Machinery Breakdown (MBD) Insurance
in Dubai & The UAE
What is Machinery Breakdown Insurance? Machinery Breakdown (MBD) Insurance, one of our Commercial Insurance policies, provides financial protection against unexpected mechanical and electrical failures of essential business machinery and equipment. It ensures businesses can recover quickly from breakdowns without incurring heavy financial losses.
With Dubai’s fast-growing industrial and commercial sectors, businesses rely heavily on machinery for operations. A sudden equipment failure can lead to significant repair costs, downtime, and loss of productivity. Machinery Breakdown Insurance helps mitigate these risks by covering repair and replacement costs.
Industries That Commonly Require Machinery Breakdown Insurance
- Manufacturing & Industrial Plants (factories, production units)
- Construction Companies (cranes, excavators, heavy equipment)
- Energy & Utilities Sector (power plants, water treatment facilities)
- Healthcare & Laboratories (MRI machines, lab equipment)
- Hospitality & Food Processing (kitchen machinery, refrigeration units)
Difference Between Property All Risk Insurance and Machinery Breakdown Insurance
While both Property All Risk (PAR) Insurance and Machinery Breakdown (MBD) Insurance provide coverage for factory equipment and assets, they serve different purposes:
Can a Factory Self-Insure to Save Costs?
Some businesses opt for self-insurance instead of purchasing MBD insurance. While this may save on premiums, it carries significant risks:
Best Approach for Cost Savings
- Hybrid Approach: Factories can partially self-insure small, predictable expenses while purchasing MBD insurance for high-cost machinery to prevent major financial losses.
- Bundled Insurance Plans: Many insurers offer discounts for bundling PAR and MBD insurance into a single policy, ensuring comprehensive protection while managing costs.
Case Studies: When MBD Insurance is Activated
Case Study 1: Manufacturing Plant Machine Failure
- Incident: A manufacturing plant in Dubai experiences a sudden failure in its CNC machine due to a short circuit.
- MBD Coverage: Insurance covers repair costs, replacement of damaged electrical components, and labor charges.
- Business Impact: Factory operations resume within a few days, preventing major financial loss.
Case Study 2: Construction Equipment Breakdown
- Incident: A tower crane at a construction site suffers a hydraulic failure due to overloading.
- MBD Coverage: Policy covers replacement of faulty components and crane repair costs.
- Outcome: Project timelines remain unaffected as the insured company quickly repairs the crane.
Common Exclusions in Machinery Breakdown Insurance
The following are not covered under Machinery Breakdown Insurance:
- Normal Wear & Tear or Gradual Deterioration: Regular maintenance-related failures are not covered.
- Pre-existing Faults or Defects in Machinery: Issues present before policy inception are excluded.
- Damage Due to Natural Disasters: Covered under property or fire insurance policies, not Machinery Breakdown Insurance.
- Improper Use, Lack of Maintenance, or Negligence: Businesses must ensure proper handling and maintenance of machinery.
Claims Process for Machinery Breakdown Insurance
Steps to File a Claim:
- Report the Breakdown: Notify the insurer immediately after the incident.
- Submit Required Documents: Provide maintenance records, incident reports, and invoices.
- Damage Assessment: The insurer inspects the machinery and evaluates repair costs.
- Claim Approval & Settlement: If approved, the insurer covers repair/replacement costs as per policy terms.
Machinery Breakdown Insurance FAQs
Machinery Breakdown Insurance is not legally mandatory, but it is highly recommended for industries that rely on expensive machinery.
Yes, Machinery Breakdown Insurance can be bundled with property insurance, business interruption insurance, and general liability policies for full coverage.
Some policies offer coverage for rental or temporary replacement machinery, but this depends on the insurer’s terms.
Most insurers require regular inspections and maintenance records to ensure proper machine upkeep and claim eligibility.
The sum insured is usually based on the replacement cost of the machinery and can be adjusted based on business needs.
Yes, Business Interruption Insurance can be added as an extension to MBD insurance. This covers financial losses due to downtime caused by machinery breakdowns. It helps businesses recover lost revenue while machinery is under repair.
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