Equipment Breakdown Insurance

Equipment breakdown is a type of insurance that covers the expense of replacing or repairing an item of machinery that has suffered an unexpected technical or electrical malfunction. This pertains to equipment that malfunctions unexpectedly because of an internal issue, such as a fractured rotor or short circuit.

Equipment Breakdown Insurance

Equipment breakdown coverage covers most commercial and industrial equipment, including production gear, boilers, air conditioners, elevators, generators, and air conditioners. Moreover, equipment failure plans may include additional coverage such as loss of revenue, spoilage, utility disruption, and building ordinances. Furthermore, this coverage is offered for both personal and business insurance, including homeowners’ policies.

How Does Equipment Breakdown Insurance Work

Business owners might choose to insure against equipment breakdowns (often referred to as boiler and machinery or mechanical breakdown insurance). In most cases, it assists in covering the cost of replacing or repairing equipment that unexpectedly breaks down or ceases functioning entirely. For instance, a short circuit that isn’t covered by typical business property insurance coverage can be the root of the malfunction.

Insurance against equipment failure covers internal defects brought on by mechanical or electrical problems, including:

  • Short circuits
  • Mechanical malfunctions
  • Burnout in motors
  • Power spikes

Additionally, harm brought on by someone using the device incorrectly may be covered. In addition, you can purchase equipment breakdown coverage separately or add it to your business property policy as an endorsement.

What Does Equipment Breakdown Insurance Cover

Your residence’s equipment breakdown coverage may cover mechanical or electrical malfunctions. However, only if an unforeseen event leads to an unexpected loss, like engine burnouts, ruptures because of gravity, or electricity loss from artificially created surges. The coverage for equipment failure does not extend to normal wear and tear or damage resulting from carelessness or inadequate maintenance.

Equipment coverage differs according to the insurer. Equipment covered by this kind of insurance might consist of:

  • Equipment for cooling and heating.
  • Computer hardware.
  • Electrical locks and doors.
  • Backup generators.
  • Equipment for at-home workouts.
  • Devices for the kitchen.
  • Solar-panel.
  • Sump pump installation.
  • Dryers and washers.
  • Heating systems and water heaters.

What Does Equipment Breakdown Insurance Not Cover

Generally, regular wear and tear is not covered by equipment breakdown insurance. For example, your equipment breakdown coverage won’t cover the cost of a new refrigerator if your 20-year-old refrigerator just breaks down from age. Additionally, while computer hardware is covered by equipment breakdown policy, software errors, data theft, and cyber-attacks are usually not. Furthermore, you will often need to get cyber liability insurance to cover software.

How Much Does Equipment Breakdown Insurance Cost

The annual cost of commercial equipment breakdown insurance is around $800. Moreover, the exact cost depends on several variables. This includes the size of your company, the kind of equipment you use, and whether you receive supplementary business owner policy (BOP) coverage or a separate policy.

A business interruption package (BOP) includes commercial property insurance, business interruption coverage, and general liability insurance that any small firm should have. However, you may increase the safety of your BOP by purchasing other insurance policies, like this breakdown coverage.

Examples of Equipment Breakdown Insurance

Having equipment breakdown coverage is crucial for businesses relying on equipment owned and operated by a crucial provider, like a local power company. These are a few instances of losses that are covered by equipment breakdown policy.

  • When a boiler’s feed pump malfunctions and it is left without water, the boiler sustains significant damage.
  • A building’s electrical panel is harmed by a power surge, which results in the building losing electricity.
  • When a temperature sensor malfunctions, fresh vegetables inside a refrigerator freeze. The product is all ruined.
  • A damaged bolt can harm the internal gears of a printing press, leading to machine failure.

Insurance against equipment failure does not limit coverage to broken equipment. Moreover, buildings and private property are destroyed as a result of equipment failure. The cost of rebuilding the boiler and the wall in the event of a boiler explosion is covered by the equipment breakdown policy.

Doesn’t My Commercial Property Insurance Cover Equipment

Your business property coverage includes harm resulting from a third-party event, like a fire. Equipment breakdown coverage protects against losses resulting from internal factors. These internal factors include power outages, electrical shorts, mechanical malfunctions, engine burnout, and operator mistakes.

However, note that while equipment breakdown insurance covers computers, it does not include software. To completely safeguard your computer systems, including software, you will require cyber liability coverage.

Should I Get Equipment Breakdown Insurance

Equipment breakdown insurance might be beneficial to many entrepreneurs. In addition, it functions similarly to a homeowner’s equipment breakdown policy. It helps keep the equipment in your company safe. Furthermore, the extensive coverage justifies the price. In the absence of this coverage, you would probably be liable for the cost of replacing or repairing:

  • Devices
  • Equipment
  • Systems

An experienced insurance provider with over 200 years of combined expertise can assist you in obtaining any additional coverage you might want, such as an equipment breakdown policy.

How to File an Equipment Breakdown Insurance Claim

The following actions are advisable if you have equipment breakdown insurance and must make a claim:

  • Speak with your insurance provider.
  • Examine your policies about equipment breakdowns.
  • Record the damage using written, visual, and audio documentation.
  • If at all feasible, leave the damaged components and equipment where they are so insurance investigators may inspect them.
  • Make an effort to keep the equipment from getting any worse.
  • Assemble information and papers for the claim.

Furthermore, speak with a certified representative about your choices for acquiring equipment breakdown insurance. The coverage is easily mandatory as a commercial package policy, company owner’s policy, or endorsement of commercial property insurance.