Equipment breakdown insurance helps business owners protect themselves against financial losses due to an unexpected or accidental breakdown of machinery or equipment. Without insurance, these losses can result in a major financial hit resulting from repair bills, lost revenue, and replacement costs of machinery. We’ve evaluated the top insurance providers based on coverage, customer satisfaction, and overall quality.
Coverwallet began its journey in New York City in 2015 operating under the
Aon Insurance banner. At Coverwallet, you can access everything you need to
keep your company well-protected at an unbeatable price.
With a 100-year history of insuring businesses, Hiscox is well-known across
America and globally. With more than 500,000 small business customers,
Hiscox is fully aware and trained in the unique risks a business can face.
Thimble provides business insurance that can be tailored to your business by
the year, month, day, or even the job. At Thimble, the process to getting
the right business insurance is simple, scalable, and flexible.
Businesses that depend on equipment to generate revenue are vulnerable to mechanical or electrical breakdowns. These breakdowns can halt production and result in large financial consequences in the form of replacing and repairing physical equipment and loss of revenue.
This can arise from any type of equipment including computers, air conditioning, security systems, boilers, and machinery used in production. For this reason, securing equipment breakdown insurance is essential for business owners. Sometimes referred to as boiler and machinery insurance or mechanical breakdown insurance, the coverage provides protection against damages to equipment and machinery owned or in the custody of the insured.
Who needs equipment breakdown insurance?
As a business owner, you need to be prepared for the worst-case scenario. Any business that is dependent upon equipment and machinery to generate revenue must consider investing in equipment breakdown insurance. Given the costs and losses can easily run into the tens of thousands of dollars and above, equipment breakdown insurance will be useful for:
Businesses that use air conditioners and refrigeration systems to store inventory such as restaurants and catering businesses. A power outage could result in a loss of perishable goods leading to a failure to deliver customer orders.
Businesses that use manufacturing equipment, engines, escalators, elevators, and machinery in production.
Businesses that use boiler and pressure equipment.
Businesses that are dependent on communication networks such as working from computers, security systems, and phone systems.
Businesses that require electrical equipment such as cables.
How much does equipment breakdown insurance cost?
The cost of equipment breakdown insurance is dependent on whether you purchase it as a stand-alone policy or as an add-on to another insurance plan. Policies are specialized and catered to your specific needs.
The cost of your policy will depend on:
Size of business: Larger businesses may require more machinery to scale production, which will be reflected in the cost of your policy.
Business income: A high or low business income will be reflected in your insurance premium.
Types of equipment: The value and age of the equipment will be reflected in the premiums. Typically higher the value and older equipment will carry a higher premium.
Deductibles and coverage limits: Low deductibles and high coverage will be reflected in higher premiums.
Level of protection: Policy premiums are largely dependent on the extent of coverage. For instance, the premium for a policy that covers repairs and replacements is likely to differ from a policy that covers this and additionally insures workers if they are injured during the equipment breakdown.
What does equipment breakdown insurance cover and exclude?
Coverage for equipment breakdown insurance will cover the repair and replacement of equipment during mechanical and electrical failures. Typically, policies can help pay for:
Rental Equipment: Coverage for equipment that is rented and liability is with the insured.
Injury to operators of machinery: Accidents and injuries that occur to employees operating machinery.
Air conditioning, heating, and refrigeration systems: Replacement or repair of heating and cooling systems.
Systems equipment: Communication networks, computers, photocopiers, and phones.
Boiler and pressure equipment: Coverage for the breakdown of boiler equipment.
Loss of expected income: Resulting from the breakdown of machinery and damage done to the reputation of the business as customers now have to go elsewhere to purchase their products.
Electrical failure: Damages during power surges and short circuits.
Loss of perishable goods: Coverage for the cost to replace spoiled food.
However, policies do have exclusions. Equipment breakdown insurance will cover you for damages caused by internal forces but if damages are caused by external forces such as a natural disaster, this will not be covered. Other factors such as ordinary wear and tear where the performance of the equipment slowly declines with usage will not be covered. Software systems for computers are typically also excluded.
What are the limits of equipment breakdown insurance?
Like all insurance policies, there will be limits to the coverage your policy will provide. There will be a maximum amount that will be paid for a covered claim and anything above the coverage limit will need to be paid out of pocket by the business. It’s important to understand the extent of coverage before choosing a policy.
How to choose the best equipment breakdown insurance?
Equipment breakdown insurance policies are specialized to the individual needs of a business and it’s important to obtain a quote from multiple providers. Before you select a plan, here is what to look for:
Check the insurers rating: You’ll want to choose an insurance company that has a strong rating and is in a position of financial strength. An insurer must be reliable during a mechanical or electrical breakdown.
Customizable options to your unique needs: The policy must be tailored for your business and the extent of coverage must be adequate for the type of machinery and equipment used. Different types of machinery carry their unique risks.
Choosing an experienced insurer: Working with an insurer that specializes in your industry can help identify exposure to risks and identify hazards that may arise in your operations. This can help to manage and mitigate risks and allow businesses to recover faster from a breakdown.
