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Insuring Your Critical Machinery and Equipment

By December 5, 2011August 22nd, 2018

Commercial property policies typically exclude losses involving machinery or equipment breakdowns. If your business depends on equipment or machinery then it’s important for you to consider additional insurance. An Equipment Breakdown Coverage policy handles a substantial loss exposure to items such as: air, steam or water tanks; refrigeration systems; rollers; steam pressers; generators; chemical processing tanks; motors; switches and controls; compressors; pumps; gears, etc.

Typically, equipment breakdown protection provides the following coverages:

  1. Property Damage – This coverage pays for direct damage to covered property which is listed in the policy.
  2. Expediting Expenses – This coverage applies to extra costs incurred in order to make temporary repairs and to speed-up the permanent repair or replacement of damaged property.
  3. Business Income and Extra Expense – These coverages may be purchased together or extra expense coverage alone. For example, if a business were to lose most of its records due to a breakdown of its main server, most of the costs to restore the information would be handled under this option.
  4. Spoilage Damage – Spoilage damage to raw materials, property in process or finished products is covered when that property is in storage or in the course of being manufactured. 
  5. Utility Interruption – This coverage is available ONLY when the insured also purchases coverage for Business Income and/or Extra Expense. It responds to loss involving equipment breakdown created by loss of utility service (gas, electric, water or communication). The loss or service must last beyond the time-limit that appears on the policy.
  6. Newly Acquired Premises – This feature automatically covers newly acquired premises purchased or leased by the insured and the period of protection depends upon the length of time selected, which is usually in 30 day increments.
  7. Ordinance or Law Coverage – This addresses loss created by the imposition of ordinance or laws affecting the rebuilding of the damaged property including the regulation of the demolition, construction, repair or use of the building or structure.
  8. Errors and Omissions – This coverage pays for loss or damage that would have been covered except for the insured’s error or unintentional omission in describing covered property, a failure to include any premises owned or occupied by an insured when coverage began, or the insured’s error or unintentional omission that results in the company canceling coverage at one of the insured’s premises.
  9. Contingent Business Income and Extra Expense – This Protection applies to loss resulting from a breakdown to equipment at premises upon which the insured is dependent upon in order to run its own operation, such as a key materials supplier.

Sudden and accidental breakdown of equipment and machinery can easily happen. Contact your Flanders Group insurance specialist today to discuss your critical equipment and what supplemental coverage would best protect your interests.