Introduction to engineering insurance
The Insurance Act defines Engineering insurance as the business of effecting and caring out contracts of insurance of various perils arising out of plant and machinery, such as explosion and collapse of boilers, breakdown of electrical and mechanical plant and lifts and cranes and resultant of damage to the insured surrounding property and liability to third parties there from.
The policy covers a multiple of of risks, the cover available depends on the type of the plant insured. In general, the policy covers own breakdown of machinery and damage by extraneous causes. It also covers:
- Cost of repair of own surrounding property damaged by plant for example in the case of explosion.
- Breakdown of specific items of plant and machinery
- Legal liability for injury caused by damage to, or breakdown of specific items of plant and machinery.
- Inspection services of machinery.
The statutory requirement for inspection is at the moment provided for under the Occupational Safety and Health Act(OSHA) 2007. The objective of the Act is to provide for safety, health and welfare of workers and all persons lawfully present at the work places and provide for the establishment of the National Council for Occupational safety and health, whose main duties are among others to;
- Formulate and develop a policy framework for national occupational safety and health
- Develop a strategy for promoting best practice for occupational safety
- Review the provisions of OSHA, rules and regulations, standards and the industry code of practice to ensure their continued relevance
The Act provides that every steam boiler, all its fittings and attachments shall be thoroughly examined by an approved person, at least once every once in every period of 12 months and also after modification or extensive repair, provided that the person carrying out any such examination may specify in writing a period exceeding twelve months but not exceeding such 15 months within which the next examination will be carried.
Provisions of the OSHA 2007
- Every cylinder for compressed, liquefied and dissolved gases and its fittings, shall be so designed as to be suitable for the particular circumstances of their use.
- Every refrigeration plant capable of being entered by an employee shall, have control valves situated outside the cold storage rooms and have all doors of cold storage room capable of being opened easily and quickly from inside and outside.
- Every steam boiler and all the fittings and attachments shall be of good construction, sound material, and adequate strength and free from patent defect, and shall be properly manned.
- Every lifting machine shall be of good construction, sound material and adequate strength and free from patent defect and shall be properly maintained.
It is a legal requirement that a report be issued in a prescribed format after every inspection, giving full details of the conditions of a plant plus any useful observation which may affect the conditions of safety and efficiency of the equipment.
The service is of an utmost value both to the insurer and the insured, in that the main object is to prevent the occurrence of mishaps by detecting incipient faults and arranging for their correction before they develop far enough to cause a breakdown. if this objective is achieved, the insurer is saved the cost of paying a heavy claim for repairs and damages and the insured in production. It is for this reason that insurers will undertake an inspection without insurance, but they will not undertake insurance without inspection, however, though accidents and damages can be minimized by proper care and maintenance, it is possible to eliminate such accidents.