Equipment breakdown insurance, also sometimes called boiler and machinery insurance, is a specialized type of insurance that protects businesses from losses caused by sudden and accidental breakdown of covered equipment. Here’s what it does:
What it Covers:
-
Equipment Failure: Covers the cost of repair or replacement for a wide range of equipment that experiences mechanical breakdown, electrical arcing, or other covered malfunctions, such as:
- Boilers and pressure vessels
- Air conditioning and refrigeration systems
- Production machinery
- Electrical systems
- Computers and data processing equipment
-
Consequential Losses: Goes beyond just fixing the broken equipment. It can include coverage for:
- Business Interruption: Loss of income while the equipment is down.
- Spoilage: Reimbursement for spoiled product or inventory due to equipment failure (like a refrigeration system).
- Extra Expenses: Costs associated with renting temporary equipment or expediting repairs.
Why Businesses Need It
- Equipment is Expensive: Repairing or replacing broken machinery can be a major financial blow, even if the equipment itself is insured under property insurance.
- Disruption is Costly: Downtime can lead to lost revenue, missed deadlines, and strained customer relationships.
- Unexpected breakdowns: Even with proper maintenance, equipment fails, and it’s often impossible to predict when.
Who Benefits Most:
- Manufacturers: Heavily reliant on complex machinery, where breakdowns can halt production.
- Businesses with critical systems: Like hospitals or data centers where equipment failure has significant consequences.
- Food and Beverage Industry: Refrigeration systems are crucial.
- Any business with expensive, specialized equipment.
Additional Notes:
- Not Maintenance Coverage: Equipment breakdown insurance isn’t a substitute for regular maintenance. It’s for unforeseen events.
- Inspections: Policies often include complimentary inspections by the insurer, helping prevent breakdowns in the first place.