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Equipment Breakdown... what does that even cover?

As any owner of a business knows, you rely heavily on your equipment to keep your business running. This equipment could be anything from your telephone systems and computers to boilers or refrigeration units. Although equipment breakdown is a common occurrence and can be extremely expensive to fix depending on the equipment, there are not a lot of standard companies that offer this protection.

A lot of property policies actually exclude losses arising from mechanical, electrical and pressure systems failure. Warranties and maintenance contracts may have gaps as well. Typically, they do not cover accidents to equipment caused by operator error, business interruption, extra expenses or spoilage losses that can result from an equipment failure. These losses could possibly lead to temporary shut downs to complete business failure. Equipment Breakdown coverage could addresses those gaps you might find in your policy.

Equipment Breakdown coverage could provide financial protection you need to run your business and continue to meet your customer demands. Adding this coverage enhancement to your commercial insurance program could provide protection from these exposures. There could be coverage for cost to repair or replace damaged equipment, lost income, spoiled inventory, etc.

There are five categories that Equipment Breakdown enhancement will usually cover:

* Mechanical

* Electrical

* Computers/Communications

* Air conditioners and refrigeration systems

* Boilers and pressure equipment

A lot of people think they have coverage under your commercial property insurance that would cover this. But your commercial property policy covers damages made by a covered peril such as fire. It does not necessarily cover internal forces such as power surges, electrical shorts, motor burnout or operator error. This is where your Equipment Breakdown Coverage could come in to play.

It does not, however, cover losses caused by normal wear and tear or lack of maintenance. An example of that is if your air conditioner unit breaks down and the reason was a clogged filter - that's maintenance and there would be no coverage in place. But let's say there was an electrical storm that created a power surge which fried the motor, there could be coverage for that under Equipment Breakdown.

Equipment Breakdown coverage is usually fairly inexpensive to add on to your policy, sometimes as low as $50/annually (less expensive than a warranty at times). A deductible does apply and there is a limit on the coverage that you can claim. Some are $5,000 limits, some are $100,000 - it depends on your carrier and the policy limits in force.

If you are not sure if this is a coverage you want, give us a call. Let's talk about your needs, your equipment and what it would mean to you to have a loss. Would it stop operations for your business? Would you lose money if you had equipment breakdown? Would you possibly have to close your doors? These are questions you should ask your self. If you answer Yes to any of them, you should definitely give us a call! Let's chat.

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