What is the CPM (Contractor’s Plant & Machinery) Insurance Premium Rate?

In the construction, mining, and infrastructure sectors, heavy equipment (plant and machinery) is the backbone of ensuring projects run on schedule. Excavators, bulldozers, cranes, dump trucks, and batching plants worth billions of rupiah are used daily to expedite construction. The investment is substantial, so even the slightest malfunction can significantly impact productivity, costs, and safety.

A common question asked by equipment owners, renters, contractors, and buyers is: “How much does CPM insurance premium cost?” For many companies, insurance premiums are considered an additional expense, when in fact, they are an investment in protecting valuable assets.

This is where the role of an experienced insurance broker like L&G Insurance Broker becomes crucial. From the outset, brokers help analyze needs, negotiate competitive premium rates, and ensure coverage aligns with the characteristics of the equipment and the work location. This article will comprehensively discuss the types of equipment covered, the risks involved, examples of losses, types of CPM insurance policies, premium rate determinants, claims procedures, and the vital role of brokers in assisting companies.

Contact L&G Insurance Broker now at Phone number 08118507773 for a free consultation before the risks haunt your business.

What is CPM Insurance?

Contractor’s Plant & Machinery (CPM) is an insurance policy that provides coverage for heavy equipment used in construction, mining, plantation, and infrastructure projects. This coverage applies to both owned and hired/leased equipment.

Some types of heavy equipment that are usually covered by a CPM policy:

1. Excavator & Backhoe → digging and moving soil/rock.
2. Bulldozer → level the ground surface.
3. Dump Truck & Hauler → transporting mining or construction materials.
4. Crane (crawler, tower, mobile crane) → lift and move heavy loads.
5. Loader & Grader → road and infrastructure works.
6. Batching Plant, Crusher Plant, Asphalt Mixing Plant → supports road and building construction.

The CPM policy is “all risks”, meaning it covers sudden and unexpected physical loss or damage due to accidents, except for risks that are specifically excluded.

Uses of CPM Insurance

1. Asset protection → the value of heavy equipment can reach billions to hundreds of billions of rupiah.
2. Maintaining project smoothness → avoiding downtime due to uncovered damage.
3. Meeting contract requirements → many projects require contractors to have CPM coverage.
4. Increase credibility → companies with insurance protection are seen as more professional by project owners and investors.
5. Reducing financial burden → losses are not borne by the individual, but are transferred to the insurance company.

Risks Faced by Contractor’s Plant & Machinery

1. Workplace accidents – collisions between heavy equipment, overturning, or falling into ravines.
2. Technical failure – due to operator negligence, overloading, or mechanical error.
3. Natural disasters – floods, earthquakes, landslides, storms, and forest fires.
4. Fires and explosions – both from engines and external factors.
5. Theft and robbery – heavy equipment parked in open areas is vulnerable to theft.
6. Losses during transportation – when equipment is moved from one project location to another.

Example of Loss Case

1. A bulldozer caught fire in Kalimantan due to an electrical short circuit, causing losses of up to Rp 4 billion.
2. An excavator overturned into a river during embankment construction. Repairs cost Rp 2 billion.
3. A mobile crane collapsed due to strong winds at a port project, resulting in claims totaling Rp 6 billion.
4. A dump truck was stolen during a palm oil plantation project, resulting in a loss of Rp 1.5 billion.
5. A batching plant was damaged by flooding during a toll road project. Repair costs were Rp 10 billion.

Without CPM insurance, the contractor or equipment owner must bear the costs themselves.

Types of Insurance for Heavy Equipment

1. In addition to the CPM policy, there are additional guarantees and related insurances:
2. Third Party Liability (TPL) → protects against third party claims due to equipment accidents.
3. Property All Risks (PAR) → if the equipment is permanently placed in the workshop or site.
4. Workmen Compensation / Jamsostek → protects operators and workers from accidents.
5. Marine Cargo / Inland Transit → protects equipment when it is shipped from the factory/importer to the site.
6. Business Interruption → covering losses due to operational downtime.

Factors Affecting CPM Premium Rates

1. Type of equipment & coverage amount – the more expensive and complex, the higher the premium.
2. Work locations – projects in mines, plantations, or flood-prone areas are at higher risk.
3. Type of work – equipment used in wet risk (offshore, river, dam) is subject to higher rates than dry projects.
4. Older equipment is more prone to damage, premiums are higher.
5. Owner contractor track record – frequency of previous claims affects rates.
6. Type of policy coverage – whether standard or with additional extensions (TPL, flood, earthquake).

CPM Insurance Premium Rate Estimate

Referring to market practices and OJK references:

• Excavator Rp 5 billion → rate ±0.75% per year → premium Rp 37.5 million.
• Bulldozer Rp 7 billion → rate ±0.75% → premium Rp 52.5 million.
• Dump truck Rp. 2 billion/unit → rate ±0.90% → premium Rp. 18 million.
• Mobile Crane Rp. 10 billion → rate ±0.90% → premium Rp. 90 million.
• Batching Plant Rp 20 billion → tariff ±0.40% → premium Rp 80 million.

Note: These rates are indicative. Actual premiums depend on equipment condition, project location, type of work, and negotiations with the insurance company.

CPM Insurance Claim Procedure

1. Initial report immediately after the incident.
2. Damage survey by independent loss adjuster.
3. Document collection: policy, equipment invoice, chronology report, damage photos.
4. Claims analysis by insurance companies.
5. Claim payments according to policy provisions.

With a broker, the claims process is faster and the results are more optimal because the broker acts as a customer advocate.

Factors That Determine CPM Insurance Claims

In practice, Contractor’s Plant & Machinery (CPM) insurance claims are not always automatically paid in full. Several factors influence whether a claim is accepted, its amount, and how quickly it is resolved.

• Compliance with police requirements

Each policy has specific clauses and exclusions. If the loss occurs due to an uninsured cause (such as wear and tear or willful negligence), the claim may be denied.

• Complete documentation

CPM policies require equipment owners to submit damage reports, photographs, invoices, and technical reports from mechanics or surveyors. Incomplete documentation often delays or reduces the value of claims.

• Chronology of events

Claims that are clear, coherent, and reported promptly after the incident have a higher chance of being approved. Delays in reporting are often considered an indication of moral hazard.

• Sum insured

If the asset is insured below market value (underinsurance), the average clause principle will apply so that the claim is only partially paid.

• The role of insurance brokers

Brokers help ensure claims are prepared according to procedure, minimize disputes with insurance companies, and fight for clients’ rights to maximize claim payments.

By understanding these factors, owners or contractors can reduce the risk of claims being rejected and ensure heavy equipment is optimally protected.

CPM Insurance Claim Case Simulation

Case:

A contractor company was using an excavator with a market value of Rp 5 billion for a dam construction project. During excavation work, the excavator toppled into the river due to a sudden landslide. The equipment sustained severe damage to its engine, hydraulics, and electrical systems.

Cost of loss:

1. Engine & hydraulic repairs: Rp 2.8 billion
2. Cost of evacuating equipment from the river: Rp. 200 million
3. Total loss: Rp. 3 billion

Police provisions:

1. Insurance value: IDR 5 billion
2. Annual premium: 0.3% × Rp 5 billion = Rp 15 million
3. Deductible (own risk): IDR 100 million per claim

Claim process:

1. The contractor reports to the insurance broker within 24 hours.
2. The broker forwards the report to the insurance company & appoints a loss adjuster.
3. Survey conducted, losses verified amounting to Rp. 3 billion.
4. Police happens, loss is guaranteed.

Claim calculation:

1. Loss of IDR 3 billion – Deductible IDR 100 million = IDR 2.9 billion paid by insurance.
2. Important Lessons
3. Without CPM insurance, the contractor would have had to cover the full Rp 3 billion loss.

With a premium of only IDR 15 million per year, claims of IDR 2.9 billion can be paid → the return on risk transfer is very large.

The Important Role of Insurance Brokers

Why should you use an insurance broker like L&G Insurance Broker?

1. In-depth risk analysis according to tool and project type.
2. Negotiate premiums to be more competitive than direct placement.
3. Develop policy wording that suits your needs, not manufacturer standards.
4. Claims assistance until payment is complete.
5. Access to multiple insurance companies for a wider choice.
6. Providing education & risk management strategies to reduce long-term premium costs.

Conclusion 

Contractor’s Plant & Machinery (CPM) insurance is a vital tool for protecting heavy equipment in construction, mining, and infrastructure projects. The high value of the equipment and the high risk involved make this insurance mandatory for owners, lessees, and contractors.

CPM premiums are determined by several factors: equipment value, age, project location, type of work, and claims history. Estimated premiums range from 0.25%–0.5% per year of the equipment’s value. This figure is significantly lower than losses due to damage or loss, which can reach billions of rupiah.

To ensure efficient premiums with maximum coverage, use the services of an experienced insurance broker like L&G Insurance Broker. With L&G’s support, you’ll not only get the best rates, but also coverage that perfectly fits your needs and comprehensive claims assistance.

👉Don’t leave your heavy equipment unprotected. Contact L&G Insurance Broker today to get a CPM premium simulation tailored to your project needs.

DON’T WASTE YOUR TIME AND SECURE YOUR FINANCES AND BUSINESS WITH THE RIGHT INSURANCE.

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