EQUIPMENT INSURANCE
INSURANCE 101
Equipment Breakdown Insurance
Because your business depends
on functioning equipment to operate and maintain revenue , a breakdown could be devastating . The threat of breakdown is increasingly prevalent because technologically advanced equipment tends to be sensitive and fragile , and can easily sustain damage that causes breakdowns . And the losses sustained continue to increase with the rise of just-in-time manufacturing , Internet marketing and improved supply chain management . Problems with your equipment can be extremely risky if you are not properly insured , as standard property insurance will not cover these types of losses . Equipment breakdown insurance ( also referred to as boiler and machinery insurance ) will cover you in the event of damage or a breakdown .
WHY ARE BREAKDOWNS A PROBLEM ?
Though technology provides a host of invaluable features , it also poses many risks .
• Circuitry on high-tech equipment is sensitive . A force as simple as static from bubble wrap can damage certain pieces of equipment .
• Breakdowns that lead to interruptions in telecommunications , email and ecommerce mean lost time and revenue .
• Interconnected but separate technologies can affect one another after a power surge or loss of functionality .
• Obtaining parts to fix complex equipment can be difficult and time consuming .
• Equipment may be located in areas of the facility that are difficult to reach , complicating repairs and concealing problems .
WHAT ARE THE MOST COMMON EQUIPMENT BREAKDOWNS ?
Electrical Systems
• Electrical systems make up 10 to 15 percent of a building ’ s worth , and because they predicate all other business functions , a failure holds the potential for substantial loss for both building owners and their tenants .
• A short circuit in a transformer , panel or cable can spread and destroy a large part of the system . These parts are often overlooked and underserviced .
• Costs such as generator rental fees , relocation of tenants and the cost of leasing property in another location until equipment is repaired can worsen the financial impact of a breakdown .
• In one example of electrical systems failure , a 2008 incident of electrical arcing destroyed three main electrical panels and left an office building without power . Temporary measures were taken to restore power to tenants , which included an accounting firm in its tax season crunch , contributing to a total loss of $ 1,507,389 .
Air Conditioning and Refrigeration
• Since many air conditioning units are located on the roof , repair or removal requires the hire of a helicopter or crane .
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