In today's fast-paced business world, reliance on technology and machinery is inevitable. From computers and production machinery to heating systems and security devices, these equipment play a crucial role in the smooth functioning of businesses across various industries. However, what happens when these assets suddenly break down due to unforeseen circumstances? This is where Equipment Breakdown Insurance comes into play.

What is Equipment Breakdown Insurance?

Equipment breakdown coverage safeguards your company's essential equipment from sudden and accidental malfunctions. It provides financial protection against losses caused by events such as short circuits, loss of air pressure or vacuum, power surges, mechanical failures, and more - perils often excluded from standard commercial property insurance policies.

This plant and machinery breakdown policies are ideal for covering the cost of repairs or replacements of damaged parts due to unforeseen and sudden physical events. Many business owners mistakenly assume that their existing property insurance will cover any damages or losses related to equipment breakdowns. Unfortunately, this isn't the case. Most traditional property insurance policies only provide coverage for damage resulting from external causes like fire or natural disasters. Therefore, having separate Equipment Breakdown Insurance becomes imperative to fill in those gaps left by general property coverage.

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What Does Equipment Breakdown Insurance Cover?

One of the significant advantages of obtaining an Equipment Breakdown Insurance policy is its comprehensive scope of coverage. It protects a wide range of vital assets commonly found in businesses:

1) Computers and Telephone Equipment: With increasing reliance on digital infrastructure for daily operations and communication purposes, safeguarding computers and telephone systems has become paramount.

2) Elevators and Escalators: If you own a building with elevators or escalators open to public use or even limited access within your premises (e.g., office towers), ensuring their functionality can be critical for both safety reasons and avoiding disruptions.

3) Heating and Ventilation Systems: Maintaining comfortable working conditions plays a crucial role in employee productivity; therefore protecting heating/cooling units should not be overlooked.

4) Manufacturing Equipment: Whether you operate a small-scale or large-scale manufacturing facility, breakdowns in machinery can lead to significant production delays and financial losses. Equipment Breakdown Insurance offers coverage for such scenarios.

5) Mechanical System Components: This includes components like boilers, pressure vessels, air conditioning units, refrigeration systems, pumps, and more - all of which are vital for smooth operations in various industries.

6) Retail Point-of-Sale Devices: In the digital age where businesses rely heavily on electronic transactions and point-of-sale devices (such as cash registers), protecting these assets from malfunctions is essential to avoid disruptions in daily operations.

7) Security Systems: Many businesses invest heavily in security systems to protect their premises from theft or unauthorized access. Equipment Breakdown Insurance covers damages or failures related to security systems such as surveillance cameras, alarms, card readers, etc., ensuring continuous protection.

It's important to note that Equipment Breakdown Insurance doesn't require the equipment failure resulting from a covered event under your commercial property insurance policy. Even if there was no fire or other insured peril involved directly leading up to the malfunctioning equipment incident but it failed due to unexpected reasons mentioned earlier (like power surges), this specialized policy will still come into effect and provide coverage when needed most.

A machinery breakdown insurance policy typically evaluates two situations when determining replacement costs:

Partial Loss - A partial loss of the machinery is covered by the policy in full, including labor and air freight charges, customs duties, and dismantling and re-erecting costs.

Total Loss - This scenario calculates the insured amount by subtracting the depreciation from the machinery's actual value before the damaging event occurred.

Who Needs Equipment Breakdown Insurance?

Many types of businesses can benefit from equipment breakdown insurance, spanning many sectors. The following types of businesses can benefit from such a policy:

  • Heavy engineering firms
  • Industrial plants and facilities
  • Construction companies
  • Transportation and logistics companies
  • Power plants and water treatment centers
  • Textile companies

How Much Does Equipment Breakdown Insurance Cost?

The cost of Equipment Breakdown Insurance varies depending on several factors specific to your business:

1) Location: The geographic location of your business can impact insurance premiums. Areas prone to natural disasters may have higher rates due to increased risk exposure.

2) Industry: Different industries have varying levels of risk associated with their equipment breakdowns. For example, a manufacturing plant may face higher risks compared to an office-based business.

3) Experience and Claims History: Insurers consider previous claims history when determining premiums. If you've had multiple equipment breakdown incidents in the past few years without proper coverage, it could potentially raise your premium costs.

4) Number of Employees: The size of your workforce can impact the potential risks associated with equipment breakdowns. A larger company with more employees may have greater exposure