In recent years, Indonesia has become a fertile ground for foreign construction companies. Major infrastructure projects like the Indonesian Capital City (IKN), a smelter in Sulawesi, a toll road in Sumatra, and a power plant in Kalimantan are being undertaken by numerous contractors from China, Korea, Japan, and Europe.
But behind these great opportunities, there is a risk that is often overlooked: heavy equipment damage in the field.
A single crane or excavator is worth billions of rupiah. If it’s damaged or overturned, losses can reach hundreds of millions to billions of rupiah in an instant.
This is the reason why CPM heavy equipment insurance (Contractors Plant & Machinery) is very important, it can even be said to be a must for all foreign companies operating in Indonesia.
Unfortunately, many foreign contractors still don’t understand how the Indonesian insurance system works. Many purchase insurance directly from insurance companies or through agents, unaware that only insurance brokers are legally responsible for representing the interests of the insured (customer).
If a large claim occurs, an agent can’t help. A broker can.
And in Indonesia, the big name that has been proven to help foreign companies in hundreds of projects is L&G Insurance Broker.
📞 FREE consultation now!
Whatsapp 08118507773 | halo@lngrisk.co.id
Find the best solution for your CPM heavy equipment insurance before the project starts.
True Story: Losing Hundreds of Millions Just Because You Don’t Have Insurance
Just imagine this.
A Chinese construction company is working on a dam project in Sulawesi. They are bringing more than 15 units of heavy equipment: excavators, bulldozers, dump trucks, and large cranes.
One night, heavy rains lashed the project site. A landslide struck one of the heavy equipment units, causing extensive damage. Repairs were estimated at Rp 600 million.
Unfortunately, the company has not had the opportunity to purchase a local CPM insurance policy because it considers the protection from its headquarters in China to be sufficient.
When they filed a claim with the central insurance, the answer was disappointing:
“Sorry, the incident is outside our area of responsibility.”
Losses must be borne alone.
The project stalled for two weeks, operational costs ballooned, and the company’s reputation in the eyes of the project owner declined.
Cases like this are not rare.
Every year, many foreign companies in Indonesia lose hundreds of millions of rupiah simply because they don’t understand the obligations and insurance systems of local CPM heavy equipment.
Why Foreign Projects Must Have Local CPM Insurance
Indonesia has a clear rule: every contractor working on a large project, especially a government or state-owned enterprise project, is required to have local insurance licensed by the OJK.
Policies from abroad are not legally recognized, because:
- The project location is outside the policy area,
- There is no legal standing for foreign insurance companies to process claims in Indonesia,
- Government tender regulations require all insurance to be done through local companies.
So, even if you have coverage from your head office, you still need a local CPM policy to work on Indonesian projects safely and legally.
What exactly is CPM insurance?
Contractor’s Plant & Machinery (CPM) insurance is a type of insurance that provides protection for heavy equipment used in construction projects.
The protection includes:
- Damage due to accidents in the field,
- Fire or explosion,
- The tool is overturned, stuck, or dropped,
- Partial or total theft,
- Damage due to operator negligence,
- Natural disasters such as landslides or floods.
In short, all physical risks that cause the equipment to become unusable will be covered by the CPM policy, as long as the cause is not due to negligence that is excluded in the policy.
So, if a unit of heavy equipment worth Rp 2 billion is damaged due to a rollover, the company doesn’t have to pay out of the project’s cash flow. An insurance claim will cover the repair or replacement costs.
Major Risks in Indonesian Projects
Indonesia’s geographical and climatic conditions are very different from those of the countries of origin of most foreign contractors.
This is where the risks arise:
- High rainfall and unstable soil in Kalimantan and Sulawesi cause cranes or excavators to easily overturn.
- Projects in remote areas are prone to theft of machine components.
- Transportation between project locations often causes equipment to be damaged due to uneven roads.
- HumidityHigh temperatures cause the engine to corrode quickly.
Without insurance coverage, one small incident can become a major loss that hurts project cash flow and delays completion schedules.
Fatal Mistakes Often Made by Foreign Companies
Over the years of assisting many foreign projects, L&G Insurance Broker has discovered several classic mistakes that are often repeated:
- Thinking Global Insurance is Enough
While global policies are only valid in the country of origin, if an incident occurs abroad, the claim is immediately denied.
- Buying Through an Agent
Agents only act as intermediaries for policy sales. If a claim arises, they have no negotiating power or defense on your behalf. Agents work for the insurance company, not the customer.
- Not Involving Brokers From the Start
Many companies only seek out brokers once a project is already underway. However, brokers can assist with planning, including analyzing risks, adjusting insurance coverage, and preparing tender documents.
- Lowering the Coverage Value for Cheap Premiums
Low premiums are tempting, but if the insured value does not match the actual price of the equipment, the claim will only be paid partially.
Why Insurance Brokers Are Safer Than Agents or Buying Directly
Imagine you’ve just suffered an Rp 800 million loss due to an excavator fire on a construction site. If you purchased your policy through an agent or directly from the insurance company, who will help you prepare the claim documents, negotiate with the loss adjuster, and ensure the claim is paid in full?
The answer is: none.
But if you work with an insurance broker, it’s a different story.
Brokers work for you, not for insurance companies.
By law (referring to POJK No. 70/POJK.05/2016), insurance brokers are required to defend the interests of the insured. They act as risk advisors, protection consultants, and claims advisors.
So when a problem arises, you’re not alone in facing the insurance company. Brokers like L&G Insurance Broker will fight for your rights until your claim is fully settled.
How Brokers Work to Protect Foreign Companies
L&G Insurance Broker doesn’t just sell policies.
They provide a 360° service covering all stages of project protection:
- Risk Analysis and Policy Recommendations
Brokers assess project conditions, heavy equipment used, and field risks. - Market Comparison
L&G will search for quotes from some of the best insurance companies in Indonesia and provide detailed comparisons so you know the most efficient choice. - Premium and Guarantee Negotiation
Brokers negotiate with insurance companies to get the best coverage at the most cost-effective rate. - Policy Issuance and Administration
All documents are regulated in accordance with OJK regulations and project provisions (including JO between local and foreign companies). - Claims Assistance
When an incident occurs, the L&G team will assist with everything from evidence collection and reporting to the investigation process with loss adjusters and insurance companies.
Advantages of L&G Insurance Broker Compared to Others
For over 30 years, L&G has been a strategic partner for many foreign companies operating in Indonesia. The following are the advantages that have earned L&G the trust of hundreds of clients in the construction sector:
- Specialist in Project Insurance and Heavy Equipment CPM
L&G is not a general broker. They focus on construction, infrastructure, and energy projects—the most complex areas of insurance. - Claims Completed, Not Promises
L&G’s claims team is experienced in handling major cases and has proven successful in disbursing claims worth billions of rupiah. - Wide Network of Insurance & Reinsurance
With access to many major insurance companies in Indonesia and abroad, L&G can ensure maximum protection. - Tim Bilingual
Smooth communication between foreign and local teams, without any technical miscommunication. - Free & Transparent Consultation
Before you purchase, the L&G team will explain all aspects of the coverage at no cost. No pressure, no hidden markups.
Case Study: Claiming Success with L&G
A Korean company working on a coal-fired power plant (PLTU) project in Sumatra caught fire during operation, causing losses of Rp 1.2 billion.
Because the policy was prepared by L&G Insurance Broker, the claims process was smooth:
- Claim reports are prepared within 48 hours,
- Negotiations with the loss adjuster were facilitated directly by the L&G team,
- Full claim payment will be disbursed within 26 working days.
The client now entrusts all of its project policies in Indonesia to L&G, including CAR/EAR insurance and liability coverage.
What Happens If You Don’t Have CPM Insurance?
Without CPM insurance, companies face significant risks:
- Direct Financial Loss
The cost of repairing damaged heavy equipment can reach hundreds of millions per unit. - Delayed Project
Broken heavy equipment brings work to a halt, triggering delay penalties from the project owner. - Reputational Loss
Delayed projects reduce the trust of project owners and local partners. - Failed Project Audit or New Tender
Many large projects, especially from the government, require active insurance as a mandatory tender document. - Lost Business Opportunity
Without a policy that complies with local regulations, foreign companies may be deemed legally non-compliant.
The Right Steps for Foreign Companies in Indonesia
To keep your project safe from risks, take the following steps:
- Involve an Insurance Broker From the Start
Let a broker like L&G help analyze your needs and develop a protection strategy. - Use a Local Policy from an OJK Licensed Insurance Company
This is important for legal validity and ease of claims. - Ensure the Insurance Value Matches Market Prices in Indonesia
Don’t be underinsured, it’s better to have a slightly higher value than a claim that is only partially paid. - Prepare Claim Documents with Broker Assistance
The broker will ensure that all documents are complete so that the claim is not rejected.
Cover
In the construction industry, risk is part of the game. But losses don’t have to be a reality.
Without CPM heavy equipment insuranceForeign projects in Indonesia can lose hundreds of millions of rupiah due to a single minor incident. And worse, without an experienced insurance broker, your claim could be halted mid-process.
That’s why hundreds of foreign companies choose L&G Insurance Broker as their project protection partner in Indonesia. Because when risks arise, only a broker truly stands by you.
📞 FREE consultation now!
Whatsapp: 08118507773
✉️ Email: halo@lngrisk.co.id
🌐 www.lngrisk.co.id
