Equipment breakdown coverage is a type of insurance that protects businesses from the financial losses incurred due to equipment failure or malfunction. It is designed to cover the costs associated with repairing or replacing damaged equipment and any losses incurred due to business interruption.
What Is Equipment Breakdown Coverage?
Equipment breakdown coverage, also known as boiler and machinery insurance, covers the costs associated with repairing or replacing damaged equipment due to sudden and accidental breakdowns. This insurance policy is typically purchased by businesses that rely heavily on equipment to run their operations, such as manufacturers, food processors, and data centers.
Why Is Equipment Breakdown Coverage Important?
Equipment breakdown coverage is important for businesses that rely heavily on equipment to operate their daily operations. It protects a wide range of equipment, including boilers, electrical systems, refrigeration systems, air conditioning systems, and production machinery.
Without this coverage, businesses may be left with significant financial losses due to the costs associated with repairing or replacing damaged equipment and any resulting business interruption losses. Equipment breakdowns can also result in significant reputational damage for businesses. For example, a manufacturer that experiences an equipment breakdown may be unable to fulfill customer orders, resulting in lost business and damage to their reputation.
What Does Equipment Breakdown Coverage Typically Cover?
Equipment breakdown coverage typically covers repairing or replacing damaged equipment due to sudden and accidental breakdowns. This can include the cost of labor, materials, and replacement parts.
In addition to the cost of repairing or replacing damaged equipment, equipment breakdown coverage can also provide coverage for any resulting business interruption losses. This can include lost income, extra expenses, and rental expenses for temporary equipment.
Equipment breakdown coverage can also cover other losses associated with equipment breakdowns, such as spoilage of perishable goods due to a refrigeration system failure or damage to property due to a boiler explosion.
How Is Equipment Breakdown Coverage Different from Other Types of Insurance?
Equipment breakdown coverage differs from other types of insurance, such as property or general liability insurance. While property insurance may cover damage to the equipment caused by fire, theft, or other covered perils, it typically does not cover the costs associated with repairing or replacing equipment due to sudden and accidental breakdowns.
Similarly, general liability insurance may cover bodily injury or property damage caused by the business or its products. Still, it typically does not cover the costs of repairing or replacing equipment due to sudden and accidental breakdowns.
Equipment breakdown coverage is designed to fill this gap in coverage by protecting the costs associated with repairing or replacing damaged equipment due to such circumstances. It is important for businesses to carefully review their insurance policies to ensure that they have adequate coverage for their equipment and operations.
Conclusion
Equipment breakdown coverage is an important insurance policy for businesses that rely heavily on equipment to operate their daily operations. It protects the costs associated with repairing or replacing damaged equipment and any resulting business interruption losses. Businesses should carefully review their insurance policies to ensure adequate coverage for their equipment and operations.
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