When considering the various types of coverage included in a Business Owners Policy (BOP), one critical component stands out: equipment breakdown insurance. This essential coverage acts as a safeguard, protecting your business from the financial strain of mechanical failures that can disrupt your daily operations.
Let’s explore what this insurance covers and why it’s a smart investment for your business.
What Is Equipment Breakdown Insurance?
In today’s business landscape, the equipment you rely on is often expensive, and repairs or replacements can be a significant financial burden. Unexpected breakdowns or damages can occur at any time, potentially bringing your operations to a standstill and leading to costly downtime.
This is where equipment breakdown insurance comes into play. It’s designed to shield your business from these unexpected events, helping you avoid substantial financial losses and keeping your operations running smoothly.
What Does Equipment Breakdown Insurance Cover?
Also known as boiler and machinery insurance, equipment breakdown insurance typically covers the following:
- Spoiled Inventory: Whether it’s food, pharmaceuticals, or other perishable items, if your inventory is damaged due to equipment failure, this insurance can help cover the loss.
- Lost Income: If your business operations are interrupted due to equipment breakdown, the policy can compensate for the lost income during the downtime.
- Repair and Replacement Costs: The insurance covers the expenses of repairing or replacing damaged machinery and equipment, including labor and time.
- Employee Wages: If your employees are unable to work due to a breakdown, their lost wages can be covered.
- Additional Repairs: Any other necessary repairs resulting from the equipment breakdown are also included.
Key Items Covered by Equipment Breakdown Insurance
Here are five essential items that are commonly covered:
- Pressure Equipment and Boilers: These critical components of your operations are protected against costly failures.
- Refrigeration and Air Conditioning Systems: Vital for businesses that rely on climate control, such as food storage or laboratories.
- Mechanical Equipment: From water pumps to elevators, engines to motors, the equipment used in production and manufacturing is covered.
- Computers and Communication Systems: This includes fire alarms, security systems, voicemail, and phone systems—key to your business’s daily functions.
- Electrical Components: Cables, electrical panels, and transformers are protected from damages that could halt operations.
Why Your Business Needs Equipment Breakdown Coverage
Even if you don’t operate from a physical building, equipment breakdown coverage is a wise choice—especially for businesses heavily reliant on equipment. For instance, consider a bakery that depends on online orders. A power surge could disrupt operations, resulting in spoiled goods and lost revenue.
In such scenarios, equipment breakdown insurance could cover:
- Replacement of Spoiled Goods: Recover the cost of perishable items lost due to equipment failure.
- Income Loss: Compensate for revenue lost during the period of downtime.
- Repair and Replacement of Damaged Equipment: Cover the costs associated with restoring or replacing damaged machinery.
Bottom Line
Relying solely on commercial property insurance may not be enough, as it typically only covers the building itself. Equipment breakdown insurance, on the other hand, extends protection to your vital equipment, covering damages from electrical shorts, power surges, mechanical failures, and more. It’s a crucial component in ensuring your business remains resilient in the face of unexpected challenges. Contact Atlanta Insurance today for a quote.
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