Equipment breakdown is a big expense for business owners. When equipment fails, it can cause a loss in business income as well as the expense costs for repairing/replacing faulty equipment. An equipment breakdown can cause business operations to come to a halt. Equipment breakdown insurance is an important insurance coverage all business owners need.
Equipment breakdown insurance is a modern version of the boiler and machinery insurance of the past. Boiler and machinery insurance was introduced at a time when businesses relied heavily on steam boilers to power their businesses. Today, most businesses run on electricity, so policies need to cover a wider range of equipment.
The policy covers the cost to repair or replace damaged equipment including time and labor, any lost income, property damage liability expense, inspection costs, and any income or products that are damaged or spoiled due to the equipment breakdown. Equipment covered includes electrical equipment, computers, phone systems, security systems, air conditioning/refrigeration systems, mechanical equipment, manufacturing equipment, elevators, escalators, and boilers/pressure equipment.
The commercial property policy covers damages to property by external causes, such as a fire, but it generally excludes coverage for equipment breakdown. Internal causes of damage to equipment are covered by equipment breakdown insurance and include electrical failures, power surges, or mechanical breakdowns. This coverage may be included in a business owners policy (BOP) or added by endorsement to a commercial property policy. It can also be purchased as a stand-alone policy.
While equipment breakdown insurance is an important coverage for all business owners to have, it does not cover everything. If your equipment malfunctions or fails because of ordinary wear and tear or because it was not properly maintained, this will not be covered by equipment breakdown insurance. Contact us for more information.
