Why HVAC and Boiler Equipment Breakdown Insurance is Something to Consider

In the business world, time is money, and time lost due to equipment failure can be very expensive. Even though you might think most equipment breakdowns are singular in nature such as one computer crashing, in reality, you could be facing a breakdown of your entire computer system or HVAC or refrigeration system due to a power surge or short-circuit. That is where equipment breakdown insurance steps in, to protect you financially from lost time, lost product and/or lost revenue due to equipment failures.

What does equipment breakdown insurance cover?

Your traditional business insurance covers you in the case of fire, flooding, and liability things such as a customer or vendor injury on your property. General liability insurance also covers damages to your property or a client’s property by an employee. On the other hand, it does not typically cover equipment damaged by employees to a client’s computer system. For example, a virus that causes a complete or partial loss of data. In this example, equipment breakdown insurance could cover the labor costs to recover or rebuild your lost data, as well as any lost time or revenue until you are back up and running.

Equipment breakdown insurance, sometimes called boiler and machinery insurance, covers damages to equipment by way of things such as power surges, motor burnout, boiler malfunction and operator error. This coverage also covers the cost of repairing equipment, time spent on fixing a breakdown, and income lost through the absence of said machinery.

Repair small refrigeration unit
Equipment breakdown insurance can pay for the repair AND to replace spoiled stock lost as a result of the failure to help your business get back on its feet faster.

If your business includes frozen or refrigerated perishables such as a restaurant, residential facility or food manufacturing and distribution, this coverage also pays to replace spoiled stock lost due to the equipment breakdown.

If your air conditioning fails and you have revenue lost due to tenants, employees or customers not being able to stay in your building, the insurance will cover these costs as well.

Do I need coverage if I do not own the building?

As a tenant, you would not be responsible for things affecting the building only such as plumbing floods, elevator failure, and roof leaks (although you would not be covered for water damages to your equipment and other property). So the answer is yes, you need coverage even if you do not own the building. In the example of the roof leak the owner would only be responsible for repairing the roof; damages to your property are not paid by his liability insurance.

Is the equipment breakdown insurance comprehensive?

Although your equipment breakdown insurance may not cover 100% of your property, it is fairly comprehensive. Basic equipment coverage includes air-conditioning equipment as it pertains to a loss of revenue such as in a restaurant, refrigeration as it pertains to, in our restaurant example, food spoilage etc. It covers production machinery, medical and electrical equipment such as computers and telecommunications systems failure.

There are different levels in this type of insurance. The coverage offered changes with different levels of coverage. There is better coverage for higher premiums, and conversely, there is lesser coverage for lower premiums.

How much insurance is enough?

Although it may be difficult to estimate the scope of future losses, clients can use a cost-benefit analysis to explore the pros and cons and possible losses based on your specific business type. If you’re the restaurant owner, for example, you would need to estimate weekly revenue versus weekly inventory purchases to come up with a figure that may cover the cost of your loss. Other things apply such as the age of equipment, and the necessity of certain equipment. Naturally this will not be a comprehensive figure but your best ballpark estimate regarding the potential loss.

Before purchasing any equipment insurance, weigh your options, and speak with a  licensed insurance agent  to figure the best coverage for you.

Article written by Michael H. from US Insurance Agents with contributions by John Beauregard from Sylvia Insurance.

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