Difference between HE and CPM policies

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Difference between HE and CPM policies

Sumber Gambar:  Ritchie Bros. Auctioneers

Many people often assume that between HE and CPM are the same thing. Some say that both are the same insurance, just different names. But is it true? Let's say.

Heavy Equipment (HE)


HE is an acronym for Heavy Equipment. From the term, HE insurance means insurance that covers the risks of heavy equipment (heavy equipment). Yup, right. Heavy Equipment refers to heavy duty vehicles, specially designed for carrying out construction work, and mostly related to earthworks.

Heavy Equipment Insurance Policy does not have standard wording, aka tailor made. All insurers can make heavy equipment wording with their guarantees. Therefore, the guarantee can be very broad or very standard. In most cases, HE policies are named-perils policies; only cover the risks stated in the policy. You need to read the wording before concluding the extent of your HE policy coverage.

As with motor vehicle insurance, generally the insurance period is one year. The owners of heavy equipment think that using it in the project or not is still a risk. That's why yadah insured every year and continuously extended.

What is strikingly different is on the basis of indemnity / basis of settlement when a claim occurs. In the HE policy, both partial loss and total loss use the market value. Market Value in theory means the unit price that has been subject to depreciation alias depreciation (NRV - Depreciation). In effect, every repair made will take into account depreciation so that the value of the compensation received by the insured is not maximal.


Contractor's Plant & Machinery (CPM)


From the name, the CPM policy covers the risks that occur to the vehicles and machines used by the contractor. In terms of interest insured, CPM and HE guarantee the same object of coverage. However, this CPM policy is designed to cover equipment, vehicles, or machinery used in a construction project.

Contractor's Plant and Machinery Insurance has the Munich-Re wording standard. CPM is an all risk policy. In an all risk policy, what you need to see as a customer are the policy exceptions. Just make sure that the policy exclusions don't conflict with the type of project you're working on.

The CPM policy period usually follows the construction period agreed between the contractor and the project owner. Therefore, it is not uncommon for you to find a CPM policy with a period of two to three years. If the work exceeds the time schedule, then you can apply for an extension of the insurance period. This is a natural thing.

In the standard munich rewording CPM policy, the basis for the settlement of compensation is New Replacement Value (NRV) for partial loss. So, repair or replacement of spare parts that occur will use the new price, complete with shipping costs, shipping taxes, excise duties, installation costs, and others. However, for total loss, compensation still takes into account the depreciation value.

Well, that's the difference between HE and CPM policies. If you have any questions, you can write them in the comments column.



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Difference between HE and CPM policies

Difference between HE and CPM policies

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Many people often assume that between HE and CPM are the same thing. Some say that both are the same insurance, just different names. But is it true?
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Sumber Gambar:  Ritchie Bros. Auctioneers

Many people often assume that between HE and CPM are the same thing. Some say that both are the same insurance, just different names. But is it true? Let's say.

Heavy Equipment (HE)


HE is an acronym for Heavy Equipment. From the term, HE insurance means insurance that covers the risks of heavy equipment (heavy equipment). Yup, right. Heavy Equipment refers to heavy duty vehicles, specially designed for carrying out construction work, and mostly related to earthworks.

Heavy Equipment Insurance Policy does not have standard wording, aka tailor made. All insurers can make heavy equipment wording with their guarantees. Therefore, the guarantee can be very broad or very standard. In most cases, HE policies are named-perils policies; only cover the risks stated in the policy. You need to read the wording before concluding the extent of your HE policy coverage.

As with motor vehicle insurance, generally the insurance period is one year. The owners of heavy equipment think that using it in the project or not is still a risk. That's why yadah insured every year and continuously extended.

What is strikingly different is on the basis of indemnity / basis of settlement when a claim occurs. In the HE policy, both partial loss and total loss use the market value. Market Value in theory means the unit price that has been subject to depreciation alias depreciation (NRV - Depreciation). In effect, every repair made will take into account depreciation so that the value of the compensation received by the insured is not maximal.


Contractor's Plant & Machinery (CPM)


From the name, the CPM policy covers the risks that occur to the vehicles and machines used by the contractor. In terms of interest insured, CPM and HE guarantee the same object of coverage. However, this CPM policy is designed to cover equipment, vehicles, or machinery used in a construction project.

Contractor's Plant and Machinery Insurance has the Munich-Re wording standard. CPM is an all risk policy. In an all risk policy, what you need to see as a customer are the policy exceptions. Just make sure that the policy exclusions don't conflict with the type of project you're working on.

The CPM policy period usually follows the construction period agreed between the contractor and the project owner. Therefore, it is not uncommon for you to find a CPM policy with a period of two to three years. If the work exceeds the time schedule, then you can apply for an extension of the insurance period. This is a natural thing.

In the standard munich rewording CPM policy, the basis for the settlement of compensation is New Replacement Value (NRV) for partial loss. So, repair or replacement of spare parts that occur will use the new price, complete with shipping costs, shipping taxes, excise duties, installation costs, and others. However, for total loss, compensation still takes into account the depreciation value.

Well, that's the difference between HE and CPM policies. If you have any questions, you can write them in the comments column.

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