Heavy Equipment Insurance Renewal isn’t just an annual administrative obligation. It’s a key defense system that protects your heavy equipment investment from major risks like accidents, fire, theft, and even sudden damage that can result in billions of rupiah in losses. Many companies only realize the impact when it’s too late, when the policy has expired, and unexpected events occur at the most inopportune moments.
In this article, you will learn in detail what happens if a company does not renew its heavy equipment policy on time: from financial risks, operational losses, real-life case examples, to how to prevent major losses simply by ensuring the policy is always active.
If you want to ensure that your business protection remains safe, controlled, and free from loopholes, you can have a FREE consultation with us.L&G Insurance Broker:
📞 OF:08118507773
📧 Email: halo@lngrisk.co.id
Why Do Many Companies Forget or Delay Renewals?
In the construction and mining world, operational activity is almost never-ending. Equipment mobilization, production demands, tight deadlines, and changing field conditions often lead management teams to prioritize insurance administration. As a result, heavy equipment policy renewals are often forgotten or dismissed as “later.”
One of the main causes is the lack of a clear internal reminder system. Many companies still rely on manual records or simply memorizing information, making it easy to overlook things during busy project times. Furthermore, the increased focus on operations makes protection a non-urgent matter, even though the heavy equipment used can be worth billions of rupiah.
Another common misconception is the assumption that there’s a grace period after the policy expires. In reality, there’s no grace period for risks in insurance. Once the expiration date passes, coverage ceases completely. Some companies also assume renewals can be requested at any time, when in fact, surveys, documentation, and insurer approval take time.
Risks When the Police Has Expired Their Validity Period
When the policy expires, it means the insurance coverage stops completely. It doesn’t matter whether the company“intend to extend” or “in process”only the policy status at the time of the incident is seen.
- Total Loss Without Replacement
If heavy equipment is damaged, burned, sunk, or lost when the policy is no longer active, the company must cover 100% of the loss.
Estimated equipment loss:
- Excavator: Rp 1,2–1,8 M
- Dozer: Rp 2–3,5 M
- Crane: Rp 5–20 M
Without protection? Everything is your own responsibility.
- Loss of Project or Contract
Many contracts require heavy equipment to be insured. If inactive:
- Contracts can be canceled
- There is a penalty
- Companies can be blacklisted
- Claims Will Definitely Be Rejected
Damage 1 day after the expiry date is still not guaranteed.
- Risk of Fire, Collision, and Mechanical Damage
Heavy equipment repair costs are never cheap:
- Engine overhaul: Rp 500 million–Rp 1.2 billion
- Hydraulic failure: Rp 350–600 million
- Broken boom: Rp 700 million–Rp 1.4 billion
Everything must be paid for yourself if the policy has expired.
Without a risk management team monitoring the policy’s status, the risk of negligence increases. Even just one day without coverage can result in significant financial losses if an equipment incident occurs.
Financial Impact If the Policy is Not Renewed
Failure to renew heavy equipment insurance on time can have a significant direct financial impact on a company. Due to the high value of heavy equipment, a single incident can disrupt cash flow, impact profits, and even halt a project. Here’s a breakdown of the most common financial impacts:
- Major Repair Costs
When the policy expires, all risk transfers completely to the company.
Both minor and major damages must be covered by yourself, and the costs are no joke:
- Hydraulic damage: Rp 350–600 million
- Engine overhaul: Rp 500 million–Rp 1.2 billion
- Broken boom or frame damage: Rp 700 million–Rp 1.4 billion
Without protection, costs of this magnitude would immediately erode a company’s cash flow.
- Loss of Income
In addition to repair costs, companies also lose potential revenue when equipment is not operational.
If one unit has to enter the workshop for 1 month, the loss could reach:
- Rp. 120–180 million per unit per month
When combined with repair costs, the total loss could approach Rp. 1 billion or even more.
- Loss of Project Owner’s Trust
Companies that fail to maintain the protection of their assets are often seen as unprofessional.
As a result:
- Partners lack confidence
- Tender opportunities may be reduced
- The company is considered not to have good risk management
This kind of reputational impact also has a direct impact on long-term earnings.
Operational Impact When the Policy is No Longer Active
When the heavy equipment insurance policyIt has expired.The impact isn’t just felt financially, but also directly impacts project operations. Without protection, any equipment failure or downtime can disrupt work schedules, reduce productivity, and increase stress on operational teams. Here are some of the most common operational impacts:
- Project Delayed Due to Equipment Unusable
If the equipment is damaged and cannot be repaired immediately due to lack of claim funds, project activities will immediately stop.
This causes:
- Daily progress not achieved
- The processing time is delayed
- Operating costs increase
One unit stopping can disrupt the entire workflow in the field.
- Other Units Are Forced to Work Harder
In order to meet project targets, other units are often forced to work longer hours.
The consequences:
- Risk of damage increases
- Maintenance cost naik
- Double downtime may occur
This creates a detrimental domino effect.
- Stress Management Finding Emergency Funds
Without insurance coverage, the company would have to cover repair costs from internal funds. This placed significant pressure on the finance team and project leaders, who had to find funds quickly.
- Project Delays Causing Penalties
When equipment is not operational, projects can miss deadlines.
The effect:
- Late penalty
- Complaints from clients
- Potential loss of continued contracts
All this can happen just because one policy is left inactive.
Real Case Example of Loss Due to Expired Policy
Excavator Catches Fire One Day After Policy Expires (Loss of Rp2.975 Billion)
A mining company delayed renewing its policy due to an internal audit. The policy expired on February 3rd. They planned to renew it on the 5th. However, on February 4th, a PC300 excavator caught fire due to a short circuit.
When checked:
- The police have run out of time.
- There is no grace period.
- Cannot be extended backwards
Claim rejected.
Loss:
- Unit price: Rp 2.4 M
- Production downtime: Rp 450 million
- Penalty: Rp. 125 million
Total loss: Rp. 2.975 billion
Even though the cost of renewing the policy is only around IDR 40 million.
Legal Consequences When a Policy Expires
When a policy expires, companies face a number of often overlooked legal risks. While seemingly simple, an inactive policy can have serious implications for a company’s legal standing with clients, contractors, and regulators.
- Insurance companies are not obliged to pay claims
Once the policy expires, all coverage automatically ceases. If a loss occurs after that date, the insurer reserves the right to reject the claim without exception, regardless of whether the company is in the renewal process or awaiting internal approval. - Policies cannot be forced to apply retroactively
Many companies expect coverage to be reinstated for the period before the policy is renewed. However, this is legally prohibited. Backdating a policy is a regulatory violation and cannot be enforced on the insurer. - Employment contracts may state that the company is in violation of mandatory insurance requirements.
Many project contracts, particularly in the construction and mining sectors, require active insurance. When a policy is not in effect, a company is legally deemed to have failed to fulfill its contractual obligations. - Companies may be subject to contract penalties
Violation of insurance obligations can lead to fines, payment deductions, and even contract termination. In some cases, the company’s reputation can also be affected legally and commercially.
The Role of Insurance Brokers in Preventing Policy Expiration
Brokers play a big role in preventing the risk of policies accidentally expiring.
L&G does:
- Pengingat H-60, H-30, H-14, H-7, H-1
- Review the insurance value
- Best premium negotiation
- Claims assistance
- Policy and risk monitoring
With a broker, the risk of forgetting to renew can be eliminated 100%.
Conclusion
Do not do Heavy Equipment Insurance ExtensionFailure to report on time can result in the policy expiring, thus completely terminating all coverage. Consequently, damage, from minor to major, can cost billions of rupiah, delay projects, damage reputations, and even terminate contracts.
Make sure your heavy equipment is always protected. Use the serviceL&G Insurance Brokerfor a guaranteed safe, timely and professional renewal process.
📞 OF:08118507773
📧 Email: halo@lngrisk.co.id
