Machinery breakdown insurance, also known as equipment breakdown insurance, is a type of coverage designed to protect businesses from unexpected disruptions caused by the sudden failure of essential equipment or machinery. Let’s dive into the details:
What It Covers:
Equipment Damage: Machinery breakdown insurance covers the cost of repairing or replacing equipment that experiences sudden mechanical or electrical failure. This can include items like boilers, computers, phones, electrical cables, transformers, elevators, HVAC systems, manufacturing equipment, motors, and production machinery12.
Internal Causes: The coverage applies when equipment breaks down due to internal issues, such as short circuits, motor burnout, mechanical failures, or power surges.
Accidental Breakdown: It protects against accidental breakdowns and physical damage to machinery.
Why You Need It:
Exclusions in Other Policies: Regular commercial property insurance typically doesn’t cover mechanical or equipment malfunctions. It focuses on external incidents like fires, vandalism, and wind damage. Similarly, business interruption insurance wouldn’t apply in cases of equipment breakdown because it’s meant to help recover lost income after events like fires or natural disasters.
Financial Protection: Equipment breakdown insurance provides financial relief by covering repair costs or replacement expenses. Without this coverage, unexpected equipment failures could significantly impact your business operations and finances.
Commonly Covered Equipment:
Boilers and Systems: This includes boiler systems used for heating or industrial processes.
Electrical Equipment: Computers, phones, cables, and transformers fall under this category.
Elevators and Escalators: If you have these in your building, they’re covered.
HVAC Systems: Heating, ventilation, and air conditioning systems.
Manufacturing Machinery: Tools, food processing equipment, and robotics.
Motors and Engines: Any critical machinery with motors.
Water Pumps: Essential for water supply or drainage systems.
Coverage Variations:
Business-Specific: The coverage can be tailored to your specific business needs, considering the types of equipment you rely on.
Limits and Deductibles: Like other insurance policies, machinery breakdown insurance has limits and deductibles. Make sure to review these carefully.
