A commercial building has a lot of working parts and is usually more complex than a simple home. A standard commercial or business property policy will cover your business property, equipment and inventory against fire or theft or whole range of other perils. But, when it comes to equipment breakdown your standard commercial property policy will not offer any protection. Unfortunately, sudden and accidental equipment breakdown can mean tremendous hardships for a company. Imagine a company which produces ice. The compressor on their freezer unit shorts out in the middle of the summer. There is damage to both the freezer itself and to the inventory. This sudden expense could shut down that company’s operations.
Most businesses use some kind of mechanical, pressure or electric/electrical equipment for their operations. Apartment buildings often have water boilers to heat the building. Manufacturing companies often rely on mechanical presses to create their product. Plastic companies have molding machines, etc. The more a company relies on specialized equipment the greater the impact can be if said equipment fails.
Related Read: What Kind of Liability Coverage Does Your Business Need?
What business owners need to realize is that many commercial property insurance policies explicitly exclude any loss or damage to, or caused by, pressure vessels, or losses as a result of mechanical breakdown, or any loss to electrical equipment. This means a Boiler and Machinery Policy or an Equipment Breakdown Policy is needed.
A good boiler and machinery policy will provide broad coverage, including breakdown as a result of:
- Electrical arcing
- Mechanical breakdown
- Pressure explosion
- Centrifugal force
A great boiler and machinery policy will be one that is put together by a broker to provide detailed and specific protection that’s right for your business. Your equipment breakdown coverage could be extended to include:
- Loss of income – when you cannot make any sales due to a claim situation
- Extra expenses incurred – when you cannot make contractual obligations and costs rise
- Damage caused by spoilage – when your product is damaged due to a claim
Some risks are becoming more and more pronounced. For instance, many companies today rely on computer hardware such as servers and hard drives to store and operate their computer networks. Now more than ever our communications, inventory management, storage of customer account information, product information all take place electronically. A crashed server that short circuits as a result of a spike or surge in power (for example) could lead to tremendous monetary loss. Having a broker who understands your company’s risks means when computer equipment suffers a breakdown your company will have the appropriate coverage.
Related Read: Can Cyber Risk Affect Your Business?
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