Machinery Inherent Defects Insurance
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Machinery Inherent Defects Insurance

Equipment breakdown insurance for mechanical and electrical services installed in newly-constructed and refurbished buildings

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    Our comprehensive product provides cover for:

    New buildings undergoing construction
    'Shell and core' building refurbishments
    Completed buildings less than two years old

    Modern buildings are becoming increasingly complex, with up to 40% of construction costs relating to the mechanical and electrical services that support them.

    These mechanical and electrical services (often referred to as 'M&E') can be plagued by defects caused by poor design, materials or workmanship, and this can be highly problematic for the owners and occupiers of affected buildings.

    A traditional remedy has been the provision of collateral warranties by contractors. But with insolvencies in the construction and real estate sectors running at over 2,600 a year(1) in England and Wales alone, these cannot always be relied upon and can be very difficult and costly to enforce.

    Increasingly, developers, owners, funders and occupiers are turning to the security and reliability of inherent defects insurances.

    Our response

    HSB Machinery Inherent Defects Insurance has been developed to meet these risks, providing cover for the mechanical and electrical services (M&E) installed in:

    • New buildings undergoing construction
    • 'Shell and core' building refurbishments
    • Completed buildings less than two years old

    Available for periods of up to 12 years(2), our policy covers actual or impending damage caused by an inherent defect in insured property that existed prior to practical completion of the building.

    Installed services covered by our product include:

    • Boilers, space heating, ventilation and air conditioning systems
    • Lifts and escalators
    • Building maintenance units
    • Electrical distribution systems
    • Equipment used for building security and environmental control
    • Electrical and mechanical parts of water pumping, pressurisation and distribution systems

    Additional cover is also available for the loss of rental income suffered as a result of a defect. 

    Typical building mechanical and electrical support services
    Click to enlarge

    Delegated Authority/Reinsurance Solutions

    We can also provide our partners with innovative, all-encompassing equipment breakdown solutions. If you’re looking to provide specialist cover as part of your commercial proposition, contact our team.

    Why buy HSB Machinery Inherent Defects Insurance?

    Our underwriters and engineers have extensive experience in providing covers for plant and equipment in a vast array of applications and are recognised as experts in this field. Drawing on our considerable engineering expertise, we are able to provide tailored insurance products to meet the needs of developers, owners, funders and occupiers of new commercial buildings:
    • Policy wordings specifically designed for mechanical and electrical services in new buildings
    • Wordings designed with all interested parties in mind
    • Loss of rent cover available on all policies
    • Extensive expertise in building services technology
    • Access to experienced mechanical and electrical engineers
    • Access to specialist claims handlers and loss adjusters

    Claims Examples

    HSB Machinery Inherent Defects Insurance in action

    Replacement of defective drive motors
    A defect in a drive motor of a lift was discovered; this was 1 of 38 identical lifts within the building. Repairs were scheduled to replace the defective drive motors of all 38 lifts.
    A defect in one of a pair of transformers resulted in the transformer’s failure. The building went without power for two days, resulting in the building being evacuated. The second transformer also displayed signs of distress.
    Replacement of both transformers
    Loss of rental income

    Product Documentation

    Why choose HSB?

    • Leading specialist provider of engineering and technology insurance and inspection services in the UK and Ireland
    • UK-based arm of HSB Group, the equipment breakdown insurance and inspection market leader since 1866
    • Part of Munich Re, a world leader in risk solutions, consistent risk management and financial stability
    • Financially strong and stable – rated A++ (Superior) by A.M. Best Company
    • A member of the Institute of Customer Service, demonstrating our commitment to continually improving customer service performance and professionalism

    Contact Us

    (1) The Insolvency Service statistics - July 2018 (2) Cover is available for up to 12 years following practical completion of the building

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