● Equipment breakdown insurance can help small businesses mitigate the cost of the repair or replacement for accidentally damaged equipment.
● You won’t find coverage for basic wear and tear, natural disasters, or some operational errors.
● Equipment breakdown coverage can also help replace lost income if your equipment breakdown prevents you from staying in business.
What Does Equipment Breakdown Coverage Include?
Equipment breakdown insurance is not comprehensive, so only certain pieces of equipment will be covered in certain circumstances. While policies vary, common types of equipment covered include:
● Electrical systems like electrical panels, cables, and transformers.
● Electronic equipment like computers, security systems, and fire alarms.
● Telephone systems.
● Heating and cooling systems like central air and heat.
● Refrigeration equipment.
These systems have to have gone through a covered event in order to get the insurance company to payout. These events include:
● Short circuits or power surges.
● Motor burnouts.
● Accidental mechanical breakdowns.
● Delays due to required inspections.
● Code issues that need to be addressed.
What Isn’t Covered by Equipment Breakdown Coverage?
There are insurance policies for almost everything, so there will be a limit to your equipment breakdown coverage. Certain equipment will be covered, others will be covered by other policy options.
For example, while many computers, laptops, and other hardware are covered by an equipment breakdown policy, any software that makes them run is not covered. Cyber liability now exists to cover this.
Additionally, you won’t be covered if your equipment has reached the end of its life and no longer works. Normal wear and tear is something all business owners must save for on their own. The same goes for equipment that sits and rusts or molds. That’s a cost that will come directly out of the business owner’s pocket. Equipment breakdown coverage is for unexpected malfunctions or breakdowns.
Finally, damage done by natural disasters including flooding, fires, and earthquakes won’t be covered. This is where commercial property insurance comes in. That type of policy protects your property from the aforementioned disasters.
How do I Know if My Business Needs Equipment Breakdown Coverage?
If your business relies on its equipment to perform a service or deliver a product, equipment breakdown coverage is a must. If any equipment suddenly breaks down, you’ll be forced to stop operating for a period of time, which can have a serious financial impact on your business.
For example, restaurant owners that need their cooking equipment to run their business or who may be forced to close if anything happens to their heating or cooling systems, should consider getting a policy. Similarly, an office that relies on computers, fax systems, and phone systems should also consider getting coverage.
5 Ways Your Business Can Benefit From Equipment Breakdown Coverage
There are many benefits to having equipment breakdown coverage, and any business that relies on expensive equipment should consider it. Here are just five benefits to consider:
● You’ll be able to repair or replace broken equipment. Most importantly, breakdown coverage lets you replace or repair very expensive equipment that you might otherwise have to finance. For example, a new boiler can cost tens of thousands of dollars. If yours dies due to mechanical failure, having the help to replace it can be a huge relief.
● You may get a payout for lost income. Check with your agent, but many of these policies will cover lost income in the event that you can’t work due to equipment failure. This can be complicated, though, and you’ll likely have to be out of work for a large period of time before insurance will kick in.
● Coverage can help you keep your business open. If you can fix your equipment quickly, that’s fewer days your business is interrupted. Having this coverage can help you pay for emergency repairs and back to working fast.
● You could get help leasing temporary equipment. Again, check with your insurance provider, but your policy may cover the cost of renting temporary equipment if yours can’t be fixed in a timely manner.
● You may get coverage for equipment that broke off-site. If your equipment is damaged offsite, you may be able to get coverage. For example, if heavy equipment is damaged during transportation, equipment breakdown coverage can help.
How To Find Equipment Breakdown Coverage
Getting equipment breakdown coverage is fairly straightforward. It’s a common addition to a basic business insurance policy, and your agent may even suggest it if you already have policies like commercial property coverage.
Major insurers like Allstate, Geico, The Hartford, and Insureon offer this type of coverage. Simply ask your agent or call up an agent for another company if you’re thinking of switching and they’ll be able to explain the specifics of the coverage. Make sure to ask if your specific equipment will be covered and the circumstances of the coverage.