Cover for loss from a sudden mechanical/electrical failure of machinery, engines and electrical facilities. It covers the internal machinery loss excluded by fire insurance (design defect, material defect, electrical failure, operating carelessness), meeting the core risk of manufacturing, power plants and heavy-equipment sites.
N2N Insurance Brokerage does not represent any single insurer — it independently represents the client as an FSS-registered broker (Reg. No. 2026-012201). We compare the wordings, rates and service of AIG · Chubb · DB · Hyundai · KB · Meritz to propose the cover and price best suited to your risk. Each insurer's full wording is provided at application and binding.
Cover for loss from a sudden mechanical/electrical failure of machinery, engines and electrical facilities. It covers the internal machinery loss excluded by fire insurance (design defect, material defect, electrical failure, operating carelessness), meeting the core risk of manufacturing, power plants and heavy-equipment sites.
High-value precision machinery.
Turbines, boilers.
High-pressure, high-temperature facilities.
Cranes, conveyors.
| MBI (machinery BI) | Business-stoppage loss from machinery failure |
|---|---|
| EEI (electronic equipment) | PC, server, instruments |
| Express freight | Air-freight cost for overseas parts |
| Policy period | 1 year |
|---|---|
| Insurers | DB · Chubb · Hyundai (compared) |
| Sum insured | Machinery replacement value |
| Deductible | Per machine, a fixed amount up to 10% of value |
| Turnaround | 2–5 weeks |
If the insured event has already occurred at the time the contract is made, the contract is void. However, where the contract is void due to the company's intent or negligence, or where the company knew or could have known of the nullity before acceptance yet did not refund the premium, the company refunds the premium with interest at the policy-loan rate published by the Korea Insurance Development Institute, compounded annually, for the period from the day after payment to the day of refund.
The specific losses not covered (exclusions) are set out in each insurer's policy wording and product description; on this page, see the “Cover” tab(or the “Losses not covered” section) for the main exclusions. For other cover-specific grounds on which claims are not paid, please refer to the policy wording.
The company provides cover, in accordance with the policy, from the time it accepts the application and receives the first premium. Where the company accepts the application after receiving the first premium with it, cover also begins from the time the first premium was received.
The application must be completed by the policyholder, and the policyholder and the insured must sign it by hand. Failure to sign by hand may result in disadvantages regarding the validity of the contract. On an internet cyber-mall, an electronic signature may be used instead.
The policyholder has the right to be given and have explained the information needed about the product they wish to buy.
The insurer and N2N Insurance Brokerage must explain the important matters of the product to ordinary financial consumers.
When applying, the policyholder, the insured or their agent must disclose truthfully the facts they know regarding the questions in the application (including the questionnaire). Otherwise the claim may be declined or the contract cancelled. Where insurance is taken out by telephone or other means of communication, the duty is performed by answering the seller's questions, which are recorded, without a separate written questionnaire, so answers must be given with particular care.
If, after the contract is made, any of the following arises in respect of the subject-matter insured, the policyholder or the insured must notify the company in writing without delay and obtain endorsement on the policy.
The surrender value is the amount paid if the contract is cancelled early. Unlike bank savings, insurance combines risk protection and savings: part of the premium is paid out as claims to other policyholders who suffer accidents, and part covers the insurer's operating expenses, so the surrender value on early cancellation may be less than the premiums paid, or nil.
Under Article 59-4(1) of the Income Tax Act (special tax credit), for protection-type insurance taken out by an employee only, a tax credit of 12% of the premium paid (capped at KRW 1 million per year) is available. Tax matters may change with amendment or repeal of the relevant tax law.
Except as provided by law, the insurer and N2N Insurance Brokerage do not collect, use, inspect or provide personal data related to this contract — for its conclusion, maintenance and claim payment — without the consent of the policyholder, the insured or the beneficiary. However, for those purposes the insurer may, with the consent of the policyholder and the insured and in accordance with law, provide personal data to other insurers and insurance-related bodies.
The above is a summary and excerpt of the policy wording; for grounds on which claims are not paid and other details, please refer to the policy wording and product description.
Five areas of precision-machinery operation
Core production equipment — CNC, press, injection machines. A single-machine failure stops the whole line.
On-site generation, transformers, power-supply facilities. A high electrical-accident risk area.
Food/pharma/bio refrigeration. On failure, a stock-loss combination area too.
Construction, mining, logistics heavy equipment. A high-value single-machine cover area.
R&D and quality-control precision equipment. The accidental-loss cover core.
A food-processing factory's large refrigeration facility failed at night from an electrical accident. It was an excluded area under the ordinary fire wording, but under this machinery breakdown insurance the repair/replacement cost was reviewed, while the food-stock loss during the time refrigeration was stopped was handled separately under a BI endorsement. Regular-inspection records and an assessment of the use environment (whether overloaded) were central to the cover process, and some parts presumed to be normal wear were separated out as excluded. A case showing that for an industrial-facility machinery accident, the cause analysis and exclusion assessment connect directly to the wording review at enrolment.
Source: (General industry example)
The wording and structure points decision-makers most often overlook
Wear, ageing and natural depreciation from ordinary use are excluded. Whether wear was the cause, or an external accident accelerated the wear, is the key issue in the accident assessment, and regular-inspection records are the post-accident evidence.
The cover scope of a part accident (motor, sensor, controller) and the consequential main-body loss it causes differs by wording. A choice between a parts-only wording and a main-body-inclusive wording, matched to the site's risk exposure, is needed.
If the use environment differs from the wording assumptions (overload operation, exceeding environmental limits, missed regular inspection), it becomes a ground for exclusion. Following the use manual and systematising inspection records affect both cover and underwriting.
The questions decision-makers ask most when considering machinery breakdown (MB) insurance
It covers the repair/replacement cost when an industrial facility's machinery is damaged or fails from a cause other than fire — electrical accident, mechanical defect, accidental loss. A core wording supplementing the area excluded or limited under ordinary fire and property all-risks insurance.
Usually covered: electrical accident (earth leakage, overvoltage, short circuit), mechanical defect (part breakage, vibration, overload), accidental loss during work, careless damage and impact by an external object. But ordinary wear, ageing and natural depreciation are excluded.
Wear, ageing, corrosion and natural depreciation from a machine's ordinary use are normal operating costs, not an insured accident, and are usually excluded. Whether wear was the cause of the accident, or an external accident accelerated the wear, is the key issue in the cover process.
An accident to a part (electric motor, sensor, controller) is in this wording's area, but main-body loss caused by the part accident (consequential loss) differs in cover scope and limit by wording. The difference between a wording covering only parts and one covering the main body matters at enrolment.
If the operating environment differs from the wording assumptions (overload operation, exceeding environmental limits, missed regular inspection), it can be a ground for exclusion. Following the operating manual and systematic inspection records are key evidence in the post-accident cover process.
Where machinery failure stops production, a separate machinery-BI endorsement can combine business-interruption loss. Ordinary BI covers interruption after property loss such as fire, while machinery BI is a machinery-failure-specialised area, a core cover for precision industrial facilities.
The insurer assesses it on the machinery type/value, operating environment, work-risk grade, regular-inspection system, past failure history and deductible design. The exact premium and acceptance are confirmed after underwriting by insurers such as AIG, Chubb, DB, KB, Meritz and Hyundai.
