A Rp 12.7 Billion Project Generator Falls into the Sea During Shipping, Claim Rejected Without a Broker!

In the world of construction and energy projects, the need for temporary power supplies from large-capacity generators is vital. Generators worth billions of rupiah are often shipped from one island to another to support infrastructure projects, mining, and industrial plants. However, behind this shipping process lies a significant risk that many entrepreneurs often underestimate: the risk of loss or damage to goods during sea transportation.

One recent case involved the fall of a project generator worth Rp 12.7 billion into the sea during shipping. This incident is not just a story of a logistical accident, but also an important lesson in how inattention to cargo insurance can lead to significant financial losses. Without experienced insurance brokers, many companies fail to understand the details of policy clauses, ultimately leading to their claims being rejected by insurers.

Therefore, before you embark on shipping heavy equipment or high-value project generators, ensure you fully understand the risks involved. A single, minor error in policy formulation could result in billions of rupiah in irreparable losses. This article details the financial losses resulting from project generator incidents and the role of a freight insurance broker in preventing claims from being denied. Therefore, before risks destroy your investment, ensure your cargo protection meets the project’s needs.ContactL&G Insurance Brokernow in08118507773for a free consultation and recommendations for the best protection for your business.

Case Chronology: Generator Falls into Sea and Claim Rejected

The case began with a large project in East Kalimantan that required a high-power industrial generator for temporary power supply. The generator, weighing approximately 15 tons, was shipped by barge from Tanjung Priok Port to a small port in Kalimantan.

However, during the unloading process at the destination port, a technical error occurred with the crane. Bad weather, high waves, and an inaccurate load calculation caused the crane’s rope to break mid-unloading. Within seconds, the generator, valued at Rp 12.7 billion, fell into the sea, completely damaged beyond repair.

Following the incident, the shipper immediately filed a claim with the insurance company. However, the claim was disappointingly rejected. The reason was quite common: the absence of an additional loading and unloading clause in the cargo insurance policy.

This is a crucial point often overlooked by many logistics entrepreneurs and contractors. They purchase insurance policies directly without understanding the details of the protection required for complex maritime shipping activities. However, if you involve a professional freight insurance broker like L&G Insurance Broker from the outset, this risk can be prevented. The broker will ensure the entire shipping process, including loading, unloading, and transit, is fully covered through appropriate policy wording.

Why Claims Are Rejected and Where the Fault Lies

1. Failure to Understand Police Exemptions

This case provides an important lesson: not all cargo insurance policies automatically cover all risks. Many standard policies (such as Institute Cargo Clause C) only cover damage resulting from major events such as sinking, collision, or fire at sea. However, incidents during the loading or unloading process are often excluded unless a specific clause (Loading & Unloading Risk Extension) is added.

The most fatal mistake shippers make is not involving an insurance broker in policy preparation and review. Without a broker, companies often don’t know that the policies they purchase don’t cover crucial processes like loading and unloading goods at the port. Furthermore, supporting documentation for claims is incomplete—there’s no chronological report from the crane operator or photos of the damage needed for claim assessment. This exacerbates the situation and provides grounds for insurance companies to reject claims.

2. The Crucial Function of a Logistics Insurance Broker

This is where the role of a logistics insurance broker becomes crucial. Brokers not only help select the right policy but also assist in every step of the process, from risk analysis and claims filing to negotiations with the insurance company, ensuring clients receive their contractual rights.

Fatal Financial and Operational Impacts

The losses from this incident went beyond the value of the generator that fell into the sea. Overall, the project’s financial losses are estimated at Rp 20 billion, as in addition to the loss of equipment, the project also experienced months of delays. This delay triggered contractual penalties from the employer and additional operational costs due to downtime. In the project world, every day of delay means potentially significant lost profits.

Imagine, just because an incomplete policy and a claim are rejected, the entire project schedule can be shifted and the company’s reputation tarnished. This often happens to logistics companies or contractors who lack professionally designed insurance coverage. In contrast, other projects that use marine cargo insurance with the support of a broker are able to process claims quickly and receive full reimbursement. Brokers help communicate claim evidence, prepare documentation, and ensure the claims process runs efficiently and without dispute.

The Vital Role of Insurance Brokers in Shipping High-Value Goods

Many industry players don’t understand the difference between an insurance broker and an insurance agent. Agents work for insurance companies, while brokers work for clients. This means the broker is on your side as the owner of the goods or project generator.

In the context of marine cargo insurance, brokers play a very important role in:

1. Analyzing risks – Assessing the type of goods, shipping routes, and potential damage at the port.
2. Adjusting the policy wording – The broker ensures the policy covers all risks, including the loading and unloading process (a clause that is absent in the case of this generator).
3. Premium negotiation – Brokers negotiate the best price with the broadest coverage.
4. Claims assistance – The broker is the party who accompanies you so that the claim is processed quickly and according to the contract.

L&G Insurance Broker, for example, has over 30 years of experience handling a variety of logistics risks, including the shipping of heavy equipment, generators, and high-value project equipment. With expertise in marine cargo insurance policy design, L&G can provide comprehensive coverage tailored to your specific industry needs.

Therefore, before you sign your next shipping contract, make sure a risk expert reviews your policy first.ContactL&G Insurance Brokernow in08118507773for a free consultation and recommendations for the best protection for your business.

The Right Type of Insurance for Generator Shipping

When shipping high-value generators or heavy equipment, there are several types of recommended freight insurance, including:

• Marine Cargo Insurance – All Risk: Provides the broadest protection against all types of damage and loss during the transportation process.
• Institute Cargo Clause (A): An international clause that covers the risks of sinking, falling overboard, storms, and human error (including loading and unloading failure).
• Third Party Liability (TPL): Protects the owner of the goods from third party claims due to damage at the port or on board (for example, a generator falling on another vehicle).
• Delay in Start Up (DSU): Covers potential losses due to project delays due to failed or damaged delivery of goods.
• Loading & Unloading Risk Extension: This is a crucial clause that ensures protection remains in effect while the goods are being loaded and unloaded from the ship, which is the clause that is absent in the case of this generator.

For heavy equipment shipments using cranes, experienced insurance brokers like L&G Insurance Broker will recommend adding a Loading & Unloading Risk Extension clause. This is essential to ensure coverage remains in effect while the goods are being loaded and unloaded from the vessel.

Risk Mitigation Strategies in Ocean Shipping

To prevent similar incidents such as generators falling into the sea from occurring, companies can implement the following risk mitigation steps:

1. Conduct periodic shipping procedure audits (Pre Shipment Survey) by independent surveyors.
2. Ensure contractual responsibilities are clear between shipper, carrier and consignee (synchronize Incoterms with the policy).
3. Use a digital tracking system (GPS tracking) to monitor the status of goods in real time and speed up reporting if an incident occurs.
4. Involve an insurance broker from the start of planning so that all risks are properly covered.
5. Conduct strict supervision during loading/unloading and ensure that the crane certification used is still valid.

With a combination of sound risk management and the right insurance policy, the potential for significant losses can be significantly minimized. Remember, one wrong decision could destroy billions of rupiah in investments.

Conclusion

The incident of a project generator worth Rp 12.7 billion falling into the sea is a critical warning for all players in the construction, energy, and logistics industries in Indonesia. This incident demonstrates that the risks of transporting high-value goods are not only related to ship accidents at sea, but also at the most vulnerable transition point, namely during loading and unloading at the port. The insurance claim rejection in this case was not due to an unforeseen disaster, but rather due to a fatal omission in the policy design, specifically the absence of a Loading & Unloading Risk Extension clause. The total financial loss of Rp 20 billion was directly borne by the company, which clearly demonstrates that freight insurance without expert guidance is a big gamble that is not worth taking.

In navigating the complexities of marine cargo insurance, particularly for shipping heavy equipment and project generators, the role of a professional insurance broker is crucial. Brokers act as risk advocates, bridging the gap between the goods owner and the insurance company. L&G Insurance Broker ensures your policy is more than just a paper contract, but an effective and comprehensive financial shield. We help analyze risks, adjust policy wording (including crucial clauses such as Loading & Unloading and DSU), and guide the claims process transparently and expeditiously. With over three decades of experience, L&G ensures your compensation rights are met fairly and promptly, saving your project’s cash flow from major financial disruptions.

Shipping heavy equipment and high-value cargo to your next project site shouldn’t be a gamble. It should be a business activity supported by robust risk management and proven insurance coverage. L&G Insurance Broker, a trusted freight insurance broker in South Tangerang and throughout Indonesia, is ready to be your strategic partner. Don’t delay. Take proactive steps to secure your billions of rupiah investment now.

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