Equipment Breakdown Insurance: Don’t Let Equipment Failure Slow You Down

Virtually any kind of equipment failure can compromise your business to some extent – and damage your bottom line. Unfortunately, many business owners choose to not to insure against possible losses that stem from equipment breakdown. And that’s risky.

Because property insurance typically doesn’t protect against equipment damage, and warranties cover only so much, savvy business owners make equipment breakdown insurance part of their company’s insurance portfolio – so if the worst happens, they won’t have to dip into their reserves to cover their losses.

“Most companies need equipment breakdown insurance, even if they’re not in the business of manufacturing a product,” says Brenda Miller, Sales Supervisor for Nationwide Insurance. “Computer systems, voicemail systems, refrigeration – even your air conditioning system – all would fall under an equipment breakdown policy.”

How equipment failure insurance helps

Equipment breakdown insurance covers the actual damage to the equipment as well as other damage caused by the malfunction such as property damage, food spoilage, damage to other neighboring properties, or expenses incurred while setting up a temporary location to run the business.

Because the very nature of business is changing – becoming less mechanical and more computerized – equipment breakdown insurance is more important than ever. Computerized equipment or machines controlled by microprocessors are extremely sensitive to power surges and electrical fluctuations, both of which are leading causes of equipment failure in the US.

Moreover, reliance on the Internet and real-time web transactions require more complex and expensive computer and inventory systems. Often company records, inventory and databases are stored in digital formats that are almost impossible to access when equipment is not functioning, causing delays and loss of income.

What if I don’t own my building?

Even if you lease your building or use equipment that belongs to others, you need equipment insurance. Let’s say you run a restaurant in a leased space, and the electrical panel shorts out, damaging your fryers and other cooking equipment. While the owner of the building is responsible for making the repairs to the panel, you’ve lost the equipment you need to run your business. Who’s going to pay for that?

What if an equipment problem off-site impacts my business?

Sometimes equipment failures at other locations can cause significant losses to your business. For example, if you run a small business and depend upon your web site for orders chances are that an independent Internet service provider hosts your site at another location. What happens if that location loses power or experiences damage to its equipment, causing an interruption of your web presence resulting in a loss of orders?

Will my warranties cover damage to equipment?

Warranties are restrictive, and typically cover new equipment for a determined length of time and for specific types of product failures. If the equipment fails beyond the warranty expiration date or if the damage is caused by human error, then an equipment breakdown insurance policy would cover the damage.

How much should I buy?

It’s important to look beyond the face value of the equipment being insured, and consider all of the situations that could occur when determining the amounts and limits of coverage. Damage could occur to other property as a result of an equipment malfunction. What if parts to the failed equipment are not readily available? What if you are closed for an extended period of time?

Contact a Nationwide insurance advisor today and find out how our mechanical breakdown insurance policies can provide you great coverage for your company.