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Equipment Breakdown Coverage Overview

What is Equipment Breakdown Insurance?
Equipment breakdown insurance provides coverage for the costs associated with unexpected damage or destruction of business equipment. Power surges, interruption and electrical fluctuations often cause these outages and can result in damage to sensitive circuitry. Surge protection is often inadequate. Equipment breakdown insurance protects against these losses and serves as a vital aid for business security and protection.

Seven common equipment risks that are covered:

  • Electrical - When unexpected electrical interruptions occur, they not only pose a risk for those who utilize the property, but they also must be fixed in a timely manner. These short-term solutions can be very costly. One example of this would be a power outage that requires the rental of a generator for an extended period. Service interruption could also apply to a tenants' income loss if the building owner's electrical system breaks down. Costs of repair and other expenses related to electrical failure such as loss of income for those who rely on functioning electrical systems within the building would be covered.
  • Air Conditioning & Refrigeration - Air conditioners and refrigeration systems are prone to unexpected breakdown. Not only do business owners need to replace the broken component in the unit, but they must also cover expenses related to the failure of this equipment. Compressors, for example, are especially prone to breakdown and the repair cost can range from $10,000 to $20,000 or more. Replacement refrigerant can cost thousands.
  • Boilers & Pressure Vessels - Boilers and pressure vessels are used to produce heat, hot water or steam and can negatively impact a business' operations with breakdowns such as insufficient controls or safety devices, scale build-up or pump failure, causing a costly repair. Low water conditions are a recurring cause for a breakdown and can result in bulging, cracking and potential explosion of the vessel. In addition to the physical damage, additional expense is required when rental units are needed to repair or restore operations.
  • Computers & Communications - Businesses rely heavily on a variety of electronic devices to function and stay in operation, including computers, servers and telecommunication. These devices are prone to power issues and if the equipment goes down, business operation can come to a halt and result in loss of income as well as large repair/replacement bills.
  • Mechanical - Mechanical breakdown is exposed in every business and is defined as the malfunction or failure of moving or electronic parts. It can be seen in buildings through motors, engines, generators, water pumps, elevators and escalators. This type of equipment usually has sensitive technology that is prone to breakdown and virtually every type of business has some mechanical equipment exposure.
  • Renewable/ Alternative Energy - The use of renewable/alternative energy is expanding within businesses, institutions and agri-businesses. This usually requires a variety of mechanical and electrical equipment. As demand for more efficient equipment grows, so does the time it takes to repair and replace it.
  • Production Systems - Consists of machining tools, food process equipment and other types of manufacturing equipment. A power surge that damages the electronics or interrupts the flow of information between machines can render the system as inoperable as a physical breakdown. A company can come to a complete stop in productivity if one of these machines break down as they require skilled specialists to fix them.