Information About Equipment Breakdown Coverage

Equipment breakdown coverage: it's the modern-day descendant of what has been traditionally referred to as boiler and machinery insurance. And today's businesses need it just as much as they did in the old days. The truth is that just about any business needs equipment breakdown coverage it's also an area of insurance about which many agents and buyers remain uninformed in comparison to other commercial coverage’s.

The equipment breakdown policy of today covers most equipment. Electrical systems is one of the most common and they are a major part of a building's or business’s total value.

A wide range of electronic equipment or equipment that has some type of electronic component is also covered. Transformers, electrical switchgears, motors, voltage regulators and generators; as well as all types of business equipment, which is more electrical than mechanical in nature, like computers, fax machines, copiers and telephone systems; fit into this group. Mechanical equipment, including production machinery, compressors, gears, fans, blowers and pumps, is also covered.

A number of losses originate at utility companies as a result of utility equipment failure or poor power quality. Such "accidents" can cause insured equipment to fail due to power surges or low-voltage conditions.

Most buildings have some type of central air-conditioning system, and a large number of business operations—notably restaurants, institutions such as schools and hospitals, and facilities that preserve food or other perishables—rely on air-conditioning and refrigeration systems.

While you do not hear too often about boiler explosions today, it happens, most large buildings still have boilers, if only for hot water heating purposes.
"Hospitals obviously, dry cleaners where high-pressure steam is necessary, all have boilers," There's a lot of boiler and pressure vessel equipment in offices, but because it's part of the building infrastructure, most people don't even realize it's there."

Today even with the advances in boiler technology, they can still explode Because they have enormous destructive potential, in most states, cities and municipalities, boilers and pressure vessels, and sometimes other devices, such as air-conditioning in Chicago, are required by law to be periodically inspected.

Inspection service is still an important component of equipment breakdown insurance, it's a unique line of insurance within a commercial insurance arena that's focused on prevention and trying to keep accidents from occurring so that we don't have potentially catastrophic events."

Equipment Breakdown Coverage is sold differently than when it was originally marketed and the way Equipment Breakdown Coverage is afforded. Originally coverage was offered as a stand-alone coverage. There are numerous companies today that offer cover as an endorsement to an SMP or COP or as a coverage contained in a BOP or Package Policy.

Exposures are changing. Today most electrical equipment has some sort of electronic brain, microchip/processor or low-voltage circuitry. The direction has immensely increased the risk of equipment breakdown because of power surges, power quality problems and other types of somatic factors, involving moisture, heat and cold.

There has been shift in equipment cost, from a property damage position and from a business income position. As businesses amass more and more equipment, operations become increasingly dependent upon that equipment. This can create major BIEE loss, even causing a temporary stoppage of your business. What would happen if one or more of your major systems failed by a sudden and accidental cause? Would you be able continue operating as normal? Can you afford to have the equipment repaired or replaced?

Equipment Breakdown coverage fills in the gaps in your property policy, providing coverage for the cost of repair or replace mechanical, electrical or pressure systems equipment that suffers a sudden and accidental breakdown. Pollutant cleanup, expediting expense, refrigerant contamination, perishable goods and computer equipment coverage’s are included. It could cover indirect losses coming from a covered equipment breakdown, like business income, utility service interruption and extra expense if covered by your property policy.

What about warranties? There could be gaps in Warranties and maintenance contracts also. Normally accidents to equipment caused by operator error, business interruption, extra expenses or spoilage losses, are not covered which can result from an equipment failure that is sudden and accidental.