Indonesia is currently a major magnet for foreign construction companies. Giant projects like the Indonesian Capital City (IKN), the construction of a smelter in Sulawesi, new toll roads in Sumatra and Kalimantan, and even power plants outside Java are often being undertaken by contractors from China, Korea, and Japan.
All of these projects have one thing in common: a heavy reliance on heavy equipment and construction machinery worth billions of rupiah.
Well, this is where it’s important CPM heavy equipment insurance (Contractors Plant & Machinery).
This insurance is not just a supplement to project documents but mandatory protection that ensures your heavy equipment is safe from the risks of accidents, fire, overturning, and even loss.
However, simply having a policy isn’t enough. You must ensure the policy is issued by a local insurance company licensed by the OJK and managed through a professional insurance broker such as L&G Insurance Broker.
Why should you go through a broker, not an agent or buy directly?
Because only brokers are legally obliged to defend your interests as the insured, including assisting with claims until they are paid out.
Agents work for insurance companies, while brokers work for you.
📞Contact L&G Insurance Broker for a free consultation:
Whatsapp 08118507773 | Email halo@lngrisk.co.id
Big Development, Big Risks
When a foreign company begins work on a project in Indonesia, they often bring a fleet of heavy equipment from their home country: excavators, cranes, batching plants, and even road paving equipment. The total cost can reach hundreds of billions of rupiah.
Each piece of heavy equipment operates in rugged terrain, tropical climates, and conditions very different from those of its home country. This increases the risks:
- Crane toppled during strong winds,
- Excavator sinks in muddy ground,
- Fire due to short circuit in engine,
- Theft of equipment during a long holiday project.
Without local CPM insurance, losses resulting from such incidents would fall directly on the company’s shoulders. Claims to foreign insurance companies would often be rejected because the incident occurred outside the policy area.
Therefore, every foreign contractor is required to have local CPM insurance, not just as a formality, but as real protection for project assets.
What is CPM Insurance and Why is it Mandatory in Indonesia?
Contractor’s Plant & Machinery (CPM) insurance provides protection for heavy equipment used in construction work, whether owned or rented.
The types of protection include:
- Damage due to accidents, rolling over, or falling,
- Fire, explosion and lightning strike,
- Theft, partial or total loss,
- Damage due to operator negligence,
- Risks during use and when the tool is not operating.
The Indonesian government requires all companies operating on large projects, especially public projects, to have local insurance policies. This is regulated by:
- Financial Services Authority (OJK) Regulations,
- Requirements in tender documents for government and state-owned enterprise projects,
- Joint operation (JO) provisions between foreign and local contractors.
So, even if you already have a global policy from your home country, legally that policy is not valid in Indonesia without the support of a local insurance company.
Common Mistakes Foreign Companies Make When Purchasing Insurance
Based on L&G Insurance Broker’s experience handling many foreign projects in Indonesia, here are the most common mistakes made by foreign contractors:
- Relying Only on Policies from the Country of Origin
Many companies believe a global policy from their headquarters is sufficient. However, without local endorsement, the policy has no legal force in Indonesia. When a claim arises, the foreign insurance company will refuse to pay because the incident occurred outside their coverage area.
- Buying Insurance Directly Without a Broker
Buying a policy directly from an insurance company or through an agent may seem easier, but when a claim occurs, no one is on your side.
Agents work for insurance companies, not for customers.
Only a broker can be your “advocate” in fighting for your claim to completion.
- Not adjusting the insurance value to the exchange rate and market value.
Heavy equipment is often valued based on prices in the country of origin, not in Indonesia. As a result, when claims are filed, only partial payments are made because the insured value is deemed insufficient.
- Not Involving Brokers in the Early Stages of the Project
Foreign contractors often only seek insurance when a project is nearing its start. However, brokers should be involved from the outset to assist with protection planning, risk analysis, and tender document preparation.
Why is a Broker Safer than an Agent or Direct?
To understand this difference, imagine you are facing a claim worth Rp10 billion due to heavy equipment catching fire on a project.
- If you purchase through an agent, the agent will hand over all matters to the insurance company. If a claim goes wrong, the agent has no authority to represent you.
- If you buy directly from an insurance company, you will deal directly with their claims team who will certainly try to keep the payment amount down so that it is not too large.
On the other hand, if you buy through a broker like L&G, your position is safe.
Brokers act as your official representatives. They prepare documents, negotiate with insurance companies, and ensure claims are paid according to the insured amount.
Brokers are not policy sellers, but professional risk advisors.
They work to protect you, not the insurance company.
L&G Insurance Broker: The Best Partner for Foreign Companies in Indonesia
For more than three decades, L&G Insurance Broker has been a trusted partner of many foreign companies in Indonesia.
From smelter projects in Sulawesi, cement factories in Kalimantan, to large EPC projects in Java and Sumatra, all entrust their protection to L&G.
What Makes L&G Different?
- Specialist in Construction Projects & CPM Insurance
L&G has extensive experience in preparing policies for heavy equipment, contractors and large-scale projects. - 100% Claim Assistance Until Disbursement
Not only selling policies, L&G accompanies you through every claim process until the funds are actually received. - Extensive Network with International Insurance and Reinsurance Companies
Guaranteeing maximum protection with premiums that remain competitive. - Services in English and Indonesian
Easy communication between foreign and local teams, avoiding miscommunication during the claims process. - Free and Transparent Consultation
You can have a free consultation before purchasing a policy. All recommendations are based on an analysis of your actual needs, not sales targets.
Real Case Examples in the Field
Imagine the following scenario:
A Chinese construction company is working on a toll road project in Kalimantan with 12 units of heavy equipment worth Rp 80 billion.
One morning, one of the cranes toppled due to unstable ground. Losses were estimated at Rp 6 billion.
When the company submitted a claim to its insurance headquarters in Shanghai, the claim was rejected because the policy was only valid within China.
Ultimately the project was delayed by 3 weeks and the company covered all the repair costs.
Following the incident, they began working with L&G Insurance Broker, who helped prepare a local CPM policy in accordance with Indonesian regulations.
When the next damage occurred several months later, the claim was approved and paid in full within 21 business days.
The difference in results is very clear: with a broker, risks can be controlled without a broker, losses are borne by yourself.
How Brokers Work in Managing CPM
Many foreign companies don’t realize that brokers can handle the entire process from start to finish, hassle-free. Here are the steps:
- Initial Consultation
Brokers study the project profile and the heavy equipment used. - Risk Analysis and Policy Recommendations
L&G will assess operational risks, project location and equipment value, then recommend the best type of coverage. - Comparison of Offers from Several Insurance Companies (Market Comparison)
You will receive several options complete with comparisons of premiums, limits, and guarantees. - Negotiation and Issuance of Policy
L&G negotiates with insurance companies to obtain the best coverage at the most cost-efficient rate. - Claims Assistance
If an incident occurs, L&G will directly assist you in preparing reports, coordinating with loss adjusters, and completing claim payments.
When is the Best Time to Buy CPM Insurance?
Ideally,CPM policies are purchased before the heavy equipment begins operating.
However, many contractors only realize the importance of this protection after experiencing damage or an accident.
Remember:Insurance only applies to events that occur after the policy is active.
So, the sooner you take care of it, the safer your project will be.
L&G Insurance Broker is ready to assist you from the initial planning stage through to the final project. Even if the project involves hundreds of pieces of heavy equipment and multiple locations, the L&G team will ensure all your assets are fully protected.
The Role of CPM Insurance in Indonesian Regulatory Compliance
Apart from risk factors, there are also legal obligations which need to be noted.
OJK regulations and Indonesian government tender provisions explicitly require the use of local insurance policies.
In other words, foreign companies not only need a CPM policy to protect assets, but also to meet the legal and administrative requirements of the project.
Failure to meet these requirements could have serious consequences:
- Disqualification from the tender process,
- Delay in payment of project terms,
- Audit risk and sanctions from project owners.
L&G Insurance Broker ensures all your insurance documents meet OJK standards and project contract provisions in Indonesia.
Conclusion
Entering the Indonesian construction market also means being prepared to face significant risks: rugged terrain, extreme weather, complex logistics, and the astronomical value of heavy equipment.
One accident could mean billions of rupiah in losses.
Because of that, CPM heavy equipment insurance not just a need but absolute obligation for every foreign construction company in Indonesia.
However, don’t buy policies carelessly.
Buying directly from an insurance company or through an agent may seem easy, but if a large claim occurs,No one will stand by your side.
Only professional insurance brokers such as L&G Insurance Broker the one that can:
- Provide accurate risk analysis,
- Drafting policies according to local regulations,
- Accompanying the claims process until the funds are disbursed,
- And ensure every asset of your project is fully protected.
Don’t wait until your heavy equipment breaks down to realize the importance of protection!
Secure your projects and assets with CPM heavy equipment insurance through L&G Insurance Broker, a trusted partner of foreign construction companies in Indonesia.
📞 Call now for a free consultation:
Whatsapp 08118507773
Email: halo@lngrisk.co.id
www.lngrisk.co.id
Because in the construction business, risks are certain but losses can be avoided.if you have a broker who is on your side.
