For Chinese companies operating in Indonesia and using various heavy equipment in construction, infrastructure, mining or logistics projects, ensuring protection through heavy equipment insurance This is a crucial step. Unfortunately, many foreign players, including Chinese companies, make five common mistakes that weaken their protection, waste premiums, or even deny claims when they need them most.
Before we get into the mistakes, let’s first briefly explain the importance of choosing an insurance broker like L&G Insurance Broker compared to buying directly through an agent or directly from an insurance company. Brokers like L&G work for your interests as the insured, not the insurance company; they have access to a wide range of products from multiple insurance companies, conduct thorough risk analyses, design coverage plans tailored to the complex circumstances of your heavy equipment project, and most importantly, assist with claims settlement until disbursement occurs. Agents, or buying directly through an insurance company, tend to be limited: standard products, single company only, and when a claim occurs, you can be left without professional support.
By using a professional broker like L&G, you get:
- In-depth and tailor-made risk analysis for your heavy equipment conditions in Indonesia.
- Negotiate between multiple insurance companies to ensure you get reasonable premiums and optimal protection.
- Claims handling that focuses on your interests, the broker becomes your advocate, not just a “salesperson”.
- Ensure that in the event of damage, theft, downtime or operational loss to your heavy equipment you have experienced claims support.
So, before you buy heavy equipment insurance, contact us for a free consultation: WA 08118507773 or email halo@lngrisk.co.id. Don’t wait for the risk to become a major loss.
Now let’s get into the main discussion: 5 Common Mistakes Chinese Companies Often Make When Insuring Heavy Equipment in Indonesia That You Can Avoid.
Mistake 1: Choosing a standard policy without considering the project conditions in Indonesia
Many Chinese companies assume that purchasing a “general” heavy equipment insurance package is sufficient. However, the reality is that project conditions in Indonesia are often very specific: heavy equipment operates in remote locations, tropical environments, access to spare parts is limited, legal/land use conditions are subject to change, local operators may be inexperienced, and many other additional risk variables remain. If your policy only covers “physical damage” without, for example, downtime, equipment removal costs, damage due to Indonesian terrain, or third-party liability, you could end up with significant additional costs when the unexpected occurs.
A real-life example: large heavy equipment deployed to a remote mining site in Sulawesi might experience damage due to landslides, making access to spare parts expensive, and repair times extremely long. If the policy only covers damage without downtime, the company could suffer significant losses due to project delays. Chinese companies purchasing policies through standard agents in China might not recognize that conditions in Indonesia are significantly different and require expanded coverage.
The solution: ensure your broker (such as L&G) conducts a local risk assessment, understanding the location, equipment type, usage intensity, local operators, and work environment. Ensure that a specific heavy equipment insurance policy has appropriate add-ons. Don’t simply buy directly from an agent in China, who may not understand the risks in Indonesia.
Mistake 2: Not including a complete equipment list and/or a realistic sum insured.
A second common mistake: companies list only a few major pieces of equipment or use values that are too low, such as covering only minor damage. As a result, if major damage or theft occurs, the sum insured will be insufficient, resulting in a claim that won’t cover the full loss. Even worse, if a claim occurs and the sum insured is too low, the company will have to cover most of the costs themselves.
In the context of Chinese companies bringing large amounts of heavy equipment into Indonesia, whether imported or leased, it’s important to list all units, serial numbers, condition, age, and estimated replacement/repair costs. An experienced insurance broker will help match the insured value to the Indonesian market value (including import fees, duties, taxes, and spare parts). Without the right broker, companies often set the value too low because agents in China don’t understand Indonesian conditions.
So, check with your broker: a complete equipment list, realistic coverage values, and regular review, as heavy equipment values can fluctuate rapidly (e.g., increasing spare parts costs or aging equipment). Otherwise, you risk a small payout in the event of a major claim.
Mistake 3: Ignoring local operating conditions (operator, maintenance, fuel, location) and inappropriate policy terms
Heavy equipment operated in Indonesia often faces local challenges: local operators with varying skills, maintenance that may not meet international standards, fuel and spare parts suppliers that are not always optimal, and extreme environmental conditions (heavy rain, flooding, unstable soil, heat). If a policy is written without considering these factors, there is a risk that claims may be rejected because the cause of damage is deemed to be “lack of maintenance” or “operator error.”
Many Chinese companies purchase “stand-alone” policies from China or through agents in China who don’t check local requirements like “certified operator” or “scheduled maintenance.” When claiming, the insurer may reject the policy on the grounds that the operator lacks certification, routine maintenance isn’t performed, or the equipment was used in unauthorized areas. This means you’re paying a premium but not receiving full coverage.
A reliable insurance broker will check and assist you: are local operators trained? Do they have a good maintenance record? Does the operational location exceed the insured’s limits? Is there a “use in extreme terrain” clause? If so, you may need to negotiate policy changes or special add-ons.
So don’t underestimate local operational factors. To ensure your heavy equipment insurance is truly effective in Indonesia, use a broker who understands local conditions and knows what to ask the insurance company.
Mistake 4: Ignoring downtime and additional business interruption
When heavy equipment breaks down, physical damage isn’t the only cost. Often, the biggest costs are project downtime, delayed labor, lost support equipment, missed opportunities, disrupted contracts, and a company’s reputation can suffer. However, many Chinese companies purchase policies that only cover physical damage to heavy equipment and forget to include coverage for business interruption or downtime.
For example, a large excavator was damaged by a landslide at a remote location in Kalimantan. If only physical damage coverage is provided, the substantial repair costs will be covered, but the losses from waiting three weeks for spare parts or the project being halted could be substantial and not covered. This could significantly harm the company.
The broker’s role here is crucial: they will assess the risk of downtime, calculate the potential business loss, and recommend additional insurance options that cover downtime or replacement equipment rental. This way, Chinese companies operating in Indonesia can rest easy knowing they’re not only protecting their equipment but also their operations.
Mistake 5: Handling claims yourself or through an agent and not using a broker who will accompany you until the claim is paid out.
One of the most fatal mistakes is assuming that once you purchase a policy through an agent or directly with the insurance company, your job is done. The reality is that when a claim occurs, the process can be complicated: documentation must be complete, the loss must be proven, an investigation must be conducted, and claims are often rejected due to missing minor requirements. If you rely solely on an agent or go directly to the insurance company without a broker to act as your advocate, you risk not receiving your policy rights.
Unlike agents who simply sell products, insurance brokers (like L&G) act as your representatives throughout the claims process: from gathering evidence, coordinating with surveyors, negotiating with underwriters, and ensuring payment. Because brokers work for you (the insured), not the insurance company, they have an incentive to ensure your claim is processed properly.
Chinese companies that choose to purchase through agents or direct typically realize this weakness when large claims arise and the timing is too late. Even without brokers, many cases of claim payments are delayed or only partially paid due to minor requirements not being met or lengthy investigations while losses continue to accrue.
Conclusion
In the scenario of heavy equipment operations in Indonesia for Chinese companies, it’s crucial to understand that insurance isn’t simply about purchasing a standard product from an agent or directly from an insurance company. To truly maximize protection, you must:
- Involve brokers who understand local Indonesian conditions and are able to design appropriate protection.
- Avoid the five common mistakes discussed: choosing a standard policy, unrealistic coverage, ignoring local operational conditions, ignoring downtime/business interruption, and not using a broker until the claims process.
- Ensure that the policy you purchase for heavy equipment insurance covers all major risks: physical damage, theft, operator/maintenance, downtime, equipment repatriation, spare parts, damage in extreme terrain, third party liability.
If you are still unsure or want to consult about how the structure should be heavy equipment insurance You are arranged in Indonesia, please contact us at L&G Insurance Broker. FREE consultation via WhatsApp 08118507773 or email halo@lngrisk.co.id. With the right broker, you’re not just buying a policy; you’re buying peace of mind that if a risk occurs, you have a team to fight for your claim until it’s paid out.
We hope this article helps you understand the importance of proper protection and avoid common mistakes. Remember: when it comes to heavy equipment insurance, an experienced broker is the difference between smooth coverage and escalating losses due to unpaid claims. Don’t wait until the risk arises; contact us now and secure your heavy equipment assets properly.
