The following article will make us more aware of this. The importance and legal obligation for foreign construction companies operating in Indonesia to have local CPM (Contractors Plant & Machinery) heavy equipment insurance.
Key Points:
- Local Insurance Obligation: Foreign construction companies are required to have local insurance for all their assets and project activities in Indonesia, in accordance with OJK regulations and government/BUMN project contract requirements (such as IKN projects, smelters, toll roads). Global policies from the country of origin (China, Korea, Japan, etc.) are not automatically valid in Indonesia.
- Risk Without Local Policy: Without local CPM insurance, project assets (cranes, excavators, etc.) worth billions of rupiah could lose total protection in the event of damage (accident, rollover, fire, loss). Claims to overseas insurance companies will most likely be rejected because the location of the incident is outside the policy area.
- CPM Insurance Function: CPM is vital for protecting high-value assets, maintaining project continuity (ensuring equipment is repaired/replaced immediately), increasing project owner confidence, and meeting tender/audit requirements.
- Common Mistakes of Foreign Contractors:
- Assuming that foreign police are enough.
- Not knowing local tender requirements (e.g., state-owned enterprise projects).
- Error in determining the insured value (not adjusted to local prices).
- Difficulty claiming due to lack of companionship.
- The Crucial Role of an Insurance Broker (L&G Insurance Broker):
- On the Client’s Side: Unlike agents or direct insurance companies who work for the company, brokers work for the client (insured).
- Professional Advisor: Ensure regulatory compliance, find and negotiate the best policies with efficient premiums.
- Claims Assistance: Must defend the client’s interests from the beginning until the claim is fully disbursed.
- L&G Insurance Broker: Highlighted as an OJK-licensed independent broker specializing in CPM construction and heavy equipment insurance, offering free consultations, professional risk analysis, 100% claim support, and connections with numerous local and international insurance companies.
Conclusion: Working with an experienced broker like L&G Insurance Broker is a smart and safe move to ensure regulatory compliance, maximum protection, and full assistance during claims.
Contact L&G Insurance Broker:
- Phone: 08118507773
- Email: halo@lngrisk.co.id
- Website: www.lngrisk.co.id
The entry of foreign construction companies into Indonesia is increasing in line with the rapid development of national infrastructure, particularly strategic projects such as the Indonesian Capital City (IKN), smelters, ports, toll roads, and power plants. Many of these foreign contractors bring their own heavy equipment from their home countries: cranes, excavators, bulldozers, and batching plants worth billions of rupiah.
However, there’s a crucial aspect that’s often overlooked: the obligation to have Contractors Plant & Machinery (CPM) heavy equipment insurance from a local Indonesian insurance company. Without a local policy, your project assets could be at risk of losing coverage, even failing to meet contractual requirements.
In this context, insurance brokers such as L&G Insurance Broker play a crucial role. Brokers aren’t just policy sellers, but professional advisors who ensure regulatory compliance, protect your assets, and fight for your claims until they’re paid. Unlike agents or direct insurance companies, which focus solely on sales, brokers always side with their clients.
📞For a free consultation regarding your project protection, contact L&G Insurance Broker at 08118507773 or email halo@lngrisk.co.id.
Don’t delay because one small mistake in purchasing a policy could result in losses of billions of rupiah.
Why Foreign Companies Must Have Local CPM Insurance
Every foreign construction company operating in Indonesia is legally required to have local insurance for all its assets and project activities. This requirement is stipulated in various regulations, such as:
- OJK (Financial Services Authority) provisions that require the use of licensed local insurance companies,
- Government and state-owned enterprise project contract clauses,
- Tender requirements for large public and private projects.
This means that even if your company already has global insurance in its home country (for example, China, Korea, or Japan), the policy is not automatically valid in Indonesia.
For example:
A Chinese crane worth Rp 15 billion was damaged after it overturned at a mining project in Kalimantan. The claim to the Chinese insurance company was rejected because the incident occurred outside the insurance coverage area. Without a local policy, the damage would have been borne solely by the company.
With local CPM heavy equipment insurance, all risks such as damage, accidents, fire, or loss during operations in Indonesia will be covered by a legitimate local insurance company.
CPM: The Most Vital Insurance in the Construction World
For construction companies, heavy equipment is the heart of project operations. Without optimally functioning equipment, work can be delayed, costs can balloon, and even the project can fail completely.
CPM (Contractors Plant & Machinery) insurance serves as the primary protection against these risks.
Some of the benefits include:
- Protecting High Value Assets
Excavators, cranes, bulldozers, and batching plants are often worth billions of rupiah. CPM protects against losses due to accidents, rollovers, fire, or theft. - Maintaining Project Sustainability
Without CPM, a single piece of heavy equipment failure could halt the entire project. A CPM policy ensures that equipment can be promptly repaired or replaced without significant financial burden. - Increasing Project Owner Confidence
By having a valid and complete CPM policy, your company is considered professional and compliant with Indonesian regulations. - Supporting Tender & Audit Process
Many large projects, especially government-funded ones, only accept contractors who have active local insurance and are approved by a trusted broker.
Problems Often Faced by Foreign Companies in Indonesia
Here are some common mistakes that foreign contractors often make when operating in Indonesia:
- Assuming Foreign Police Are Enough
Many foreign companies assume their global insurance policies cover all overseas projects. However, most policies are only valid in their home country, unless there’s a “worldwide coverage” clause specifically authorized in Indonesia, which is rarely approved by local authorities.
- Not Knowing Local Tender Requirements
State-owned enterprise projects such as PT WIKA, PT PP, or Hutama Karya often require policies from local insurance companies supervised by the Financial Services Authority (OJK). Without these policies, contractors can be disqualified from the tender.
- Errors in Determining the Insured Value
Many foreign contractors value heavy equipment based on prices in their home countries without adjusting for the rupiah exchange rate and local market prices. As a result, when claims are made, they receive only partial payment.
- Difficulty in Claiming Due to Lack of Companion
When a large claim occurs, the agent or insurance company has no obligation to directly advocate for the client’s interests. As a result, claims can stall or be paid only a small portion.
Different brokers are legally obliged to defend the interests of the insured until the claim is paid.
Differences Between Insurance Brokers vs Agents and Direct Insurance Companies
This is the most important part that many foreign companies often misunderstand. An insurance broker is not the same as an agent.
Agents work for insurance companies. Their job is to sell policies and achieve sales targets. Therefore, when a claim arises, they are actually on the side of the insurance company, not you, the insured.
In contrast, insurance brokers work for their clients (the insured). Brokers don’t sell specific products, but rather find and negotiate the best policies from various insurance companies. Their job is to ensure you receive the most appropriate coverage at the most efficient premium.
More importantly, when a claim arises, a broker will be your advocate from start to finish. They’ll help you prepare documents, negotiate with the insurance company, and ensure your claim is paid in full, as per your rights.
So in short:
- Agents defend the interests of insurance companies.
- Brokers defend your interests as a client.
That’s why for large-value projects, especially for foreign contractors in Indonesia, using a broker is much safer, more transparent, and more efficient.
L&G Insurance Broker: Pioneering Foreign Project Broker in Indonesia
As an independent and OJK-licensed insurance broker, L&G Insurance Broker has a long track record in handling large-scale construction projects, including those involving foreign companies from China, Korea, and Japan.
L&G is not just a policy provider but a strategic partner that helps you understand:
- How do Indonesian regulations apply to foreign heavy equipment?
- What types of insurance are mandatory (CPM, CAR, EAR, Liability, Bond),
- How to prepare claim documents for smooth payments.
Why Choose L&G Insurance Broker
- Expert in Construction & Heavy Equipment Insurance CPM
The L&G team is accustomed to handling multinational projects with high complexity. - Free Consultation & Professional Risk Analysis
You will be assisted in analyzing protection needs based on the type of project, location, and heavy equipment used. - 100% Claim Assistance Until Disbursement
Brokers are required to defend you in the claims process, from reporting, negotiation, to payment. - Connected with Many Local & International Insurance Companies
L&G ensures you get the best combination of premium price and quality of protection. - Transparent and Independent
We are not tied to any particular insurance company, working solely for your benefit.
CPM Insurance Obligations in Major Projects in Indonesia
Nearly all major construction projects in Indonesia, both private and government, require a CPM policy. Here are some examples:
- IKN (Indonesian Capital City) Project
All contractors are required to have a CPM for each heavy equipment unit operating in the IKN area. - Smelter and Mining Projects
Heavy equipment in this sector is at high risk of damage, fire, and overturning. CPM is a key requirement. - State-Owned Enterprise Infrastructure Projects (Toll Roads, Ports, Bridges)
These projects always require proof of CPM insurance as part of the contract documents. - Joint Operation between Local and Foreign Contractors
In this kind of cooperation, local CPM is a mandatory requirement so that risk responsibilities can be clearly shared.
Example Scenario: Without CPM, the Risk of Loss Could Be Fatal
Imagine you are a Korean contractor bringing 10 excavators worth a total of Rp50 billion for a mining project in Kalimantan.
One night, one of the devices caught fire due to a short circuit.
You think, “Don’t worry, we already have insurance in Seoul.”
But the reality is:
- The policy does not cover operations in Indonesia,
- There is no local party that can follow up on the claim,
- Surveyor not available,
- Claim totally rejected.
A loss of Rp. 5 billion immediately hit your company.
If a local broker like L&G Insurance Broker had been used from the start, a local CPM policy could have been prepared complete with international reinsurance support, and claims would have been paid according to the insured amount. One small decision could have saved a company’s reputation and finances.
How to Purchase Insurance Through a Broker
Working with an insurance broker is much more efficient and secure. Here’s the process:
- Free Consultation & Risk Analysis
The L&G team will study the project profile, location, and type of heavy equipment used. - Market Comparison
The broker will request quotes from several insurance companies and choose the best one. - Issuance of a Valid Local Policy
Policies are issued by insurance companies registered with the OJK, complete with special clauses according to project needs. - Claim Assistance
In the event of an accident, L&G will assist with the entire claims process from A–Z to payment completion.
Conclusion
For foreign construction companies, the success of projects in Indonesia depends not only on technical capability or capital, but also on proper and legally valid insurance coverage. Without local CPM heavy equipment insurance, any equipment brought into Indonesia is at significant risk of causing unclaimed losses.
Therefore, working with an experienced insurance broker like L&G Insurance Broker is the smartest move.
The broker ensures:
- Compliance with Indonesian regulations,
- The best premiums from various insurance companies,
- Full assistance during claims,
- And maximum protection for your assets.
Don’t wait until your heavy equipment breaks down before seeking protection.
Get a free consultation with L&G Insurance Broker, a specialist in CPM heavy equipment insurance and foreign construction projects in Indonesia.
📞 Contact now at 08118507773
📧 Email: halo@lngrisk.co.id
🌐 Website: www.lngrisk.co.id
Because in the construction world, risks are certain but losses can be avoided if you have a broker on your side.
