Category: Engineering specialty · Reviewed by Chrissie Anderson, Client Executive · Last reviewed 2026-06-05
Machinery breakdown insurance, often shortened to ‘MB cover’, is the engineering insurance sub-class providing first-party indemnity for sudden and accidental mechanical, electrical or electronic breakdown of plant and machinery, with loss of profits following machinery breakdown extending the cover to the consequential business interruption.
Category: Engineering specialty Also known as: MB cover, plant breakdown insurance First codified: UK market practice from c.1880s following the Manchester Steam Users’ Association model Related legislation: Pressure Systems Safety Regulations 2000 [1]; Lifting Operations and Lifting Equipment Regulations 1998 [2]; Insurance Act 2015 [3]
Machinery breakdown insurance covers physical loss of or damage to plant and machinery caused by sudden and accidental mechanical, electrical or electronic breakdown. The cover is distinct from property insurance (which typically excludes ‘breakdown’ as a discrete peril) and is the first-party complement to the statutory inspection regime for engineering plant [4][5].
The scope of cover typically extends to:
Mechanical breakdown — failure of moving parts (bearings, shafts, gears, couplings), fracture or rupture of static parts under stress, distortion due to overheating, and similar mechanical failures.
Electrical breakdown — short circuit, electrical surge, insulation failure, motor burn-out and other electrical defects.
Electronic breakdown — failure of electronic control systems, programmable logic controllers, drives, sensors and associated equipment.
Sudden and accidental damage from internal causes (excluding wear and tear, gradual deterioration, faulty maintenance and other excluded causes).
The cover responds for the cost of repair or replacement of the damaged plant, with optional extensions for additional costs (express freight, overtime working, air freight of replacement parts) where rapid repair is critical to minimising consequential business interruption. The companion loss of profits following machinery breakdown cover responds for the lost gross profit and increased costs of working arising from the breakdown [4][5].
UK machinery breakdown insurance is dominated by specialist engineering insurers (Allianz, Zurich, RSA, HSB, Aviva) operating the integrated ‘inspect and insure’ model inherited from the 19th-century steam users’ associations. The integrated model gives these insurers substantial operational and information advantages over general property insurers in this class [4][5].
The statutory inspection regime that accompanies machinery breakdown insurance is contained principally in the Pressure Systems Safety Regulations 2000 (for boilers and pressure vessels), the Lifting Operations and Lifting Equipment Regulations 1998 (LOLER, for lifting equipment) and the Electricity at Work Regulations 1989 (for electrical installations). The ‘competent person’ role under these Regulations is typically performed by the engineering insurer’s surveying staff, who carry out the inspections, issue the required certificates and (in the integrated model) underwrite the corresponding insurance [1][2][6].
The Provision and Use of Work Equipment Regulations 1998 (PUWER) apply to all work equipment, requiring employers to ensure that equipment is suitable for its intended use, maintained in efficient state and inspected at appropriate intervals. PUWER complements the more prescriptive PSSR and LOLER regimes for specific equipment classes [7].
The Insurance Act 2015 governs the duty of fair presentation and warranty rules for commercial machinery breakdown insurance placements. The duty is particularly relevant given the insurer’s deep technical knowledge of the insured plant through the inspection regime — disclosure standards must take account of what the insurer ought to know from its own records [3].
The Health and Safety at Work etc. Act 1974 and supporting regulations apply across the engineering insurance landscape, with the HSE as the principal regulator. Major plant failures may be investigated by the HSE under RIDDOR 2013 (the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) and the insurance claim may need to be coordinated with any safety investigation [6][8].
A UK industrial customer arranges machinery breakdown insurance as part of its engineering insurance programme, typically alongside the statutory inspection of regulated plant. The cover is on a schedule of insured items basis, with each major plant item listed with its agreed value or replacement cost. The schedule is updated annually at renewal to reflect plant additions, disposals and depreciation [4][5].
Premium for machinery breakdown insurance reflects the type of plant covered (with high-pressure, high-speed and complex electronic plant attracting higher rates than simple mechanical plant), the age and condition of the plant (with newer and well-maintained plant attracting lower rates), the operating environment (with continuous-duty industrial operations higher risk than intermittent-duty plant), the claims experience of the insured and the cyclical state of the engineering insurance market [4][5].
The ‘competent person’ inspections required for regulated plant are typically performed by the same engineering insurer that provides the breakdown cover. The integrated model provides the insurer with continuous information about the insured plant, supporting both underwriting decisions and risk improvement recommendations. Recommendations from the engineering surveyor (typically called ‘risk improvement notices’ or ‘reports’) are often binding on the insured under the policy terms [4][5].
Claims handling involves an engineering loss adjuster (often the same engineer who has been inspecting the plant) attending the site to assess the cause and extent of the damage. Common claims include bearing failures, motor burn-outs, gearbox failures, hydraulic system failures, electrical control system failures, and (for older plant) catastrophic mechanical failures of major components. Repair costs can range from a few thousand pounds for minor electrical failures to several million pounds for major industrial plant catastrophic failures [4][5].
Standard machinery breakdown: cover for sudden and accidental breakdown of scheduled plant.
Combined machinery breakdown and business interruption: integrated cover with loss of profits following machinery breakdown under a single policy.
All risks machinery cover: broader cover including external causes (impact, malicious damage, certain natural perils) typically excluded from standard MB cover. Often available as an extension for specific equipment classes.
Project plant cover: cover for contractor’s plant and equipment used on construction projects, often arranged under contractors’ all risks rather than under engineering insurance.
Mobile plant cover: cover for mobile plant including agricultural machinery, construction plant and similar; often arranged outside the standard engineering insurance market.
International machinery breakdown: cover for plant in multiple jurisdictions, typically arranged as a global programme with local engineering certificates.
Specialised industry cover: dedicated machinery breakdown products for specific industries (food processing, paper manufacture, printing, broadcasting) with industry-specific equipment schedules and underwriting.
Computer breakdown insurance and electronic equipment insurance: specialised sub-classes for IT, telecommunications and electronic equipment.
A UK food manufacturing company operates a factory with substantial industrial plant including pasteurisation equipment, packaging lines, refrigeration plant, materials handling equipment and an extensive electrical installation. The company arranges combined machinery breakdown insurance with loss of profits extension under its engineering insurance programme. The schedule of insured items lists approximately 280 items of plant with aggregate insured values of £18m. Annual premium for the combined MB and LOP cover is approximately £45,000. During the policy year, a gearbox failure on a key packaging line results in a 5-day production interruption; the machinery breakdown cover responds for the repair cost (£28,000 including emergency engineering support and replacement parts) and the loss of profits cover responds for the lost production gross profit (approximately £85,000). Figures in this example are illustrative.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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