It’s crucial to protect your organisation with robust equipment breakdown insurance. Have a look at the following guidance for equipment breakdown cover and various claims scenarios
Equipment Breakdown Insurance & Claims Scenarios
As workplace machinery and technology continues to evolve, it’s no surprise that the vast majority of organisations across industry lines utilise some form of equipment. Whether it’s communications and security systems, advanced electrical paneling, heating and cooling systems or specialised production line machinery, any instance of equipment breakdown could leave lasting impacts.
In fact, recent research from insurance experts found that equipment breakdown incidents were responsible for nearly 30 per cent of all property-related losses this past year.
What Is Equipment Breakdown Cover?
At a glance, equipment breakdown insurance offers protection in the event of any workplace equipment malfunction or failure. This form of cover can provide compensation for lost income, repair and replacement costs, spoilt inventory expenses and any additional organisational costs related to the equipment breakdown incident.
Equipment breakdown policies typically cover the following:
- Electrical systems, including transformers, electrical panels and power cables.
- Communications and security equipment, including computers, phone systems, CCTV systems and fire alarm systems.
- Mechanical systems, including water pumps, ventilation systems, lifts, motors, engines and specialised production or manufacturing equipment.
- Boilers and pressure equipment, including heating systems, hot water units, cookers, sterilisers and cleaning equipment.
- Refrigeration systems, including refrigerators, freezers and air conditioning systems.
Keep in mind that this form of insurance provides cover for instances of sudden, unexpected and accidental equipment breakdowns. An equipment breakdown policy would not offer protection for malfunctions or failures caused by equipment wear and tear, employer negligence (e.g. poor staff training or maintenance practices) or any other gradually developing condition.
More than anything, it’s important to note that equipment breakdown cover should never take the place of proper care and maintenance practices for your organisation’s machinery and technology.
Equipment Breakdown Claims Scenarios
Electrical Outage
- The incident—A contracting company utilises an office space with computers and phone systems to communicate with clients and secure future contracts. A power outage temporarily shuts down the company’s access to its computer and phone systems, resulting in missed communications with clients. The company loses a contract as a result of the outage.
- The solution—The contracting company’s equipment breakdown policy can provide compensation for any lost income caused by the power outage, including the lost contract.
Machinery Malfunction
- The incident—A manufacturing organisation uses a vital piece of machinery in its assembly line to help produce its products. The machinery breaks down due to a mechanical malfunction, forcing the organisation to halt production for several weeks until the machinery is fixed.
- The solution—The manufacturing organisation’s equipment breakdown policy can provide cover for any lost income caused by the halt in production, as well as compensate the costs to repair the malfunctioning machinery.
Refrigeration Disaster
- The incident—A restaurant utilises a large-scale refrigeration system to keep its perishable inventory fresh. The refrigeration system fails, causing all of the restaurant’s inventory to spoil. The restaurant has to close its doors for several days to purchase fresh inventory and replace the broken-down refrigeration system.
- The solution—The restaurant’s equipment breakdown policy can cover any lost income that resulted from having to temporarily close, reimburse the expense of replacing the spoilt inventory and compensate the costs of purchasing and installing a new refrigeration system.
Boiler Troubles
- The incident—A small retail shop uses a boiler as a heating system on-site. The shop is hosting an event to celebrate the release of a new product. Days before the event, the boiler unexpectedly breaks down, causing the shop to lose its heat source. As a result, the shop is forced to close its doors, cancel the event and postpone the new product release until after the boiler is repaired.
- The solution—The retail shop’s equipment breakdown policy can provide compensation for any lost income that resulted from having to temporarily close and postpone the new product release, reimburse the expense of cancelling the event and compensate the costs of fixing the boiler.
Don’t let an equipment breakdown incident wreak havoc on your organisation.
https://www.turnerinsurance.co.uk/commercial/business-property-loss-of-profits/
