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Equipment Breakdown
Virtually every business, institution, and municipality increasingly relies on equipment. Many commercial insurance policies, even “all-risk” property policies specifically exclude physical damage stemming from equipment failure. Increasing exposures that equipment dependence presents translates into a growing need for equipment breakdown insurance.
Equipment breakdown insurance is frequently misunderstood. To many, this specialty line – traditionally called “boiler and machinery” insurance – seems obscure or complex. The common belief is that if a business doesn’t have a boiler, than it doesn’t have exposures that require equipment breakdown insurance.
However, equipment breakdown insurance covers more than boilers. It encompasses a wide range of coverages for many types of equipment, including:
· Telecommunications systems
· Electrical systems
· Air conditioning and refrigeration
· Elevators
· Escalators
· Stand-by generators
· Pumps
· Cash registers
· Inventory control systems
· Copiers
Coverage Components Equipment Breakdown insurance covers more than the equipment itself. It pays for Property Damage, Business Income, Extra Expense, Expediting Expense and Perishable Goods. Here’s a closer look at what the policy pays for resulting from a “covered accident” as defined in a typical policy:· Property Damage – pays for the cost to repair or replace damaged equipment or other covered property, including computers, due to a covered accident. · Off Premises Property Damage – covers portable equipment that is damaged when away from covered location. · Business Income – covers the loss of business income due to an interruption caused by a covered accident from the date of loss until such equipment is repaired or replaced or could have been repaired or replaced plus additional time to allow your business to become fully operational. · Contingent Business Income – covers business income loss resulting from an equipment breakdown at the location of a key supplier or customer. · Extra Expense – pays for additional costs (e.g., equipment rental) you incur after a covered loss to maintain normal operations. · Service Interruption – extends business income and extra expense coverage resulting from a breakdown of equipment owned by a supplier with whom the insured has a contract to supply a service. If there is no contract, the equipment must be within a mile of the location. Covered services include electrical power, communications, waste disposal, air conditioning, refrigeration, heating, natural gas, compressed air, water or steam. · Perishable Goods – covers the spoilage of food, manufactured goods or other perishables following a covered accident. Also pays for loss of perishables due to ammonia contamination and for perishable goods damaged by a service interruption. · Demolition – pays for building demolition and rebuilding required by building laws. · Ordinance or Law – pays for additional costs, other than demolition, to comply with building laws or codes. · Expediting Expense – pays for the cost of temporary repairs or to expedite permanent repairs to restore business operations. · Hazardous Substances – pays for the extra cost to repair or replace covered property contaminated by hazardous substances released in a covered loss. · Data Restoration – provides protection for data and computer programs. The coverage pays to restore data that is lost or damaged due to a covered loss. · Newly Acquired Locations – pays for property damage and all other applicable coverages at newly acquired locations. · Errors and Omissions – covers locations that are not accurately described in the policy or that are inadvertently omitted. · Brands and Labels – reimburses you for the difference in revenues when you choose to sell merchandise damaged by breakdown for less than its full, premier brand value. · Waiver of In-Use Restriction – reimburses for damaged equipment even if that equipment was disconnected or not in operation at the time of the covered accident. · Computer Equipment and CFC Coverage – provided up to the applicable policy limits. This is a general summary of coverage. For all coverage terms and exclusions, please ask us for a sample insurance policy.
Claim Examples
· A power surge caused a loss of electricity and heating in hotel rooms. The surge also caused damage to the main electrical switch gear. The total loss paid was $108,602.
· A compressor motor burned out causing a partial loss of air conditioning in July thus resulting in a loss of 50% occupancy. The total loss paid was $73,366.
Minimum premiums start as low as $500.
Premium quotations may be obtained by contacting us at (407) 829-8575.
