Machinery Breakdown
Insurance

The machinery breakdown section of an ISR policy covers sudden and unforeseen physical damage to your plant, machinery and equipment caused by mechanical or electrical breakdown. This is a critical complement to the property damage section, which typically excludes breakdown events.

Australian businesses that rely on production lines, refrigeration systems, HVAC units, generators, compressors, boilers, lifts or any other mechanical or electrical equipment face significant financial exposure if a key asset fails unexpectedly. Repair costs can be substantial, and replacement parts for specialised equipment may need to be sourced from overseas, adding delays and expense.

Machinery breakdown cover is designed to respond to a wide range of internal failures, from a motor burning out due to an electrical fault to a pressure vessel failing due to material fatigue, so you're not bearing repair or replacement costs entirely out of pocket. Response depends on the specific wording, any sub-limits, and the maintenance condition of the equipment at the time of failure.

Machinery breakdown cover is designed for sudden, unforeseen failures - not gradual deterioration or routine maintenance issues. Common exclusions include:

• Wear and tear, gradual deterioration, corrosion, erosion and cavitation
• Damage caused by lack of maintenance, neglect or failure to follow manufacturer guidelines
• Cosmetic damage such as scratching, denting or chipping that does not affect operation
• Damage to consumable items such as filters, belts, fuses, heating elements and cutting tools
• Breakdown occurring during testing, commissioning or intentional overloading
• Damage covered under a manufacturer's or supplier's warranty
• Fire, explosion or external causes (covered under the property damage section)
• Consequential loss (covered under business interruption section with appropriate extension)

Maintaining detailed maintenance records and following manufacturer-recommended service schedules strengthens your position when making a claim and demonstrates due diligence to your insurer.