Understanding Australian Insurance Premiums for Machinery


If you own a business in any part of the world, it is imperative that you have some form of risk management. In Australia, there is something known as Insurance for Machinery. This is an insurance policy that provides cover for your production equipment as a manufacturer or producer.

Some businesspeople do not appreciate the importance of insurance and it may be because they do not understand what it is all about. In this article, we will briefly share the basics of machinery insurance to help you understand what it is and why you need it as a businessperson. Meanwhile you can read this article for information on business insurance in general.

Types of Machinery Insurance

Before we go ahead to discuss about premiums, it is important to know the types of machinery insurance that we have in Australia. These covers are in 2 major categories, and they are as follows:

Machinery Breakdown Insurance

This policy covers sudden and unexpected damage that occurs within any type of equipment due to issues such as mechanical or electrical faults or breakdowns. The cover can also extend to damage caused by lack of skill of the user or mistake made by the operator or other reasons as will be stated in the contract agreement.

Plant and Equipment Insurance

This category covers a wider range of tools and pieces of equipment used in different industries such as agriculture, manufacturing, and construction. This policy covers for breakdowns, damage, or theft.

What is a Premium?

Premium is the amount that a client pays to an insurer at specified periods for covering their risk. This amount is usually specified in the contract agreement; the agreement also includes at what periods the amount will be paid. Some contracts specify monthly payments while others specify quarterly, annually, or semi-annually.

There are many factors that affect the amount that the insured person/entity has to pay as premium. In this case, we are looking at a business entity and what they have to pay as premium for insuring their machinery.

This brings us to the next point which is …

Factors That Influence Machinery Insurance Premiums

There are many factors that influence how much you get to pay on machinery insurance premium, and they include the following:

  1. The type of machinery and its value
  2. Location of the business
  3. How the machinery is used and maintained and the operators
  4. History of the claims that have been made by the company
  5. Safety measures that are adapted in the business
  6. The extent of the policy coverage
  7. Government taxes, levies, or duties
  8. The result of your risk assessment by the insurer
  9. Discounts that you may qualify for
  10. The deductibles and excess that you choose

How to Get the Best Premiums for Your Business

The following are tips that can help you get the best premiums that will make sense for your financial situation:

  1. Increase your deductibles and excess – This means that you will take on some portion of the risk by increasing the deductibles that you have and increasing your excess.
  2. Lower your risk – This involves (amongst other things) taking steps to ensure that your machinery is well maintained and operated by any highly skilled worker.
  3. Negotiate – You can talk to your insurer and negotiate your premium based on the specific risk entailed in the use of your machinery.
  4. Comparative shopping – It is to your advantage to look up several insurers because there are different products that are offered by different insurers. You can even search for machinery insurance online to make your comparative shopping easier and more convenient. Checking out as many machinery insurance products as possible will position you for the best offer for your business.
  5. Actively look out for discounts – You may never know if you qualify for discount unless you ask for it; some insurers will never tell you without you asking.
  6. Choose annual premium– This is often cheaper than instalment payment which adds up at the end of the year.


Insuring your production equipment is a sure-fire way of managing unforeseen risks for your business. However, this insurance is not something you sign up for without due diligence; this is so that you will not fall into a penny-wise, pound-foolish situation. We have shared some basic information that we believe is a good start for your due diligence so bear them in mind going forward.