Mechanical breakdown insurance is as important to your business operations as the equipment itself. In an age of technology, your company is dependent on a variety of machines to communicate with customers and to create, store and sell your products.
What mechanical breakdown insurance covers
Mechanical equipment falls under equipment breakdown insurance, which covers five categories of equipment:
- Mechanical – This includes specialized production and manufacturing equipment, motors, engines, generators, elevators and water pumps. Mechanical equipment often wears out or breaks down due to metal fatigue, vibration, misalignment or operator error.
- Electrical – This includes transformers, electrical panels and cables. Electrical equipment can arc, or short circuit, and cause the power to fail, or result in a fire or explosion.
- Computers and communications equipment – This includes computers, phone systems, voice mail systems, security and fire alarm systems. This type of equipment can be damaged by power surges or electrical fluctuations and could cause partial business interruptions or even shut your company down for days.
- Air conditioning and refrigeration systems – This type of equipment is usually costly to repair and can cause real havoc to business operations and income by driving customers away or allowing products to spoil.
- Boilers and pressure equipment – Depending on your business, a lack of heat or hot water can close the doors or your business. A malfunction of this equipment could result in more serious damage.
How mechanical breakdown insurance protects your business
Equipment breakdown insurance pays for repairs or replacement of damaged equipment resulting from an insured accident up to the limits of your policy. 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. 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.