• Equipment Breakdown Insurance
• Mechanical Breakdown Insurance

Mechanical Breakdown Insurance:
Helping You Stay in Business

When equipment is working, we take it for granted. But when something breaks down − whether it’s a computer, your electrical system, a production machine, or the HVAC − things can quickly grind to a stop. But do you realize that most of the equipment you depend upon every day isn’t covered by your property insurance if it suddenly breaks down?

That’s why equipment breakdown insurance, also known as “boiler and machinery” insurance, is so important to business owners. It covers your losses and helps get you up and running quickly if your equipment breaks down.

“Everyone who operates any kind of business using electrical or mechanical devices should buy equipment breakdown insurance,” says Brad Bengston, Commercial Sales Agent for Nationwide Insurance. “A lot of people think it’s only for large factories, but small companies can benefit from equipment breakdown coverage, too.”

The basics of equipment breakdown insurance

Equipment breakdown insurance covers five categories of equipment:

Electrical

Equipment like transformers, electrical panels and cables can arc, or short circuit, and cause the power to fail, or result in a fire or explosion.

Mechanical

This category includes specialized production and manufacturing equipment, motors, engines, generators, elevators, and water pumps. These often wear out or break down due to metal fatigue, vibration, misalignment or operator error.

Computers and Communications Equipment

Computers, phone systems, voice mail systems, security and fire alarm systems can be damaged by power surges or electrical fluctuations, which can cause partial business interruptions or even literally shut you down for days.

Air Conditioning and Refrigeration Systems

Notorious for failing at the worst possible time, this type of equipment is usually costly to repair, and can cause real havoc to business operations and income. Customers can be driven away by a hot environment, or product spoiled by broken refrigeration can result in a significant loss of food stuffs.

Boilers and Pressure Equipment

Equipment like boilers and pressure vessels provides steam for heat, hot water, cooking or sterilization. Depending on your business, a lack of heat or hot water can close the doors, or worse, a malfunction in this equipment could result in more serious damage.

How am I covered?

Equipment breakdown insurance pays for repairs or replacement of damaged equipment resulting from an insured accident. You don’t need to own the building in which your business is housed in order to be covered.

You are also covered if some of the equipment used by your business is leased or rented, and you have a contractual obligation to insure the equipment unless otherwise provided by the personal property coverage of others. Depending on the policy, your coverage could extend to portable equipment that is damaged when temporarily away from your business location as well as property owned by others in your care, custody or control.

Additionally, equipment breakdown insurance covers the costs associated with the time and labor to repair or replace the equipment; business income losses caused by a breakdown, other expenses incurred to limit the loss or speed the restoration only if it reduces the overall costs; and the expense, for example, to replace spoiled or contaminated food or other materials damaged as a result of the equipment breakdown.

How much should I expect to pay for mechanical damage insurance?

There are many variables that will impact your premium, which may include the type of business you’re in and where it is located.

The cost of repairing or replacing expensive equipment and the loss of income if you have to shut down for a period of time needs to be carefully weighed against any premium costs. Consider this also: because most equipment today uses a microprocessor, there’s an increased risk of failure due to power surges, excessive moisture, or extreme heat or cold.

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