded causes). Insure24 helps you build cover that is practical for your workshop - not just a policy document that looks good on paper.

Why Steel Manufacturers & Fabricators Are Exposed to Breakdown Risk

Steel manufacturing environments are tough on machines: vibration, heavy loads, abrasive dust, heat, high duty cycles, and pressure to meet deadlines. Even with strong maintenance, breakdown happens - and when it happens, it usually happens without warning. If you only have one press brake capable of certain bends, or one CNC plasma table sized for large plates, that machine becomes a single point of failure.

Typical “high-impact” breakdown scenarios in steel and fabrication include: controller faults that stop CNC equipment; failed drives or motors; compressor failure leading to a shutdown across multiple workstations; hydraulic problems on press brakes; bearing seizure on rolling machines; failure of extraction systems that makes welding/grinding unsafe; or overhead crane breakdown preventing movement of heavy sections and stopping work entirely.

The risk isn’t only about repair cost. It’s about the chain reaction: jobs queue up, labour becomes idle or is paid to wait, delivery slots are missed, site schedules slip, and customers lose confidence. When you’re working to construction programmes or OEM deadlines, time is money - and lost time can cascade into costly disputes.

Machinery breakdown insurance helps you manage that uncertainty and protect margins. It can also strengthen your “risk story” to insurers across your wider programme, because well-managed engineering cover demonstrates you take resilience seriously.

What Equipment Can Be Covered?

Machinery breakdown insurance can be arranged for a wide range of equipment used in steel manufacturing and fabrication. The most effective approach is to focus on the machinery that creates your biggest bottlenecks - the assets that, if they stop, prevent you delivering jobs or force expensive outsourcing.

Depending on the insurer and your setup, cover can apply to machinery such as: CNC plasma or laser cutting tables, CNC drilling lines, guillotines, press brakes, punch machines, rolling machines, saws, welding plant (including automated systems), compressors and air systems, extraction and filtration plant, shot blasting equipment, overhead cranes and lifting equipment, and key electrical/control equipment.

Insurers will want clarity on the machinery’s age, condition, maintenance regime, usage profile, and whether specialist inspections are carried out. For higher-risk items, formal inspection and maintenance records can improve appetite and pricing. If you have multiple sites, we can structure schedules to reflect equipment by location and importance.

A practical point: breakdown cover is often most valuable when it is aligned with your spare parts strategy. If your machine depends on a single drive, PLC, motor, or hydraulic component, and that part has a long lead time, you can end up with extended downtime even if the repair cost itself is manageable. We’ll help you think through these points when structuring your programme.

What’s Typically Covered (and What’s Commonly Excluded)

Machinery breakdown policies vary, but the intent is generally to cover the cost of sudden, unexpected breakdown - rather than predictable deterioration. That means policies are usually structured to respond to “event-based” failures and to exclude maintenance-related wear and tear.

In plain English: if a component fails unexpectedly and the machine stops, breakdown cover may respond (subject to terms). If a part gradually wears out and reaches the end of its normal life, that is typically treated as maintenance and is not what insurance is designed for.

Your policy may include or allow extension for associated costs (again, depending on the insurer and the section): call-out costs, dismantling and re-erection, temporary repairs, and sometimes expediting expenses. For businesses that cannot afford extended downtime, these extensions can be valuable.

Common exclusions across many breakdown policies can include: normal wear and tear, corrosion, gradual deterioration, lack of maintenance, consumables, and sometimes specific categories such as tooling, belts, or certain parts of machinery considered “service items”. This is why the best approach is always to align cover with your maintenance regime and to be realistic about what insurance is and isn’t meant to do.

Insure24 will help you understand the policy section and match it to your operation - so you aren’t buying a policy expecting it to behave like a maintenance contract. If you want the broadest practical terms, we can show you what underwriters typically need to see: inspections, servicing records, and evidence that breakdown risk is managed.

Add Business Interruption for Breakdown (Protect Turnover While Repairs Happen)

For many steel manufacturers, the most damaging part of breakdown is not the repair invoice - it’s the downtime. If your cutting capacity drops to zero, or your press brake is out of service, you may not be able to produce finished jobs at all. That can mean lost gross profit, increased costs to keep trading, and pressure to outsource at low margins just to protect relationships.

Machinery breakdown business interruption (often referred to as “machinery loss of profits”) is designed to protect you against that financial impact. It can be structured to cover loss of gross profit and/or increased cost of working following insured breakdown of scheduled machinery. This can include outsourcing, hiring replacement equipment, overtime, additional transport, or temporary workarounds - where those costs reduce the overall loss.

The key is setting realistic indemnity periods. Some repairs are quick; others involve specialist parts with long lead times or complex rebuilds. If you insure a 3-month indemnity period but a key drive takes 16 weeks to source, you may find the policy period ends while you still can’t trade normally.

We help you identify bottlenecks and plan the “what if” scenario: how long would it realistically take to recover, and what would you do in the meantime? That clarity can improve both the structure of cover and how insurers price it.

What Drives the Cost of Machinery Breakdown Insurance?

Premiums are influenced by machine type, value, age, condition, duty cycle, maintenance, claims history, and how critical the machine is to output. Insurers often look for evidence that breakdown risk is managed - not ignored. A strong maintenance regime can reduce both loss frequency and underwriting concern.

Practical insurer-friendly actions that can help reduce premium over time include: keeping maintenance and inspection records (even simple logs), addressing recurring faults, protecting electrics and control systems from dust and heat, ensuring adequate ventilation and extraction, using competent engineers, and keeping critical spares where economically sensible.

Many steel workshops can also improve pricing by scheduling machinery correctly. If your policy schedule is vague (“general machinery”) or includes items that aren’t truly required, insurers can price defensively. A clean schedule, clear values, and a realistic risk story can unlock better terms.

Insure24 can review your current setup and show you where the premium is driven by uncertainty versus genuine exposure - then help you improve the underwriting presentation.

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