What is CPM insurance?
The abbreviation CPM in the name is taken from Contractor’s Plant Machinery. A CPM policy allows you to protect construction machinery, site equipment and all equipment used on a construction site in the event of circumstances such as:
- 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 (fire, lightning, landslide, hail),
- Collisions with other machines,
- machine rollover,
- other damages.
CPM protects machinery and equipment primarily during operation, but also for downtime, repair, overhaul, assembly, disassembly, loading and unloading.
Optional policy extension
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. Additional clauses are also available, including coverage for overtime, night work and holidays. In addition, if the machine travels on public roads, you can also additionally insure it. Why additionally? Because regardless of whether you opt for a CPM policy, you still have to purchase third-party liability for the machines you own.
What can you insure with a CPM policy?
Although the word machinery appears in the name, you don’t have to limit yourself to protecting machines belonging to your company. Insurance can cover:
- Construction machinery (including: excavators, loaders, forklifts, road rollers, bulldozers, cranes and others),
- Construction equipment (including tools, scaffolding, safety items, containers).
What does construction machinery and equipment insurance not cover?
Buying an additional policy is a solution to the vast majority of problems, but not to all of them. 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.
Before you enter into an insurance contract, be sure to report any deficiencies, damages or defects already known about the machine you want to insure. If you fail to do so, and one of them contributes to the damage or other injury, you will not receive the CPM policy benefit.
Equipment insurance will also not work on naturally-occurring corrosion, nor will it cover parts that wear out with use.
How do I prepare to take out CPM insurance?
Before you decide to take out a policy, follow a few steps to make your decision easier and avoid common pitfalls.
Step one: make a list of construction machinery and equipment to be insured
Having a specific, reliably filled out and as detailed a list as possible will not only show that you are professionally prepared to take out insurance, but will also reduce turnaround time – you will save the insurer from coming back to you with additional questions, and you will save yourself from answering them.
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
It’s worth thinking about this issue even before you contact your insurer. 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
In the case of liability insurance for a passenger car, the situation is much simpler – just enter the most important data and use the comparison engine. If you want to use a CPM policy, things get a bit more complicated – so you’re faced with contacting different companies and looking at each offer separately. Or you can use the services of an insurance consultant, who will do this work for you – in exchange for a certain amount.
Remember the mandatory insurance for construction machinery!
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.
Construction machinery liability insurance applies to all construction machinery operating on public roads (including parking lots and residential zones).
Example:
Mr. Jacob’s company has one mini-excavator and one full-size excavator. The former is each time transported on a trailer to the construction site directly from the staging area. The other travels on its own wheels on public roads. In this situation, liability insurance for a mini-excavator is optional (you can still buy it), while it is mandatory for an excavator.
If Mr. James wanted to drive the mini-excavator from the parking area to the construction site on a public road, he would first have to purchase a third-party liability policy for the vehicle.
It also happens that the owner of an excavator does not provide any services with it, but only uses it on his property (e.g., on a farm). In this situation, there is no obligation to purchase a liability policy for two reasons.
First: because the vehicle does not travel on public roads.
Second: because the excavator is a slow-moving vehicle (reaching a speed of no more than 25 km/h), and such vehicles are not subject to registration. Thus, it does not comply with the requirement that compulsory third-party liability insurance be extended to every registered motor vehicle.
What about when the machine is not on public roads most of the time, but its owner commutes with it to the job site during the summer season, for example? In such a situation, he can use short-term insurance.
Example:
Mr. Tadeusz owns a loader, but uses it only during the summer season – the rest of the year the vehicle is parked in the garage. The owner can purchase a short-term liability policy for slow-moving vehicles. It is available for a period of not less than 3 months. Mr. Thaddeus therefore buys the OC at the beginning of May, and extends the policy for another three months if necessary.
You can find regulations for short-term liability insurance in Art. 27 pts. 4 of the Law on Compulsory Insurance, the Insurance Guarantee Fund and the Polish Motor Insurers’ Bureau.
