INSURANCE OF CNC MACHINES UNDER ELECTRONIC EQUIPMENTS INSURANCE

CNC machines & machining centers are widely used for precision machining of automotive and other engineering components. These machines are generally covered under Machinery Insurance policies for sudden unforeseen breakdowns.

Option to insure under either MB or EEI Policy

CNC Machines preferably should be insured under EEI Policy as EEI provides much wider coverage in comparison with MB Policy

Note – Where it is not feasible to give a breakup of values for minor electronic equipment (non-metallic items) which were integral to various machines, eg CNC Machines, wherever such CNC Machines are insured, the Insured can have option to cover the same either under MB or EEI policy.

In India, a CNC machine, due to its significant electronic components, is typically covered under an Electronic Equipment Insurance (EEI) policy rather than a standard Machinery Breakdown (MB) policy, meaning it should be included in your EEI coverage to ensure protection against damages or breakdowns related to its electronic parts and systems. 

All Electronic equipment like Computers, Medical, Biomedical, Micro- processors; Audio/Visual equipment including the value of Systems Software may be covered under Electronic Equipment Policy. The term equipment shall also include the entire computer system consisting of CPU, Keyboards, Monitors, Printers, Stabilizers, UPS, System Software etc.

Cover granted under E.E.I policy are virtually against all insurable perils namely fire, RSMD, Terrorism, Flood, Storm, subsidence, Earthquake, accidental breakdown while at work or rest, electrical damage, faulty manipulation, dropping, falling impact etc.

OTHER FEATURES: If the insured want to opt out fire and allied perils cover, a premium reduction in rate is offered based on the coverage.

SUM INSURED: 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. The sum insured of the equipment insured under this section shall include the value of ‘System Software’.

PROHIBITION TO ISSUE MB POLICY ON ELECTRONIC EQUIPMENT- Unless otherwise specifically provided for in MB Guide Rate, no machinery breakdown policy should be issued on Electronic Equipment like Computers, Medical, Bio-medical, Micro processors, Audio-visual equipment which must be covered under EEI Policy only.

Loss or damage sustained during transit and any loss/damage attributable to transit shall be excluded under both Machinery Breakdown and Electronic Equipment Policy

An Electronic Equipment Insurance (EEI) policy in India would cover an industrial CNC machine against a wide range of damages, including electrical breakdowns, mechanical failures, fire, theft, accidental damage, and even damage caused by faulty operation, essentially providing comprehensive protection for the machine's functionality due to unforeseen events; the key is to ensure the CNC machine is specifically listed as covered under the EEI policy. 

Key points about CNC machine coverage under EEI:

• Specific coverage:

EEI policies generally cover damages caused by electrical surges, short circuits, faulty operations, accidental impacts, fire, theft, and natural calamities to the electronic components of a CNC machine. 

• Separate policy needed:

While some minor electronic parts integrated into a standard machine might be covered under an MB policy, for comprehensive protection of a CNC machine, a dedicated EEI policy is recommended. 

• Consult with insurer:

Always check with insurance provider to clarify the exact coverage details for specific CNC machine to ensure it is appropriately included within the EEI policy. 

The above interpretation is absolutely personal in nature and is not binding on any individual or organization in particular.