Owning a business means discovering new risks to your company’s survival on nearly a daily basis. That’s why you have insurance. But you just might find out at the worst possible time that your bottom line isn’t as protected as you thought it was.
Equipment breakdown insurance is your protection against property damage, cost of replacement or repair, disruption of business and other losses associated with accidental damage to your electrical, mechanical, pressure, production and processing equipment.
Isn’t that covered by property insurance?
While your commercial property policy covers a broad swath of catastrophic loss situations, it doesn’t cover all of them. It’s for that reason that you should consider adding equipment breakdown insurance to your company’s protection plan.
Let’s take a look at a few of the leading reasons to consider equipment breakdown insurance.
Your property insurance misses a lot.
Your commercial coverage is supposed to cover sudden loss brought about by such external threats as fire, earthquake, break-in and the like. Not damage caused by mechanical failure, wear and tear or operator error. In other words, if your building is damaged by flood, your property insurance will cover the damage. But if your aging furnace breaks down one weekend in January and your pipes burst, that resulting flood destruction won’t be covered, in all likelihood.
But don’t your warranties cover equipment failure? Sure, as long as all of your equipment, your electrical and HVAC systems and just about everything else that could break down are under warranty. And if operator error or deliberate acts by disgruntled employees aren’t the root cause of the problem — because those situations aren’t typically covered by equipment warranties.
You have risks you didn’t even know you had.
Sure, you’d look into equipment breakdown insurance if you owned a manufacturing plant with pressure systems and dozens of pieces of machinery. But you’re running your business out of an office. No dangerous pressure situations. You don’t have much more than a few computers, a printer and a copier in the premises. What could possibly go wrong?
Let’s say you had a power surge and it wipes out your entire network. If it was a thief stealing your computers or an electrical fire turning the office to ashes, you’d collect on your property insurance policy. But a power surge isn’t likely to be treated the same way. That’s why you want to have your expensive and critical office automation included in your equipment breakdown policy.
Your insurer’s inspection might catch accidents before they happen.
If an inspection is required before your insurer will offer an equipment breakdown insurance policy, you might look at that as a hassle. But the inspector will be able to assess your degree of risk and advise you on ways to minimize your exposure to potentially catastrophic equipment failure. In fact, in several provinces your insurance inspection will satisfy the government inspection requirement demanded of your business, and you’ll avoid paying the local inspection fee!
When equipment failure happens it can be pricey.
What would it cost if your boiler blew, leading to the catastrophic destruction of your entire plant? Or if arcing in your electrical system led to a fire that took out not only your business but an entire block of commercial buildings? Imagine turning in the damage report to your property insurer and finding out that none of it is covered.
You have a business reputation to uphold.
The damaged boiler in the above scenario would put your business down for several days, if not longer. In the case of catastrophic loss, you’ve got to be able to get your business back on its feet as soon as possible. Your customers or clients are counting on you. Your reputation depends on it.
When you’re in business, your bottom-line responsibility is to control risk to your operation. That’s why you have insurance in the first place. But your risk can’t be entirely mitigated unless you have an equipment breakdown insurance policy in force.
Contact Aaxel Insurance Brokers if you’d like to find out more about equipment breakdown insurance.