HOW TO MANAGE YOUR INSURANCE FOR KEEPING YOUR BUSINESS PROTECTED.

Talk to your brokers to discuss which insurance policies are best for your business. Insurance brokers can access policies from multiple insurance companies to help you get the best deal

Understand your insurance policy

An insurance policy is a legal contract between you and the insurance company. Both Insurer and Insured need to comply with your responsibilities for the contract to be valid.

Insured need to understand:

·        What the policy covers and any exclusions any definitions.

·        How a claim is settled. For example, repair, replace or cash

·        Any excess amount you’ll need to pay

·        Your and the insurer’s cancellation rights

·        The complaints process

·        What you need to tell the insurer when you take out the policy

·        What information you need to keep updated.

·        Ask professional help from the broker or Agent if you don’t understand something in the policy

Your insurer may not pay your claim if you haven’t met the terms and conditions of your insurance contract. Check your policy for the terms and conditions. It could be something you need to do or information you need to keep up to date.

 

Review your policies periodically to make sure you stay covered.

It’s good practice to review your policies when your business changes or before you renew a policy.

Think about any changes that could affect your current policy or the type of cover you need.

For example:

·        Your business moved to a new property

·        The number of employees changed

·        You’ve started offering new goods or services

·        You’re using new business practices

·        You bought or sold equipment, including vehicles.

 

Check the value of your assets

The insurable value of many assets goes down over time.

Whether Insurance contracts will compensate for depreciation or a change in market value due to inflation. Review the value of your assets to make sure you have the right level of cover.

 

Make a claim

Contact your insurer as soon as possible if you need to make a claim. Check your policy for anytime limits to lodge a claim.

Tell your insurer:

·        How the incident happened

·        When it happened

·        How it will affect your business.

·        Your insurer will depute surveyors who will ask you for supporting documents.

This might include:

·        Photos of damage

·        Proof of ownership

·        Copies of computer records

·        Contracts between you and a claimant.

·        Some events also need to be reported to the police or other authorities. Refer your policy or ask your insurer if you’re not sure who else to report the incident to.

 

Emergency repairs

Check with your insurer before you make any emergency repairs. If you arrange the repairs, keep copies of all invoices and bills for submission to your insurer.

 

Dispute of an Insurance claim

You can dispute a claim if you disagree with your insurer’s decision. Contact your insurer and tell them:

·        that you’re lodging a dispute

·        what the problem is

·        what you would like them to do to fix the problem.

 

Grievance Redressal Mechanism as per IRDAI

Step 1: Contact the insurer

• First, file a formal complaint with the insurance company's Grievance/Customer Complaints Cell or Grievance Redressal Officer.
• Most complaints must be handled by the insurer, which has a 14-day timeline to respond. 

Step 2: Escalate to IRDAI 

• If you do not receive a satisfactory response from the insurer within a reasonable time, or if they fail to respond, escalate the complaint to the IRDAI.
• You can register a complaint with IRDAI through these channels:
• Online: Use the Bima Bharosa system or the Integrated Grievance Management System (IGMS).
• Email: Send an email to complaints@irdai.gov.in.
• Phone: Call the toll-free numbers 1800 4254 732 or 155255. 

Step 3: Approach the Insurance Ombudsman 

• If you are still dissatisfied with the resolution from the insurer after escalating to IRDAI, you can approach the Insurance Ombudsman for a fair disposal of the complaint. 

Key timelines

• Insurer: 14 days to respond to the complaint.
• IRDAI: Takes up the complaint with the company if the insurer does not respond or if the policyholder is not satisfied with the resolution.
• Insurance Ombudsman: Provides a channel for a fair and timely resolution of complaints.
• Time for redressal: While specific timelines for the Ombudsman and judicial forums vary, IRDAI guidelines aim for a structured process. 

 

Step 4: Legal recourse

·        If the policyholder is not satisfied with the Ombudsman's decision, they can file an appeal in the appropriate judicial forum, such as a civil court. 

 

Alternative options

·        File a complaint with the District Forum: If the insurer does not resolve the complaint to your satisfaction, you can file a complaint with the District Consumer Disputes Redressal Forum.

·        Determine the forum's jurisdiction: The District Forum has jurisdiction for cases where the value of goods, services, and the compensation claimed is up to 𝑅𝑠.20 lakhs. If the claim is higher, you will need to approach the State or National Commission.

·        You can file the complaint yourself.

4 Most Common Heavy Equipment Issues and How to Prevent Them

Machinery maintenance topics are of much importance to a Plant & Machinery valuer as well as owners /users for evaluating machine health.

(Originally inspired by insights from Stewart-Amos Equipment Co.)

Heavy equipment plays a vital role in construction, mining, and other industrial operations — but even the most durable machinery requires consistent care to remain reliable. Understanding common problems and their warning signs can help you prevent costly repairs, downtime, and safety hazards.

Below are four of the most common heavy equipment issues and practical ways to prevent them.

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1. Hydraulic System Problems

Hydraulic systems are the backbone of heavy machinery, powering lifts, arms, and other moving parts. However, these systems are particularly vulnerable to contamination.

Common Causes:

• Contaminants such as water, dirt, metal shavings, or dust can infiltrate hydraulic fluid during manufacturing or operation.

• If the system isn’t properly flushed, these particles degrade hydraulic fluid over time, reducing viscosity and load-bearing capacity.

• This degradation can cause overheating, poor performance, or even total system failure.

Prevention Tips:

• Replace dirty or clogged hydraulic filters regularly.

• Keep the system well-oiled and properly lubricated.

• Conduct periodic fluid testing to check for contamination.

• Use only clean, high-quality hydraulic oil recommended by your manufacturer.

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2. Electrical Failures

Electrical systems in heavy machinery are complex and sensitive. Failures can lead to performance issues, safety risks, and even fires.

Common Causes:

• Loose power connections can cause sparks or electrocution.

• Dust, moisture, and humidity often lead to short circuits or corrosion.

• Damaged insulation can trigger current leakage and system overloads.

• Power overloads occur when too much electricity flows through one part of a circuit, causing blown fuses, tripped breakers, or overheating.

Prevention Tips:

• Perform regular electrical inspections.

• Clean electrical components and housings to reduce dust buildup.

• Ensure all cables and connectors are properly insulated and secured.

• Train operators to recognize early signs of electrical stress or overheating.

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3. Undercarriage Issues

A machine’s undercarriage supports its weight and ensures stability — but it also bears the brunt of harsh terrain, heavy loads, and environmental stress.

Common Causes:

• Oil or hydraulic leaks from seals, bearings, or gaskets.

• Track damage caused by rocks, uneven terrain, or debris.

• Misalignment due to uneven loading or improper track tension.

• Insufficient lubrication increasing friction and wear.

• Overloading, which places unnecessary strain on undercarriage components.

Prevention Tips:

• Schedule regular undercarriage inspections for alignment, tension, and lubrication.

• Clean mud, rocks, and debris from the undercarriage after use.

• Avoid exceeding manufacturer-recommended load limits.

• Adjust preventive maintenance schedules based on site conditions such as rocky or steep terrain.

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4. Metal Corrosion

Corrosion and rust are silent destroyers, particularly in humid or wet environments. Over time, oxidation and chemical reactions can weaken metals, damage seals, and cause costly breakdowns.

Common Causes:

• Humidity and standing water promote rust formation.

• Lubricant oxidation produces organic acids that corrode metals like iron and zinc.

Prevention Tips:

• Store equipment in a dry, covered area when not in use.

• Apply anti-corrosion coatings or paints.

• Schedule regular inspections to catch rust early.

• Keep metal surfaces clean and well-lubricated.

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Signs Your Equipment May Need Repair or Replacement

Recognizing early warning signs can save you from unexpected breakdowns:

• Vibrations: Could signal loose parts, misalignment, or imbalance.

• Strange noises: Hissing, screeching, or grinding may point to hydraulic leaks or mechanical issues.

• Dashboard warning lights: Indicate low oil pressure, high hydraulic temperatures, or electronic control errors.

• High fuel consumption: May suggest an engine issue, clogged filters, or underinflated tires.

• Engine stalling: Could result from a weak battery, airflow issues, or hydraulic malfunctions.

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Final Thoughts

Preventive maintenance is always cheaper and safer than emergency repairs. By keeping up with regular inspections, fluid checks, and cleaning routines, you can dramatically extend the lifespan of your heavy equipment and ensure it performs reliably on every job.

If your machinery shows any of the warning signs listed above, don’t wait — schedule professional servicing before small issues turn into major failures.

 

When to Say Goodbye to Your Old Piece of Construction Equipment

In the construction industry, equipment is the backbone of every project. From earthmoving to lifting and grading, your machines work tirelessly day in and day out. But even the toughest machines have a limit.

At some point, maintaining old equipment becomes costlier—and riskier—than replacing it. While academic papers analyze this through “optimum cost and time models,” busy contractors and equipment dealers often need a simpler, more practical guide.

Here’s how to know when it’s time to bid farewell to your old machine—and how to make that decision smartly.

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🚜 Signs It’s Time to Replace Your Construction Equipment

Many companies continue to run older equipment simply because it’s “still working.” But ongoing use without evaluation can lead to unplanned downtime and financial loss. Watch out for these signs that it’s time to move on:

1. ⚙️ Non-availability of Spare Parts
   Difficulty finding genuine or affordable spare parts increases downtime and affects performance.
2. 🆕 Availability of Better Replacement Options
   Newer models often offer better fuel efficiency, safety, and automation. Upgrading may boost productivity.
3. 🔧 Frequent Breakdowns
   When repair frequency rises, reliability drops. Time spent on repairs could be better used on projects.
4. 📉 Performance Issues Despite Regular Maintenance
   If output or power is falling despite proper servicing, the machine is likely nearing the end of its life cycle.
5. 💰 Rising Maintenance Cost and Downtime
   High repair bills and idle time add up quickly—sometimes exceeding the cost of financing a new machine.
6. ⚠️ Safety Concerns
   Older machines may lack modern safety features, putting operators and projects at risk.
7. 📊 Depreciation and Low Resale Value
   The longer you hold aging assets, the lower their market value. Early replacement can yield better returns.

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⏱️ Understanding Equipment Lifespan

Reference: “Understanding the Lifespan of Heavy Machinery and Construction Equipment” – MechLink, August 18, 2025

The average lifespan of heavy equipment depends on usage hours, environment, maintenance, and quality. Below are general benchmarks:

Equipment Type	Average Lifespan (Hours)	Equivalent Years
Excavators	10,000 – 15,000	10 – 15
Bulldozers	10,000 – 12,000	10 – 12
Backhoe Loaders	6,000 – 8,000	8 – 10
Skid Steer Loaders	5,000 – 8,000	10 – 12
Cranes	15,000 – 20,000	15 – 20
Forklifts	8,000 – 10,000	8 – 10
Asphalt Pavers	7,000 – 8,000	15 – 20
Road Rollers	8,000 – 12,000	10 – 15
Motor Graders	12,000 – 15,000	12 – 15
Dump Trucks	8,000 – 10,000	8 – 10

⚠️ Note: These are indicative figures. Real-world lifespan varies depending on care, usage, and environment.

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🔍 Key Factors Affecting Equipment Longevity

1. User Intensity
   Overloading and long operating hours accelerate wear. Maintain a balanced workload and schedule rest periods.
2. Maintenance Practices
   Preventive maintenance—cleaning, lubrication, inspection, and timely replacement—prolongs machine life.
3. Operating Conditions
   Harsh terrains, extreme temperatures, and humidity can reduce lifespan. Equipment in such environments requires extra protection.
4. Equipment Brand and Build Quality
   Reputed brands like Volvo, Tata Hitachi, JCB, and Sany offer better materials, engineering, and long-term support.
5. Operator Skill Level
   Trained operators minimize misuse and handle machinery efficiently, reducing wear and tear.
6. Fuel and Lubricant Quality
   Always use manufacturer-recommended oils and fuels. Low-quality fluids cause engine damage, clogging, and overheating.
7. Frequency of Use
   Both excessive use and prolonged idleness are harmful. Machines should be used periodically and stored properly when idle.

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💡 Making the Right Replacement Decision

Determining the right time to replace equipment isn’t just about age—it’s about economic efficiency.

• Are repair costs exceeding depreciation and operating savings?
• Is downtime affecting your project timelines?
• Are new technologies offering measurable ROI?

If the answer is yes, replacement might be the smarter long-term choice.

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🧩 Conclusion

Knowing when to retire construction equipment requires a mix of experience, observation, and financial logic. Machines that once symbolized reliability can eventually become cost traps if held too long.

By keeping track of maintenance trends, performance metrics, and market options, business owners can ensure their fleets remain safe, efficient, and profitable.

In the end, saying goodbye to old equipment isn’t a loss—it’s a step toward operational growth and sustainability.

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

Indemnity for CPM insurance Claims

In the construction industry, the construction machines are constantly exposed to damage during use. Companies using these machines often decide to purchase an insurance policy.

CPM Insurance can cover:

Construction machinery (including excavators, loaders, forklifts, road rollers, bulldozers, cranes and others), Construction equipment (including tools, scaffolding, safety items, containers).

It protects machinery and equipment primarily during operation, but also for downtime, repair, overhaul, assembly, disassembly, loading and unloading.

·        Theft of machinery and equipment from a construction site or staging area,

·        Damage and destruction done by third parties,

·        Errors in machine operation,

·        Damage caused by weather conditions (fi re, lightning, landslide, hail),

·        Collisions with other machines,

·        Machine rollover,

·        Other damages.

Optional policy extension (Add Ons)

• Add-ons provide extra coverage beyond the standard policy for a premium, including options like Third-Party Liability, Terrorism, Earthquake, Express Freight, and Additional Customs Duty. These additions can be tailored to specific needs, such as covering damages to surrounding property or the costs associated with dismantling and shifting machinery
• In consideration of the payment of an additional premium, Insurers offer a variety of CPM coverage, and they almost always allow comprehensive coverage extensions. It may include incidents occurring while construction machinery is being transported to the site.
• If the machine travels on public roads, you can also additionally insure it. Because regardless of whether you opt for a CPM policy, you still have to purchase third-party liability for the machines you own. If the machine travel on its own wheels on public roads, liability insurance is mandatory otherwise if used strictly inside construction yard, it is optional
• Although the range of services offered by insurers may vary, the policy generally does not cover mechanical breakdowns of vehicles, as well as defects in electrical systems. Nor will the CPM protect the owner of a construction machine from damage caused intentionally or negligently.
• There is no direct annual maintenance contract requirement for a Contractors' Plant and Machinery (CPM) policy, as it is an indemnity-based insurance product. However, insurers mandate that the policyholder perform their own proper maintenance to ensure the machinery is in working order and to prevent claims. 
• It is extremely important to note that CPM insurance is completely optional – it is a good practice and a solution that will help avoid sizable costs in the event of a breakdown, collision or theft of construction machinery, but it is not a substitute for third-party liability. 

Basis of Indemnity 

The basis of indemnity for a Contractors Plant & Machinery (CPM) policy is to restore the damaged machine to its pre-loss condition, either by repairing it or, in case of total loss, by paying its actual value just before the loss occurred. For repairs, the company covers the cost of repair, dismantling, re-erection, and ordinary freight, customs duties, and other specified costs, provided they were included in the sum insured. For a total loss, the payment is the replacement value, minus depreciation, plus applicable costs like dismantling and freight, if they are included in the sum insured

Before taking out a policy, a necessary few steps to make decision easier and avoid common pitfalls.

Step 1: Make a list of construction machinery and equipment to be insured

The list of construction machinery you intend to submit for insurance should include:

·        The identification, registration and/or inventory number of the machine,
·        Brand and model name,
·        Year of production,
·        Specifying the type of machine,
·        Value of the machine.
·        In addition, if the machine is leased, a set of documents certifying the fact of the lease agreement should be           prepared in this connection

 Step two: determine the sum insured•

The sum insured is the limit of the amount the insurance company can pay out under the contract. By setting a low sum insured, you may be able to get a benefit that does not cover all your losses if necessary – but in return you pay a lower insurance premium. A higher amount will allow you to recover a larger amount in case of damage.

To be more precise about your needs, try to prepare separate sums insured for each machine if you want to cover more than one with your policy.

 Step three: Compare insurers’ offers

Contact different companies and looking at each offer separately. Or use the services of an insurance broker/consultant, who will do this work for you – in exchange for a certain amount.

Common mistakes when declaring their insured values:

• Declaring assets’ Book Value.
• Using last year's declared values or simply increasing values by a percentage.
• Declaring assets’ Market Value.
• Relying on valuation from an in-house accountant.

Understanding Insurance Valuation

Valuation is the way an insurance company will value the worth of the damaged or stolen equipment.  The most common methods of valuation are Actual Cash Value (ACV) and Replacement Cost (RC).

Actual Cash Value (ACV) is the cost to replace the equipment with another of like kind and quality less the cost of depreciation. It is important to review equipment ACV periodically as the value will decrease when the item depreciates over time.

Replacement Cost (RC) is the cost to replace the equipment with equipment of like kind and quality at current costs.  RC does not consider depreciation and ignores factors such as age, condition, maintenance, or obsolescence. For example, a machine purchased three years ago for 30,00,000 Rs. may have an ACV of 10,00,000 Rs., but to purchase a comparable unit based on today’s market it would cost 20,00,000 Rs.  

Thus 20,00,000 would be the Replacement Cost and 10,00,000 the Actual Cash Value. For newer equipment ACV verses RC is an important consideration.

Machinery break-down policy:

The Insurance Policy covers “Unforeseen and sudden physical damage” subject to certain exclusions. The insured has the choice to select specific machinery for insurance. While a deductible of 1% of the Sum Insured is common, this can be increased at the insured’s option with a reduction in premium.

 The Sum Insured “shall be equal to the cost of reinstatement of the insured property by a new property of the same kind and capacity.” If the item- wise Sum Insured “is less than the amount required to be insured as per above provision, the Company will pay only in such proportion as the Sum Insured bears to the amount required to be insured.”

  The provisions for settlement of claims are briefly stated hereafter. If the damage can be repaired, then full cost of repairs to restore the machine to pre-damage condition is payable. No depreciation will be deducted on the value of parts replaced unless such parts are of limited life. 

 However, if the cost of repairs exceeds the actual pre-damage value of the property, i.e., depreciated value, settlement of claim will be limited to actual pre-damage value after taking account of salvage.

 If the insured property is destroyed, the Insurance Company will settle the claim for actual pre-damage value, i.e., depreciated value, after taking into account value of salvage. A cash settlement will be made for the above said machine after deduction of the salvage value from the claim.

 MI INSURANCE TOTAL LOSS PAYOUT

ACV = NRV (1–A/SL)

ACV Actual cash value (on the accident date and therefore the indemnity limit)

NRV:  New replacement value

A: Machine age on the accident date

SL: Designed service life in years under normal operating conditions

 Depending on the inflation rate and useful machine service life, the actual value of an insured item could be greater than the initial purchase value.

Purchase value 100%

NRV after 10 years 163%  of Purchase Value @ 5% annual inflation

Example of a claim with and without an inflation clause

Imagine a machine with a replacement value of ₹50 lakh. After one year, due to inflation, the replacement cost has risen to ₹55 lakh.

Scenario 1: With an inflation clause

• The policy's Sum Insured would have automatically increased with inflation.
• If the machine is destroyed, the insurer pays the full replacement cost, and insured is fully indemnified. 

Scenario 2: Without an inflation clause

•  Sum Insured remains ₹50 lakh.
• The insurance company will apply the "average" or underinsurance clause. They will pay a proportionate amount of the loss, calculated as:
  Claim Amount = (Sum Insured / Actual Current Replacement Value) * Loss
• In this case, Insured would only receive:
  (50 lakh / 55 lakh) * Loss
• Insured is left to pay the remaining cost of replacement from own resources. 

 

Claim Settlement under Fire Insurance

 Fire & Special Perils Insurance policies are generally issued with Reinstatement Value clause. 

Damaged / destroyed / irreparable property to be replaced by new property of “the same kind or type but not superior to or more extensive than the insured property” and the monetary claim to be allowed on value as new basis without deducting depreciation.

 In R.I. policy monetary claim is to be paid only after actual repairs / replacement of parts / reinstatement has been completed and then payment shall be made for claims made by the insurer, as per terms and conditions of relevant policy.

The important aspects to be borne in mind by the insured that the insured has the option to reinstate or not and the said option has to be exercised within 6 months of the damage or any further time limit which may be allowed by the insurer in writing.

The reinstatement may be done at the same site or at any other site.

The reinstatement has to be completed within 12 months of the date of damage. Extension of time, may be allowed by the insurer.

 For damage to repairable property, the full cost of repairs including replacement of parts would be payable without deduction of any depreciation, subject to the repairs / replacement of parts are of the “same kind or type.”

1.     Buildings

The amount payable would be the cost incurred for reinstating or replacing a new building in the place of the building destroyed. The cost incurred would include the cost of materials used in the construction, the labour charges, the architect fees and other technical charges.

Example

Assuming that the replacement cost would come to say Rs.6 lacs. If the market value of the building destroyed is assessed after considering the state of maintenance of the building, its wear and tear and the use to which it was put, it would amount to Rs. 4 Lacs. Thus the amount payable had the policy been on the ordinary indemnity basis would be as follows:

Cost of building as new	RS. 6 lacs
Less: say 33 1/3 % depreciation	Rs. 2 Lacs
Depreciated value (market value)	Rs. 4 Lacs

 

Rs. 4 lacs is payable under normal indemnity basis.

Rs. 6 lacs is payable under Reinstatement value basis.

The “words of the same kind or type but not superior to or more extensive than the insured property when new as on the date of loss” mean that if the new building covers a larger floor area or is of superior construction than the one destroyed, i.e., employing materials of superior quality or durability or higher cost. If any betterments accrue to the insured under the above factors, he / she is required to make his / her contribution to the cost of betterments.

If there is partial damage to the building, the policy would pay the cost of repairs, the depreciation factor being totally ignored.

  2.     Plant and Machinery

The amount payable represents the cost of reinstating or replacing the new machinery of the same kind and type of the machinery destroyed but disregarding depreciation suffered by the machines up to the time of loss. The amount payable would be the delivered cost at site plus incidentals for civil work etc. Delivered cost would constitute, usually, CIF cost of new similar machine plus duty, if any, installation charges and incidentals like octroi, transport etc.

In other words, the amount payable represents the fully re-erected value of the machine at the time of erection.

Loss assessment has to take into account, the specific terms, conditions, etc., covered under “add-on” covers and special policies (e.g., Reinstatement value, Declaration etc.) under the fire policy for computation of claim amount. 

Method for Computation of Loss

The rule of “DESAFER” is followed to ensure a standard rule for computation of loss.

DE	Depreciation
S	Salvage
A	Average or Under Insurance, if any
FE	Franchise / Excess (whatever is applicable)
R	Reinstatement premium

 

While computing net payable amount, deduct depreciation first from the gross assessed loss followed by deducting Salvage, Underinsurance, excess as application and finally the Reinstatement premium. In case this sequence is altered, the net payable loss would also change which may lead to disputes.

(Reference Publication: IC-56 Of Indian Institute of Insurance)

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

A handy reference of insurance coverages under different Engineering Insurance Policies

Please note that CNC machines can be covered under either MB Policy or EEI Policy