Imagine you’re working on a major project, such as building a road in a hilly area. Heavy equipment like excavators and bulldozers are constantly operating from morning until night. Suddenly, heavy rain falls on the site. Landslides occur, heavy equipment is overturned, and the project is severely damaged, bringing it to a complete halt.
The big question: who bears the costs?
If you don’t have CPM (Contractor’s Plant and Machinery) Heavy Equipment Insurance, then the answer is clear: you are responsible for everything yourself.
Losses can reach hundreds of millions or even billions of rupiah. Yet, all of this can be prevented with just a small annual premium.
This is why every contractor MUST fully understand the guarantees, risks, and exclusions in the CPM Insurance policy, so that you know what protection you are actually getting.
However, there is one thing that many contractors often forget, namely that how you purchase a policy also determines the fate of your claim later.
Many contractors buy directly from insurance companies or through agents, without realizing that if a claim is delayed, the agent cannot help.
The only ones who can help negotiate and speed up the disbursement of claims are official insurance brokers such as L&G Insurance Broker because the broker is on the side of the customer, not the insurance company.
This article will discuss in detail about:
- What are the main guarantees in CPM Insurance?
- The risks that are borne and those that are not,
- And why you should buy through an insurance broker (not an agent) so that your claim is processed smoothly and quickly.
If you would like a direct consultation to find out which CPM policy best suits your heavy equipment, contact L&G Insurance Broker at:
📞 WhatsApp 08118507773
📧 Email: halo@lngrisk.co.id
100% free consultation, no commitment required.
What is CPM Insurance and Who Needs It?
Contractor’s Plant and Machinery (CPM) insurance is a type of insurance that provides protection against damage or loss of heavy equipment due to accidents, fire, natural disasters, and human error.
This policy covers heavy equipment used in construction projects., like:
- Excavator
- Bulldozer
- Crane
- Wheel loader
- Compactor
- Dump truck
- Drilling machine, and so on.
This insurance is important not only for large contractors, but also for subcontractors, heavy equipment rental companies, and project owners who have high-value assets in the field.
Imagine a Rp 2.5 billion excavator being completely damaged. Without insurance, you’d have to replace it yourself. But with CPM, you simply file a claim, and the equipment can be repaired or replaced immediately.
Guarantees Provided by CPM Insurance
In general, CPM Insurance covers damage or loss of heavy equipment due to sudden and unexpected accidents.
The following are the main guarantees covered in it:
- Damage Due to Accidents in the Field
For example, if heavy equipment rolls over while operating on a slope, or if an excavator bucket breaks due to a heavy impact, all such physical damage is covered by the policy.
- Fire and Explosion
If heavy equipment catches fire at the project site due to an electrical short circuit or fuel explosion, the damage is covered by CPM insurance.
- Damage Due to Natural Disasters
Landslides, floods, strong winds, and even storms can cause severe damage to heavy equipment. CPM insurance protects against these natural risks.
- Theft or Attempted Theft
A CPM policy can also be extended to cover losses due to theft. For example, if a critical component like a hydraulic system or heavy equipment battery is stolen overnight.
- Human Error (Operator Error)
It’s not uncommon for operators to make mistakes—for example, forgetting to activate the handbrake, or moving the hydraulic lever incorrectly, causing the machine to hit a hard object. These types of errors are covered as long as they’re not intentional.
- Collision or Overturning While Moving
Some heavy equipment is moved from one project to another using trailer trucks. If a collision occurs or the equipment falls during the move, the damage is covered by the policy.
- Damage Due to Falling Objects
For example, if a crane is operating and the boom is hit by heavy material falling from above, the damage caused by this incident is also covered by CPM coverage.
Scope of Coverage
The CPM policy uses the “All Risks” principle, which means all physical risks not specifically excluded will be covered.
This means that as long as the damage occurs due to an unintentional cause and is not included in the list of exceptions, it can be claimed.
Some risks that are usually included in the coverage:
- Sudden and unexpected physical damage,
- Accidents during operations or breaks,
- Damage due to transportation within the project area,
- Losses due to burning equipment,
- The impact of extreme weather and unstable soil,
- Human error in operating the tool.
This policy does not cover loss of profit, so what is protected is the physical equipment, not the cost of project downtime.
Exclusions in CPM Insurance Policy
Well, this is a part that is often overlooked even though it is very important.
Many contractors think that all automatic damage can be claimed. However, there are exceptions to what you need to know so you won’t be disappointed when a claim is submitted.
Here are some of the risks that not guaranteed by CPM Insurance:
- Natural wear and tear or tool age (wear and tear)
For example, a machine breaks down due to age, wear, or lack of maintenance. This is a normal risk, not an accident. - Damage due to willful negligence
If the operator or owner intentionally uses the equipment in a damaged condition, the claim may be rejected. - Loss due to fraud or embezzlement
For example, if the equipment is rented to another party and then not returned—this is not a guaranteed risk. - Internal mechanical failure without external cause (mechanical breakdown)
If a gear, piston, or engine component fails without any external event, it is usually not covered (unless extended by an additional warranty). - War, terrorism and nuclear
All risks related to acts of war, sabotage or nuclear are not covered by default. - Damage during transportation outside the project area
CPM only covers equipment operating at the project location, not when it is being shipped between cities (that requires Marine Cargo Insurance). - Loss due to administrative negligence
For example, if the tool is lost due to incorrect recording or incorrect documentation, it is not covered by the guarantee.
By understanding this section, you can avoid wrong expectations when purchasing a policy.
Why Go Through an Insurance Broker, Instead of an Agent or Directly to the Insurance Company?
Now, this is the most important part and often determines whether your claim is paid out or stalled.
Many contractors who originate CPM insurance either from an agent or directly from an insurance company because they think they are all the same.
However, there are big differences between insurance agents and brokers:
| Aspect | Insurance Agent | Insurance Brokers (such as L&G Insurance Broker) |
|---|---|---|
| Represented party | Insurance company | Customer (contractor/equipment owner) |
| The main purpose | Selling certain products from one company | Looking forbest policy from many companies |
| Claims capability | Cannot assist with the claims process | Actively accompany, negotiate, and expedite claim disbursement |
| Police options | Limited (only from 1 company) | Many options and can be adjusted to your needs |
| Regulatory authority | Registered by insurance company | Officially licensed by OJK and directly responsible to customers |
It means:
If you buy through an agent, when a claim goes wrong, you will have to fight on your own.
But if you buy through a broker like L&G Insurance Broker, you have a professional team to accompany you from the start until your claim is disbursed.
Insurance brokers will:
- Evaluate your tool needs and value,
- Choose policies with the best premiums,
- Taking care of all documents and administration,
- Accompanying you if a claim occurs, even helping with direct negotiations with the insurance company.
When is the Right Time to Buy CPM Insurance?
The answer: before your heavy equipment goes into the field.
Once the tool starts working on a project, the risks start to run.
The sooner you protect your equipment with CPM, the less likely you are to suffer significant losses if damage occurs.
In addition, some government or state-owned enterprise projects now require contractors to have CPM Insurance before work begins.
Without this policy, you may fail to meet the tender requirements.
Real Case Example: Excavator Overturns and IDR 800 Million Claim Disbursed
One of L&G Insurance Broker’s clients in Kalimantan experienced an unexpected incident. An excavator working in a mining area overturned due to unstable soil. The nearly Rp2 billion (approximately $2 billion) unit sustained severe damage to its boom and hydraulic system.
Luckily, the equipment was insured through L&G Insurance Broker.
The L&G team immediately came down to help with the reporting process, documentation, and claim negotiations.
In less than 60 days, the Rp800 million claim was paid in full.
Imagine if the equipment was not insured, or the policy was purchased directly without the help of a broker, perhaps the claim would still not be settled.
Conclusion
Construction projects are full of risks. A single piece of heavy equipment failure can disrupt a company’s schedule, finances, and even its reputation. CPM Heavy Equipment Insurance All of these risks can be transferred to the insurance company. But remember: how you purchase the policy will significantly impact the outcome of your claim.
Don’t just buy through an agent. Don’t go directly to the insurance company. Choose the right path, use a professional insurance broker who is on your side.
L&G Insurance Broker We’ve been helping contractors across Indonesia for over 40 years, covering everything from mining to highways and ports to large infrastructure. We know how to ensure your equipment is protected and your claims are paid out quickly.
Want to Know the Best Premiums and Protection for Your Heavy Equipment?
Contact us for a free, no-commitment consultation:
📞 WhatsApp: 08118507773
📧 Email: halo@lngrisk.co.id
Because when it comes to CPM Heavy Equipment Insurance, what you need is not just a policy but a partner you can trust when you need protection most.
