EQUIPMENT BREAKDOWN INSURANCE FAQ
(FREQUENTLY ASKED QUESTIONS)
Equipment Breakdown
Insurance works a lot like other types of commercial insurance. But
when some people hear the old phrase "boiler and machinery" they
think they have to be an engineer to understand it. Actually, it's
pretty simple. These FAQs will be helpful if you're just getting
started.
What Is Equipment
Breakdown Insurance?
Equipment Breakdown
Insurance pays for financial loss incurred when equipment breaks
down suddenly and accidentally. Equipment is subject to unique
hazards such as power surges, short circuits, centrifugal force,
motor burnout, and mechanical breakdown. Equipment breakdown
insurance covers equipment accidents from these risks of loss.
What Does It Pay for?
It pays the cost to
repair or replace damaged equipment. It can also cover business
income losses and the costs you incur to speed restoration of
business operations when breakdown interrupts your operations. Many
of our customers buy spoilage coverage to protect substantial values
of perishable goods that spoil as a consequence of a breakdown.
Why Do I Need Equipment
Breakdown Coverage?
Because the costs of
breakdown can be significant and these breakdowns occur often enough
for there to be a legitimate risk to your organization's financial
health or to the profits of your business.
Who Needs It?
If your business or
organization owns, operates or depends upon some type of equipment
to generate revenue, you need equipment breakdown insurance. Do you
use electricity?
Do you heat, cool or refrigerate your premises? Do you have
communication networks? Do you manufacture or process goods? Do you
use equipment to sell, deliver service or help you keep track of
sales? Do you use a lot of hot water? If so, you need equipment
breakdown insurance.
Doesn't Business
Property Insurance Already Cover This?
Property insurance
covers many standard perils, such as fire. But even "all risk"
property coverage wasn't designed to pay for equipment accidents
from the unique causes of equipment failure such as short circuits,
centrifugal force or mechanical breakdown. Equipment breakdown
coverage is specially designed to pay for damage caused by these
risks. Because standard property policies don't cover equipment
breakdown you need to ask to make sure it is included.
I Don't Have a Boiler,
Why Do I Need It?
Equipment breakdown
covers many types of equipment. It protects electrical systems, air
conditioning and refrigeration, mechanical equipment, modern office
equipment in addition to heating systems such as boilers. That's why
"Equipment Breakdown Insurance" is a better description than "Boiler
and Machinery Insurance."
How Is This Different
from Warranties or Service Contracts?
Warranties and
service contracts are important but they don't cover many of the
common causes of equipment breakdowns. Maintenance contracts cover
routine service such as cleaning or adjustment. But they don't pay
for damage due to operator error, the cause of over 35% of equipment
breakdowns. Equipment breakdown insurance does. Warranties and
maintenance contracts also don't pay for business interruption or
income loss resulting from breakdown. Nor do they pay for spoilage,
damage to surrounding property or extra expenses to restore
operations. Equipment breakdown insurance can cover all these risks.
I'm a Tenant, Do I Need
It?
You don't have to own
a building to face an equipment breakdown risk. If you are a tenant
you still have equipment such as phone systems, fax machines,
computers, air conditioners and an electrical system. These types of
equipment do fail and even a modest loss can be painful to a
business. Your lease may also make you responsible for other
equipment that services your premises. Lastly, your operations and
income are dependent upon equipment of others. If the electrical,
heating or cooling system of your landlord broke down, the
interruption of those services can impact you. The right equipment
breakdown coverage can protect you in this contingency.
