Getting Machine Insurance and Protection for Your Biogas & AD Company

Machine insurance for biogas plants is a specialised type of renewable energy insurance that provides financial protection against a range of risks. While it's primarily used for biogas facility equipment breakdown, it may also include property damage, business interruption and environmental liability.

Key Takeaways

• Biogas and AD facilities rely on complex mechanical, electrical, and biological systems that are vulnerable to breakdowns, contamination events, and equipment failure.

• Machine insurance provides financial protection against these risks, reducing downtime costs and safeguarding revenue streams from biogas, biomethane, electricity, heat, and digestate by-products.

• Policies can cover repair, replacement, business interruption, and even specialised assets like CHP engines, depackagers, feedstock pre-treatment lines, and upgrading units.

• Selecting the right protection requires assessing plant age, criticality of equipment, spare parts availability, and the consequences of outages on contracted outputs.

• Understanding exclusions and insurer expectations—such as maintenance logs, monitoring data, and proof of preventative actions—is essential to avoid rejected claims.

Running a biogas plant or anaerobic digestion facility brings together biology, chemistry, mechanical engineering, and sometimes grid-balancing energy markets—all under one roof. With this complexity comes real operating risk. Even well-designed plants can face mechanical failure, feedstock variability, contamination, and ongoing wear and tear.

That is where machine insurance and asset protection become essential.

In this article, we explain why AD plant operators increasingly rely on specialist machine insurance, what it typically covers, and what to consider before buying a policy.

Why Biogas Plants Need Machine Insurance

Biogas operations rely on continuous throughput and stable biological performance. A single equipment breakdown can disrupt that continuity and cause far-reaching operational, contractual, and financial impacts.

1. Mechanical breakdowns can stop the entire process

Key AD and upgrading machinery is highly specialised and expensive:

• Pumps

• Mixers and gas-mixing systems

• Pasteurisers

• Depackaging units

• CHP engines or biomethane upgrading skids

• Digestate separators

If any of these fail, throughput stalls, biology destabilises, and revenue halts. Machine insurance can cover the cost of repair or replacement so operators can get back online quickly.

2. Avoiding costly downtime

Many plants rely on contracted outputs—RHI, FIT, SEG, PPAs, biomethane supply contracts, or waste-gate fees. Unplanned downtime can trigger:

• Loss of income

• Contractual penalties

• Failure to meet gas-to-grid or electricity export obligations

Machine insurance often includes business interruption cover to offset these financial shocks.

3. Protection from contamination and feedstock issues

Feedstock can introduce metal, stones, glass, plastics, or other contaminants that damage:

• Shredders

• Depackagers

• Pumps

• Screw presses

• CHP engines

Insurance can cover damage arising from foreign object ingress, a common risk in food-waste-based AD plants.

4. Rising costs of spare parts and specialist technicians

OEM parts for CHP engines or gas-upgrading membranes are expensive and may involve long lead times. Insurance spreads that risk and accelerates recovery.

5. Lending, grants, and investors increasingly require it

Banks and project financiers often insist on machine insurance as part of their risk-mitigation strategy. Without it, refinancing and additional investment become harder.

What Machine Insurance Can Cover at a Biogas Plant

Typical policies include protection for:

Mechanical Breakdown

Covers sudden and unforeseen breakdowns of mechanical or electrical components essential to running the plant.

Electrical Failure

Useful in facilities with multiple VSD-controlled pumps, blowers, compressors, and SCADA-integrated systems.

CHP and Upgrading Unit Coverage

CHP engines run under high stress and are prone to:

• Turbocharger damage

• Contaminants in biogas

• Generator winding faults

• Bearing failures

Upgrading units (membrane, amine, PSA, water scrubbing) require specialist protection due to their high capital cost.

Business Interruption

Compensates for the loss of income due to equipment failure and helps maintain cash flow during repairs.

Damage from Accidental Ingress

Particularly relevant for food waste AD plants receiving variable-quality feedstock.

Environmental and Safety-Related Failures

Some policies offer add-ons for:

• Overpressure/underpressure events

• Gas flare issues

• Digestate spills (though these may fall under environmental liability cover)

Cyber Risks

With the rise of SCADA-targeted threats, some operators now extend their policies to cyber protection.

For additional context on insurance in general, the original article referenced helpful third-party explanations such as Zurich Insurance Company, Ltd’s Twitter feed. You may still link externally to sources like https://www.zurich.com/en/media/twitter for background industry content and perspectives.

How to Select the Right Machine Insurance for Your AD Plant

This policy is adaptable and assists businesses in recovering financial losses due to property damage and business interruption. If you own a business in Australia, you will find that obtaining Machinery insurance cover in Australia is a great way to protect your business interests, especially as machines can break down at any moment.

1. Map the critical machinery

Identify assets whose failure would immediately stop production:

• Feed pumps

• Mixing/recirculation systems

• CHP engine

• Biogas booster compressors

• Upgrading membranes

• Depackaging lines

These should form the core of your insured equipment list.

2. Review maintenance logs and OEM requirements

Insurers often require:

• Documented servicing

• Proof of OEM-approved lubricants, oils, and parts

• Operational monitoring data

A strong maintenance history improves claim success.

3. Evaluate the cost of downtime

Quantify the effect of outages on:

• Gas-to-grid volumes

• FIT/SEG payments

• Heat offtake agreements

• Gate fees

This will help you select the correct level of business interruption cover.

4. Understand the exclusions

Common exclusions include:

• Wear and tear

• Inadequate maintenance

• Corrosion

• Misuse

• Blockages from biological growth unless sudden and unavoidable

Knowing these helps you avoid claim disputes.

5. Consider bundled risk protection

Some insurers offer combined policies covering:

• Machinery

• Buildings

• Environmental liability

• Fleet

• Cyber

• Employer and public liability

This can reduce overall premiums.

Practical Scenarios Where Machine Insurance Helps

Scenario 1: CHP Engine Turbo Failure

A sudden oil pressure drop causes catastrophic turbocharger failure. Replacement costs exceed £35,000, and downtime halts electricity exports for eight days. Machine insurance covers:

• Replacement turbocharger

• Labour

• Lost earnings

Scenario 2: Foreign Object in Depackager

A large piece of metal enters the feedstock stream, shatters a rotor, and stops pre-treatment for five days. Insurance covers:

• New rotor

• Removal and installation

• Interruption to the plant’s gate-fee revenue

Scenario 3: Upgrading Unit Membrane Damage

High H₂S unexpectedly damages membrane elements. The cost is significant and delivery takes weeks. Insurance offsets:

• Membrane replacement

• Temporary gas-flaring losses

Machine Insurance – Conclusion

Machine insurance is not just a corporate checkbox for biogas and AD facilities. It is an operational safeguard, a cash-flow stabiliser, and increasingly a requirement for project finance and investor confidence.

The possibility of having to pay out of pocket for losses has a big impact on a company's cash flow management. However, you can easily face any machine-related uncertainty with calm if you have insurance coverage on your side. The insurance provider pays in the case of an insured incident occurring at any time. If you would like to understand how this works, you can check out https://www.investopedia.com/terms/i/insurance_claim.asp for more information.

With the right protection in place, plant operators can maintain uptime, control financial risk, and focus more on biological optimisation and efficient plant operations.

With all these features in place, you wouldn’t need to worry about accessing the provider from any part of the world. The ease that comes with conducting transactions online cannot be overemphasised. You can read this article to learn more about the benefits of electronic payments.

FAQs – Getting Machine Insurance and Protection for Your Biogas & AD Company

What is machine insurance for biogas plants?

It is a specialist insurance policy designed to cover mechanical and electrical equipment breakdowns at AD facilities, including high-value assets such as CHP engines, pumps, compressors, and upgrading systems.

Is machine insurance mandatory?

Not legally, but many banks, investors, and grant funders require it as part of project risk management.

Does it cover biological failures?

Generally no. Machine insurance covers mechanical or electrical breakdowns. Biological under-performance is typically excluded unless caused by a covered equipment failure.

What about wear and tear?

Wear and tear is one of the most common exclusions. Insurers expect evidence of proper maintenance.

Is business interruption included?

Often as an add-on. It compensates for lost revenue during insured downtime, such as loss of biomethane exports or gate fees.

Does insurance cover feedstock contamination?

Yes, if the contamination causes sudden mechanical damage (e.g., a metal object damaging a pump or depackager).

How much does machine insurance cost?

Costs vary by plant size, equipment age, operating hours, and maintenance history. Larger plants with CHP engines and upgrading units typically pay higher premiums but also gain greater financial protection.

[Published 12 January 2022. Rewritten for relevance to the AD and Biogas industry, December 2025.]