There’s Coverage for That: Equipment Breakdown Insurance

Office workers know there are few things as frustrating as broken printers. For most of us, the copier/scanner/printer/fax machine (or a hybrid of all those things) is the biggest piece of machinery we contend with in our work day, and when it doesn’t work like we want it to, we dramatically declare our day ruined.

For business owners, the consequences of machinery breaking down extend far beyond irritated and inconvenienced employees. Firstly, there is the financial cost to repair or replace the equipment. Large or complex machinery and systems can require expensive labour and parts, and often need to be repaired immediately – repairs can’t be put off until it make more sense with the budget. (I never expected to lookup “how much does an elevator cost,” but I did, and, while it’s not quite as exorbitant as I thought, it was still a lot of money.)

There is also the cost of interrupted or ceased operations. Most businesses rely on some sort of machinery for their day-to-day operations, and when that machinery fails, production slows or stops. It could be a conveyor belt failure on an assembly line, or a computer failure in… pretty much any office, these days. Until that equipment is fixed, people can’t do their jobs at the rate they normally do, and sometimes they can’t do them at all.

Are you ready for the good news? There’s insurance for that.

Equipment Breakdown Insurance (sometimes called Boiler and Machinery Insurance) exists for exactly this reason: to cover the costs incurred due to a sudden breakdown of equipment. With an Equipment Breakdown policy in place, business owners have coverage for:

• Repairing or replacing the damaged equipment/machinery
• Expediting expenses (the additional costs to get the work done immediately)
• Lost income due to interruption of operations (subject to a 24-hour waiting period)
• Additional expenses to keep the business operation during repairs, such as temporary relocation
• Food spoilage (e.g. the refrigeration system at a restaurant breaks down)

Breakdown caused by wear and tear or poor maintenance is not covered, but user error usually is.

A standard commercial property insurance policy caused by covered external causes, such as fire, water, earthquake, and flood, but Equipment Breakdown Insurance covers more:

• Mechanical breakdown
• Power surges or short circuits
• Moisture or humidity
• Explosion from steam or other pressure

If you’re wondering whether you should have equipment breakdown insurance, consider whether any of the following apply to your business:

• There is heating or air conditioning in your building
• You rely on computers and/or printers to complete your operations
• You have a telephone system
• You have a refrigeration system
• You have a security system (alarms, cameras)
• You have escalators or elevators (which we now know are expensive to replace)
• You use machinery to manufacture products (anything from ovens to 3D printers)
• You use any type of equipment that requires electrical power

Most businesses have a need for equipment breakdown insurance, even if they are not mass-manufacturers, or working with large-scale machinery. Offices need equipment breakdown insurance, as do healthcare facilities, and hospitality establishments.

Warranties on equipment may provide some coverage, but to make sure you are fully protected, talk to your broker about purchasing Equipment Breakdown coverage.

Morgan Thomas, BA (Dtn.)
Administration Coordinator & Personal Insurance Trainer