What is equipment breakdown coverage?
When equipment fails, productivity is affected. That’s why equipment breakdown coverage is so important. Breakdowns come in many forms, including:
- A computer network damaged by a power surge
- Problems with the electrical system
- Mechanical issues with your production equipment
Equipment breakdown is more than annoying. It hurts the bottom line. That’s why most companies will offer equipment breakdown insurance to help keep your business running.
What does equipment breakdown insurance cover?
Also known as "boiler and machinery" coverage, equipment insurance protects you in the event of breakdowns caused by power surges, motor burnout, boiler malfunction and operator error. Equipment breakdown insurance covers all sorts of equipment – mechanical and electrical equipment, computers and communication equipment, air conditioning and refrigeration systems, boilers and pressure equipment. It also includes coverage for new technology.
Equipment breakdown coverage can pay for:
- The cost to repair or replace the damaged equipment
- Costs for time and labor to repair or replace the equipment
- Business Income losses when a covered breakdown causes a partial or total business interruption
- Other expenses incurred to limit loss or speed restoration
- The cost to replace spoiled stock or materials
Equipment Breakdown covers the following and more in most cases
- Power Surges
- Mechanical Malfunction
- Operator Error
- Mechanical & electrical
- Computers & networks
- Heating & cooling
- Equipment repair
- Business income losses
- Lost or damaged inventory & materials
Equipment Breakdown FAQ's
Should I get equipment breakdown insurance if I don’t own the equipment?
Yes. Business equipment insurance may not be your responsibility. But if the equipment breaks down, you could lose productivity, customers & income. Maybe you use leased equipment. Or one of your vendors, like an internet service provider, experiences a service outage. Equipment breakdown insurance covers business income losses in these situations.
Does property insurance cover equipment breakdown?
No. Most standard property insurance policies don’t cover your business equipment. And warranties can be limited – typically only covering new equipment for a short period of time. And they definitely don’t cover lost business income. Talk to your agent about adding an endorsement for equipment breakdown coverage.
What if you don’t own your building?
Even if you lease your building or use equipment that belongs to others, you still need equipment breakdown insurance. Say for example, you run a restaurant in a leased space. The electrical panel shorts out, killing power to the heat, air conditioning, lights and refrigerators for a couple of days. Although the owner of the building is responsible for making the repairs to the panel, you’ve lost customers and income. Equipment breakdown insurance helps you pay for that lost business income.
What if an equipment problem off site impacts your business?
Sometimes, equipment breakdowns at other locations can cause a loss to your business.
For example, if you run a small business and depend on your website for orders, you probably have an independent Internet service provider hosting your site at another location. What happens if that location loses power or experiences damage to its equipment, causing an interruption of your web presence resulting in a loss of orders? Equipment breakdown coverage helps pay for lost business income when a key supplier’s equipment breaks down.
How much equipment breakdown insurance should I buy?
To ensure you’re covered thoroughly, consider all of the scenarios that could occur.
- Damage to your equipment
- Damage caused to others’ property
- Unavailable replacement parts
- Being closed for an extended time
An honest look at how things can add up gives you a better idea about the amount of coverage you could need and what your equipment insurance quote will look like.
Insurance terms, definitions and explanations are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in individual insurance contracts, policies or declaration pages, which are controlling. Such terms and availability may vary by state and exclusions may apply. Discounts may not be applied to all policy coverages.