If you own a business, the hope is that you have an Insurance Broker who has suggested you add the Equipment Breakdown endorsement to your insurance policy. You most likely thought you didn’t need that coverage because you don’t have any boilers or big equipment, but the endorsement covers a lot more than just boilers and big equipment. Almost all businesses will now have equipment that is covered from this endorsement. There is coverage for equipment from computers and retail point of sale systems to boilers and air conditioning units. Keep reading below to find out how this coverage could save you hundreds to thousands of dollars in the event of a covered loss to your business.
What is Equipment Breakdown?
The purpose of equipment breakdown insurance is to insure against the financial losses such as, property damage, spoilage, and business interruption that result from perils such as:
- Mechanical Breakdown
- Electronic Circuitry Impairment
- Electrical Arcing
- Bulging, Cracking, or Collapse of Pressure Vessels
- Centrifugal Force
- Artificially Generated Electrical Currents
What Types of Equipment are Covered?
As with all insurance, every company has its own rules for what is covered and what is not covered. It is always suggested that you take a look at your specific company’s wordings to get exact answers. The types of equipment that are usually included in an Equipment Breakdown Endorsement are:
- Refrigeration and Air Conditioning Units
- If you have stock that heavily relies on temperature control to avoid spoilage, you will most likely need an equipment breakdown endorsement on your policy. Examples are flowers or food.
- If your company leases its current location, make sure to check your lease agreement to ensure you are not responsible for the air conditioning unit for your building/unit. Read our blog post on Commercial Leases and Your Commercial Insurance for more information.
- Hot Water Tanks
- Boilers & Pressure Vessels
- Computer and Communication Equipment
- If your business relies on electronic equipment for the function of the business and you had a power surge or interruption, it could cost your company thousands while you wait to replace or repair the equipment. From point of sales machines to MRI machines, electronic equipment is a large part of most businesses today.
- Renewable Energy
- Normally defined as any equipment used for the generation, transmission or utilization of electrical power.
- Production Systems
- If your company has CNC manufacturing equipment, robotics, food process equipment, or machining tools; a loss to this equipment could cost your company a significant amount of money. It’s not just about replacing the equipment, it is also about the interruption to your business and the loss of income during this period.
- Elevator motors, ventilation fans, and water pumps all fit into the mechanical category.
Why Do I Need Equipment Breakdown Coverage?
Businesses rely on their technology and equipment for almost every aspect of their business in one way or another. The entire point of insurance is to get an insured (you) back to the point you were before an insured peril. If your business has to be temporarily shut down due to equipment breaking down, can your business put itself back to where it was before the loss, or will the damage and resulting loss of business already have too big of an impact on your company?