The Friedman Blog

Posted on 07/11/2011, by Jeremy Edsall

Equipment Breakdown Insurance

Since your business depends on equipment to function properly, to keep it going and to maintain a revenue stream, a breakdown could be a potentially devastating financial experience. Learn how to protect your business now.
Do You Know Your Equipment Risks?
Though technology benefits modern society and the business world with increased functionality and usability features, it also possesses many risks:
§   Threat of equipment breakdown is greater because technology is fragile and circuitry is sensitive.
§   Income is lost when equipment breaks down. Businesses rely on telecommunications, e-mail, e-commerce, etc. to survive.
§   Businesses have technology that works with one another and is connected. If one system is affected, other systems can experience damage as well.
§   Even if your business is a tenant of another facility, an equipment breakdown can affect your bottom line.
§   Obtaining the parts to fix problems can be a lengthy process.
§   Equipment may be located in parts of your facility that are hard to reach. Repairs may be hard to make and there may be no warning of a problem since the equipment is out of sight.

What are the Most Common Equipment Breakdowns?
§   Electrical systems
§   Air conditioning and refrigeration
§   Boilers and pressure vessels
§   Computers and communication equipment
§   Mechanical systems

What is Covered under Equipment Breakdown Insurance?
§   Property Damage
§   Off-Premises Property Damage – Portable equipment damaged away from the covered location.
§   Business Income – Income resulting from a covered accident until equipment is replaced or repaired. Allows for additional time after repair or replacement to assure that the business is operating at full capacity.
§   Contingent Business Income – Income lost after a breakdown at an essential customer or supplier location.
§   Extra Expense – Additional expenses incurred to keep the company going after a loss (i.e., equipment rental fees).
§   Service Interruption – Income and extra expenses after a breakdown at a supplier with whom the insured had a contract. If no contract exists, the equipment must be located within one mile of the insured’s location.
§   Perishable Goods – Food spoilage, manufactured goods or other perishable items after a covered incident.
§   Demolition
§   Ordinance or Law – Costs associated with complying with building codes and laws.
§   Expediting Expenses – Temporary or permanent repairs to get the business going again.
§   Hazardous Substances – Cleaning, repairing or replacing areas contaminated by hazardous substances after a loss.
§   Data Restoration
§   Newly Acquired Locations
§   Errors and Omissions
§   Brand and Labels – Need to sell a damaged product for less than retail price.
§   Waive of In-Use Restriction

Equipment breakdowns are common in today’s world as compared to years past because technology is more sensitive and fragile, thus making damage more common.
Are You Protected?
Problems with your business equipment can be risky, if you are not properly insured. A standard Property Insurance policy will not cover these types of losses.
To combat potential risks, Equipment Breakdown Insurance (formerly known as Boiler and Machinery Insurance) will cover you in the event of a breakdown or damage.

Disclaimer: This information is provided for informational purposes only. The information provided herein is not intended to be exhaustive, nor should it be construed as advice regarding coverage.  Eligibility for coverage is not guaranteed and all coverages are limited to the terms and conditions contained in the applicable policy. Content © 2009 Zywave, Inc.

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