Machinery Loss of Profit Insurance
Keep Earning While Critical Machines Are Repaired
When a key machine breaks down, the repair bill is only part of the loss. Orders go unfulfilled, fixed costs keep running and profit disappears for weeks or months. Machinery Loss of Profit (MLOP) insurance pays the gross profit you lose while production is interrupted by a breakdown covered under your Machinery Breakdown policy. MILES helps plant owners pick the critical machines, set the indemnity period and structure the cover around their real production chain.
What MLOP Insurance Covers
Lost Gross Profit
Profit lost because output fell after an insured breakdown, measured against your normal turnover in the matching period.
Standing Charges
Fixed costs such as salaries, rent, interest and insurance that continue while the plant is not producing.
Increased Cost of Working
Extra spending to keep supplying customers, such as outsourcing production or hiring temporary machines during repairs.
Agreed Indemnity Period
Pays for the loss over a maximum period you choose, linked to repair lead times for your critical machines.
Selected Critical Machines
Cover can be limited to the bottleneck machines whose failure actually stops production, keeping the premium efficient.
Works With MB Policy
Triggered by damage insured under Machinery Breakdown, so both the repair and the income loss are handled together.
What is Machinery Loss of Profit insurance?
Machinery Loss of Profit (MLOP) insurance covers the loss of gross profit and increased cost of working when a business is interrupted because insured machinery suffers a breakdown. It is the business interruption partner to Machinery Breakdown insurance and will only pay if the underlying breakdown is covered by that policy.
Fire policies and their loss of profit extensions do not respond to internal mechanical or electrical failure. MLOP closes that gap. It is part of our industrial and engineering insurance range.
What MLOP insurance covers
- Reduction in turnover: the drop in sales caused by the breakdown, compared with the same period in the previous year, adjusted for trends.
- Gross profit on that lost turnover: usually net profit plus insured standing charges, as defined in the policy.
- Increased cost of working: reasonable extra expense to avoid or reduce the fall in turnover, such as renting a machine or buying finished goods to meet orders, up to the loss it prevents.
Cover can be arranged for all machines in a plant, or for a list of critical machines only. In continuous process industries a single bottleneck, like a kiln, a turbine or a main compressor, can stop the whole line. Insuring those items carefully usually matters more than insuring everything.
What is not covered
- Interruption caused by a breakdown that is excluded under the Machinery Breakdown policy.
- The time excess, which is the first few days of interruption set as a deductible in the wording.
- Loss caused by lack of funds to repair, or by the insured choosing to upgrade the machine during repair.
- Delay caused by restrictions imposed by public authorities.
- Loss of market or customers beyond the indemnity period.
- Fire, flood and similar perils, which fall under Fire Loss of Profit insurance.
Who needs MLOP insurance
Businesses where a single machine failure can halt revenue. Typical examples are cement, steel, paper, textiles, pharma, food processing, plastics and chemicals. Power producers selling to the grid also rely on it, as do cold storage operators and hotels whose chillers or boilers are essential to operation.
How the sum insured and indemnity period are decided
Gross profit
The sum insured is the annual gross profit, calculated from audited accounts and projected forward for growth. The definition matters. Wordings commonly define it as net profit plus insured standing charges, or as turnover minus specified working expenses such as raw materials. We check that the figure matches how the policy calculates the claim, or the average clause can reduce a payout.
Indemnity period
The indemnity period is the maximum time the policy will pay for loss after a breakdown. It should be long enough to cover diagnosis, sourcing spares, shipping, repair, recommissioning and the ramp-up back to normal output. Imported parts with long lead times usually justify a longer period.
Premium
Premium depends on the machines covered, the time excess, the indemnity period, spares and standby availability, and the underlying Machinery Breakdown terms.
How MILES helps
- We work with your plant and finance teams to identify bottleneck machines and realistic repair timelines.
- We calculate gross profit on the same basis the insurer uses to settle claims.
- We align MLOP with your Machinery Breakdown and fire loss of profit policies, so an interruption is covered whatever the cause.
- We compare time excess and indemnity options across insurers to balance cost and protection.
- We coordinate the surveyor and accountant during a claim, with our claims team tracking every document.
What we need for a quote
- Audited profit and loss accounts for the last two to three years.
- Projected turnover for the coming year.
- List of machines to be covered, with capacities and ages.
- Expected repair or replacement lead time for each critical machine.
- Details of spares held, standby machines and outsourcing options.
- Your current Machinery Breakdown policy schedule.
Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.