Foreign Infrastructure Projects in Indonesia Are Increasing, But Have You Prepared for CPM Insurance?

Infrastructure development in Indonesia is progressing rapidly. From the IKN (Indonesian Capital City) project, new toll roads in Sumatra and Kalimantan, to smelters and power plants, all underway by foreign contractors, primarily from China, Korea, and Japan.

However, behind the enthusiasm for construction, there is a big risk that often goes unnoticed: damage to heavy equipment and project machinery.
A single crane, excavator, or batching plant is worth billions of rupiah, and under extreme working conditions, the risk of accidents can occur at any time.

This is the reason why every foreign construction company is required to have CPM heavy equipment insurance (Contractors Plant & Machinery) while operating in Indonesia.

But don’t just buy! The insurance system in Indonesia is different from that in other countries. If you buy directly from an insurance company or through an agent, you won’t have a claim representative.

Unlike insurance brokers such asL&G Insurance BrokerIt’s your legal obligation to defend your interests, not the insurance company. If a major claim arises, only a broker will fight for your rights until the claim is fully paid.

📞 FREE consultation now at 08118507773 or send an email to halo@lngrisk.co.id

Find the best coverage for your CPM heavy equipment insurance project before the risk becomes a reality.

The Influx of Foreign Contractors into Indonesia

Indonesia is currently in the global spotlight. The government is pushing infrastructure projects worth trillions of rupiah, with many foreign contractors involved.

• The IKN project in East Kalimantan is dominated by companies from China, Korea, and Japan.
• In Sulawesi, Chinese mining and smelting companies are building nickel processing facilities.
• In Java and Sumatra, contractors from Korea and Japan are working on toll road, MRT, and power plant projects.

Each major project involves hundreds of pieces of heavy equipment: cranes, loaders, bulldozers, excavators, and batching plants. All are highly valuable and vital to the smooth running of the project.

The problem is, many contractors come to believe that global insurance from their home country is sufficient.
In reality, foreign policies are not valid in Indonesia without cooperation with a local company licensed by the OJK.
When damage occurs in the field, claims from abroad are immediately rejected.

The Hard Facts on the Ground: Real Risks in Indonesian Projects

Indonesia is not a country with easy construction terrain. Unstable soil, high rainfall, long logistics routes, and extreme weather often trigger heavy equipment breakdowns.

Here are some real risks that often occur in field projects:

• The crane collapsed due to the ground collapsing.
• The excavator got stuck in a swampy area during heavy rain.
• Dump truck burning in the mining area.
• Batching plant damaged by lightning.
• Theft of equipment components at night.

Each such incident can result in losses ranging from hundreds of millions to billions of rupiah. Without CPM insurance, the company would be left to cover the costs themselves, and the project could be brought to a complete halt.

What is CPM Insurance and Why is it Important for Foreign Projects?

Contractor’s Plant & Machinery (CPM) insurance provides protection for heavy equipment used in construction projects, whether owned or rented.

CPM insurance coverage includes:

• Damage due to accidents at the project site,
• Fire, explosion, lightning strike, or landslide,
• Damage due to the tool being rolled over or dropped,
• Theft and loss of some components,
• Damage due to operator negligence.

In other words, CPM is a “financial safety belt” for every contractor. If heavy equipment breaks down, an active CPM policy can cover repair costs or even a total replacement. Specifically for foreign contractors in Indonesia, this policy must be issued by a local insurance company in accordance with OJK regulations and government/state-owned enterprise project tender requirements.

Mistakes That Still Often Occur Among Foreign Companies

Over the years of handling international projects, L&G Insurance Broker has discovered a recurring pattern of mistakes in foreign companies new to Indonesia:

1. Not Knowing That Local Insurance Is Mandatory

Many companies assume that foreign policies can be used anywhere. However, legally, foreign policies cannot be used as the basis for claims in Indonesia.

2. Buying a Policy Through an Agent

Agents can sell policies, but they work for the insurance company, not you. If a claim arises, the agent has no obligation to assist you in seeking payment.

3. Not Involving Brokers from the Start

As a result, the purchased policy doesn’t match the project’s characteristics or the equipment used. Claims are ultimately difficult to approve due to inappropriate policy wording.

4. Not Taking Local Market Value into Account

Foreign companies often value their equipment in the home currency, but claims valuations in Indonesia follow local market prices in rupiah.

All these mistakes can be avoided with one simple step: use an experienced local insurance broker like L&G Insurance Broker.

The Important Role of Insurance Brokers in Foreign Projects

Brokers are more than just intermediaries selling policies. They are professional risk advisors who understand Indonesian law, business culture, and claims systems.

Unlike agents or direct insurance companies, brokers are completely on your side. They ensure the policy you purchase meets your needs, and in the event of a claim, the broker will fight for your rights to the fullest extent.

Some of the important roles of insurance brokers in foreign projects include:

1. Providing Education and Risk Analysis
   Brokers assess every risk in your project, from the type of equipment, terrain conditions, to the duration of the project.
2. Preparing Quotes from Multiple Insurance Companies
   Not tied to one company, brokers compare various options to ensure maximum guarantees with efficient premiums.
3. Preparing Tender and Contract Documents
   Many large projects require specific insurance documentation. Brokers ensure all these requirements are met.
4. Accompanying During Claims
   When an accident occurs, the broker helps prepare reports, coordinates with loss adjusters, and ensures claims are paid at their proper value.
5. Maintaining Long-Term Relationships
   Brokers don’t stop after the policy is issued. They continue to assist throughout the project’s life.

Why Choose L&G Insurance Broker?

Not all brokers have experience handling foreign projects. But L&G Insurance Broker has been trusted by international contractors for over 30 years on various major projects in Indonesia.

Here are the reasons why L&G is the top choice:

• CPM Construction Project and Heavy Equipment Specialist
  Focus on infrastructure and energy sectors, not just general insurance.
• Experienced in Handling Foreign Companies
  The L&G team is accustomed to working with companies from China, Korea, Japan, Europe and the Middle East.
• Claims Assistance from Initial to Disbursement
  When a claim occurs, the L&G team goes directly to the field and assists with the entire administrative process until payment is completed.
• Transparent and Independent
  L&G is not tied to any single insurance company. Its goal is one: to provide the best policy for its clients.
• Bilingual Communication (English & Indonesian)
  Ensuring there is no miscommunication between local and expatriate teams.

Field Case: When CPM Insurance Saves a Project

A Japanese company working on a power plant project in Sulawesi had 10 units of heavy equipment. One of their cranes toppled due to heavy rain and ground subsidence. Losses are estimated at Rp 900 million.

Fortunately, from the start they were equipped with a CPM heavy equipment insurance policy prepared by L&G Insurance Broker.

L&G acted quickly:

• Assist in reporting claims within 24 hours,
• Compiling technical documentation and field photos,
• Coordinate with surveyors and insurance companies.

The result? 100% of the claim was disbursed within 30 business days. The project was able to continue without any financial disruption.

This is real proof that having an experienced broker can save a project from huge losses.

Major Impacts If a Project Doesn’t Have CPM Insurance

Many foreign contractors think, “If it breaks, we’ll just fix it ourselves.” But the risks are far greater than that.

Without CPM insurance, you face:

1. Direct Financial Loss
   The cost of repairing heavy equipment can reach hundreds of millions of rupiah, even billions.
2. Project Delays
   Broken heavy equipment can stop work, causing schedule delays and potentially incurring penalties from the project owner.
3. Reputation at Risk
   Projects that fail to meet deadlines can damage a company’s reputation in the eyes of both project owners and local partners.
4. Legal Issues
   Many government or state-owned enterprise projects require active insurance. Without a local policy, you could be considered in breach of contract terms.
5. Claim Cannot Be Processed
   If you buy a policy directly or through an agent, when a large claim occurs, there is no one to defend you.

Why is Buying Through a Broker Safer than an Agent or Directly?

If you buy directly from an insurance company, you won’t receive any assistance in the event of a claim. If you buy through an agent, their sole responsibility is to sell the policy, not to advocate for your interests.

But with a broker like L&G Insurance Broker, you have a professional partner who acts as an advisor, liaison, and advocate when problems arise.

It is the broker who:

• Ensuring policy wording is appropriate to project risks,
• Assist in negotiating claims to get paid in full,
• Organize all administrative documents,
• Protecting your interests at every stage.

Brokers are your business shield in the insurance world.

Safe Steps Before Project Start

Before starting the project, make sure you have done the following steps:

1. Contact a Trusted Insurance Broker
   Let the broker analyze your needs and develop the most suitable protection solution.
2. Make Sure the Policy is Issued by a Local Insurance
   Only local policies are recognized by the OJK and can be used in government project tenders.
3. Conduct an Annual Review
   Project conditions and equipment values ​​are subject to change. Brokers will assist with adjustments to ensure optimal protection.
4. Prepare a Claims Team with the Broker
   Don’t wait for an incident. Prepare a claims plan early to expedite the process if a loss occurs.

Conclusion

The expansion of foreign infrastructure projects in Indonesia presents a significant opportunity, but also carries significant risks. Heavy equipment is the backbone of projects, and a single incident could result in losses of hundreds of millions of rupiah.

Because of that, CPM heavy equipment insurance It’s not just a formality. It’s absolute protection to keep your investments safe in Indonesia. And to ensure a smooth claim process, don’t buy insurance through an agent or directly from an insurance company. Only brokers like L&G Insurance Broker who will accompany you from the beginning until the claim is actually disbursed.

📞 Contact us for a FREE consultation via WhatsApp 08118507773 or Email halo@lngrisk.co.id