Electronic Equipment Insurance (EEI) Malaysia

Your data centre's UPS system suffers an internal electrical fault at 2am. The cascade takes out three server racks before the backup kicks in. You check your IAR policy and discover: internal electrical fault in electronic equipment is excluded. Your machinery breakdown policy excludes electronic equipment too. Neither policy responds.

Michelle Chin, Cert CII, Co-Founder, Foundation. Reviewed 8 September 2026.

Electronic Equipment Insurance (EEI) fills this gap. It covers electronic and electrical equipment against sudden and unforeseen damage, including the internal faults that IAR and fire policies specifically exclude. For any facility where electronic equipment is the backbone of operations, EEI is not optional.

This page covers:

• What EEI covers and how it differs from IAR and machinery breakdown
• Equipment types covered under EEI
• Who needs EEI in Malaysia (data centres, factories, automated facilities)
• Premium factors and indicative rates
• Common exclusions and coverage extensions
• Claim scenarios showing how EEI responds
• What your intermediary needs to get you quoted

What Does EEI Insurance Cover?

EEI covers sudden and unforeseen physical damage to electronic and electrical equipment from any cause not specifically excluded. This includes internal faults, which is the key differentiator. Fire insurance, IAR, and standard machinery breakdown policies all exclude internal electronic/electrical faults in different ways. EEI is designed specifically to cover them.

We do not publish a rate table for this class. Rating is individual and a number quoted before underwriting is a guess, not a quotation.

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Common EEI Exclusions

EEI Claim Scenarios

How EEI Fits Your P&E Programme

What Your Intermediary Needs to Quote EEI

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Frequently Asked Questions

What does EEI insurance stand for?

EEI stands for Electronic Equipment Insurance. It is a specialist engineering insurance policy that covers electronic and electrical equipment against sudden and unforeseen physical damage, including internal electrical and mechanical faults that other property policies exclude.

Is EEI the same as machinery breakdown insurance?

No. Machinery breakdown covers mechanical equipment like motors, compressors, pumps, and turbines. EEI covers electronic equipment like servers, PLCs, switchgear, and control systems. They are companion policies. A modern factory or data centre typically needs both machinery breakdown and EEI to cover the full range of equipment.

Does IAR cover electronic equipment?

IAR covers electronic equipment against external causes of damage (fire, flood, theft, accidental impact). But IAR excludes internal electrical and mechanical faults. If your server fails due to an internal short circuit or power board fault, IAR does not respond. EEI covers exactly this gap.

Do data centres need EEI insurance?

Yes. EEI is one of the most important coverages for data centre operations. Servers, storage systems, networking equipment, UPS, and cooling controls are all electronic equipment subject to internal failure. The entire data centre revenue model depends on equipment uptime. Internal electrical faults are the primary threat, not fire.

What is the increased cost of working section?

Section II covers the additional expenses you incur to maintain operations while damaged equipment is being repaired or replaced. This includes temporary equipment rental, cloud migration costs, outsourcing production, overtime, and emergency procurement. The indemnity period should match the longest equipment replacement lead time in your portfolio.

Does EEI cover data loss?

EEI covers the cost of restoring data on storage media that is physically damaged by an insured event (external data media extension). It does not cover the inherent value of data, intellectual property, or data loss from non-physical causes like cyber attacks or software bugs. Separate cyber insurance and backup systems are needed for comprehensive data protection.

How old can equipment be and still be covered by EEI?

Most insurers will cover equipment up to 10-15 years old, depending on the equipment type and maintenance history. Very old equipment may face higher deductibles, coverage restrictions, or declinature. Equipment under active OEM maintenance contracts is more likely to be accepted regardless of age.

Can I add EEI to my existing IAR policy?

Some insurers offer EEI as an extension to IAR for smaller equipment portfolios. For significant electronic equipment values (above RM5-10 million), a standalone EEI policy is recommended because it provides broader coverage terms, specialist underwriting, and dedicated claims handling for electronic equipment.

What deductibles apply to EEI?

Deductibles vary by equipment type and total portfolio value. Typical deductibles range from RM5,000-25,000 for standard equipment to RM50,000-100,000+ for high-value items. Higher deductibles reduce premium but mean you absorb smaller claims. Choose a deductible level that eliminates nuisance claims without leaving you exposed to significant losses.

How long does an EEI claim take to settle?

Small claims (single component failure, under RM100,000) typically settle within 1-2 months. Larger claims involving multiple equipment items or Section II (increased cost of working) can take 3-6 months. Equipment with long replacement lead times (semiconductor equipment, custom switchgear) may require interim payments while awaiting final settlement.

Conclusion

Electronic equipment is the backbone of modern industrial operations. Data centres, semiconductor fabs, automated factories, and process plants all depend on electronic systems that IAR and fire policies were never designed to cover. EEI fills this gap with specialist coverage for the internal faults, power events, and accidental damage that electronic equipment is actually exposed to.

Foundation structures EEI programmes for data centre operators, E&E manufacturers, automated factories, pharmaceutical facilities, and process plants across Malaysia. We understand how electronic equipment fails, what underwriters need to see, and how to structure Section II coverage to match your actual downtime costs.