Equipment
Breakdown
Insurance

What is Equipment Breakdown Insurance?

An equipment breakdown insurance policy can cover all sorts of equipment used in your business, such as elevators or heating, rather than just the machinery your business uses while manufacturing. Policies usually cover computer equipment but will only pay for physical hardware damage rather than software failure or malware.

It’s worth noting that, while manufacturer warranties may pay for repair costs or provide replacements in some circumstances, they usually aren’t as extensive as systems breakdown insurance.

For example, the warranty might not cover accidental damage from human error, such as overloading electrical circuits. Equipment breakdown insurance, however, will cover this type of incident.

What does Equipment Breakdown Insurance cover?

Equipment Breakdown Insurance helps cover:

A) The cost to repair or replace damaged equipment, including time and labor

B) Lost income

C) Spoiled inventory

D) Necessary expenses incurred during the restoration period

What equipment categories does Equipment Breakdown Insurance cover?

A) Mechanical, which includes motors, engines, generators, elevators, water pumps and specialized production and manufacturing equipment

B) Electrical, which includes transformers, electrical panels and cables

C) Computers and communications,  which include computer systems, phone systems, voice mail systems, security systems and fire alarm systems

D) Air conditioners and refrigeration systems

E) Boilers and pressure equipment

Examples of Equipment Breakdown Insurance coverage

Equipment breakdown insurance is smart to have—even if you don’t own your own building—especially if your business’ success depends on properly functioning equipment owned and operated by a key supplier, such as a local power company.

For example, if you own a pizza shop that depends on online orders, as well as walk-in customers, your business will suffer if the power goes out due to a power surge. A power outage could result in loss of heat or air, the inability to process online orders, as well as the inability to prepare, cook, serve and sell food. And if the power is out long enough, your food inventory could spoil.

In this example, equipment breakdown insurance may help pay for:

A) Business income you lost while the power was out

B) The cost of repairing your walk-in refrigerator and replacing a computer that was damaged by a power surge that occurred when the electricity was restored

C) Costs associated with the time and labor to repair and replace your damaged equipment

D) The cost to replace any spoiled food

If your business could suffer in the event of an equipment breakdown, this optional coverage may be a good choice. Our team can help you understand your policy and whether your business may benefit from additional protections such as equipment breakdown coverage.

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