The heavy equipment market in Indonesia is currently undergoing a major shift. Chinese brands such as SANY, XCMG, Zoomlion, SDLG, Liugong, Shantui, Lovol, Lonking, Foton, XGMA, and Yutong are increasingly dominating thanks to competitive pricing, easy financing, and wide availability of spare parts. This has led many mining, contractor, and plantation companies to switch to using Chinese-made heavy equipment to support their projects.
However, behind this rapid growth lies a significant, often overlooked risk: errors in heavy equipment insurance arrangements. Many distributors and customers purchase policies directly from agents or “friends” without thoroughly understanding the policy terms and conditions. As a result, when heavy equipment is involved in an accident, such as a rollover, fire, or sinking, their claims are often rejected by insurance companies.
This is why the role of a professional and independent insurance broker is so important in ensuring that protection actually works when needed.
📞 For a free consultation regarding your heavy equipment protection, contact 0811-8507-773 or send an email to halo@lngrisk.co.id.
L&G Insurance Broker’s team of experts is ready to help you review your existing policies and ensure your business is protected from potential major losses.
The Phenomenon of Cheap Insurance in the Heavy Equipment Industry
In the fierce competition for heavy equipment sales, many distributors are trying to reduce operational costs, including insurance costs. Some offer very low premiums with promises of “full coverage,” even though the policies don’t cover actual risks in the field.
For example:
- “Full coverage” insurance with a premium of IDR 2 million per year for excavators worth IDR 3 billion.
- An “all risk” policy which turns out to only cover fire and theft in the warehouse, not when the equipment is operating in the mine.
- Cheap premiums without important clauses such as Overturning, Operational Risk, or Flood & Landslide.
Everything seemed fine—until disaster struck.
True Story: When Cheap Premiums Become a Nightmare
One of Shantui’s heavy equipment distributors once took out a policy through a local agent at a super-low premium. There was no risk assessment, no wording review, and the entire process was instant. A few months later, a bulldozer worth Rp 4.5 billion (approximately US$400,000) overturned and was completely destroyed in a Kalimantan mining area.
When a claim was submitted, the insurance company refused on the grounds:
- The risk of rolling over is not listed in the policy,
- Work location not reported at closing,
- There is no Operational Extension clause.
The claim was completely rejected. The distributor covered the losses himself, while the customer demanded compensation. The total loss reached over Rp 5 billion. It all stemmed from a simple decision: choosing cheap insurance without the assistance of a professional broker.
Why Cheap Premiums = High Risk
1. Cheap Premiums Mean Minimal Coverage
Insurance premiums are determined based on the level of risk. If the premium is too low, it means many risks are not covered. For example, heavy equipment operating in an open-pit mine may only cover risks while in the garage, with no additional clauses such as Impact, Collision, Landslide, or Flood. So, despite being called “All Risks,” the coverage is actually very limited.
2. Cheap Premiums Are Not Accompanied by Strong Reinsurance
Every major claim typically involves international reinsurance. However, low-premium insurance companies often lack adequate reinsurance support. When claims worth billions arise, they lack the funds to pay and end up finding excuses to deny claims.
3. Cheap Premiums = Weak Claims Process
Low-cost insurance companies generally lack professional claims teams. The process is slow, unresponsive, and can even stall mid-process. Without broker support, clients often become disoriented and end up with nothing.
4. No Risk Survey or Technical Evaluation
Proper insurance always begins with a risk assessment. However, with cheap schemes, this step is often overlooked. As a result, when claims are filed, insurance companies reject them, citing “previous damage to the equipment” or “the risks don’t match the policy.”
The Domino Effect of Cheap Schemes
The Chinese heavy equipment distribution ecosystem in Indonesia involves many parties: manufacturers, distributors, leasing companies, customers, and even projects. If one claim fails, the impact spreads across all sectors.
- Distributors Suffer Huge Losses
Without claims, distributors lose assets or credit collateral, disrupting cash flow and hampering expansion. - Leasing Facing Bad Debt
Most heavy equipment is purchased with leasing financing. If the equipment is lost and the claim fails, the customer stops making installment payments—and the leasing company loses money. - Customers Lose Trust
Failed claims leave customers disappointed and they switch to other brands. A damaged reputation is difficult to repair. - Relations with Manufacturers in China Fractured
Failure to handle claims leads manufacturers to view distributors as unprofessional, when in fact the problem lies in incorrect insurance arrangements.
The Vital Role of Insurance Brokers in Avoiding Disasters
This is where a professional insurance broker like L&G Insurance Broker becomes crucial. A broker isn’t just a policy seller; he’s also a risk advisor and your representative with insurance and reinsurance companies.
1. Brokers Ensure Risk-Appropriate Policies
L&G Insurance Broker understands the operational conditions of Chinese heavy equipment in Indonesia—from coal mines in Kalimantan to infrastructure projects in Papua. We ensure policies cover real risks such as overturning, impact, collision, operational use, flooding, landslide, subsidence, and transit over water.
2. Brokers Negotiate Realistic Premiums
Cheap premiums aren’t the solution. What’s needed are competitive premiums with comprehensive coverage. Brokers help balance price and protection, ensuring you don’t buy “cheap” insurance that carries high risks.
3. Brokers accompany you during claims
The claims process is often lengthy and complex. With a broker, you have a professional team guiding you from reporting to payment. L&G has an independent claims department with extensive experience handling high-value claims, including heavy equipment damage, sinking, or fire.
4. Brokers Build Long-Term Relationships
L&G Insurance Broker is not only present when the policy is issued, but also continues to accompany clients with annual reviews, claims training, and digital portfolio management through the LIGASYS system.
Conclusion: Cheap Premiums Today, Disaster Tomorrow
Insurance isn’t just a formality; it’s a lifeline for businesses. If you choose a low premium without proper coverage, you’re essentially setting yourself up for significant future losses. Many Chinese heavy equipment distributors in Indonesia have already experienced the pain of having their claims rejected—not because they failed to pay their premiums, but because they purchased the wrong policy.
Cheap isn’t always safe. Insurance isn’t about how low your premiums are, but how much protection you receive when disaster strikes.
Entrust your heavy equipment insurance matters to L&G Insurance Broker (PT Liberty and General Insurance Broker) — an experienced independent broker who has:
- Insuring thousands of Chinese heavy equipment throughout Indonesia,
- Handled dozens of large claims with successful results,
- And recognized as one of the best specialist brokers for heavy equipment and construction projects in Indonesia.
L&G Insurance Broker – Protecting Assets, Maintaining Trust, and Saving Your Business.
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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
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