Business insurance – equipment breakdown
Business insurance – equipment breakdown cover
The basic premise of all types of business assets insurance, is that there must be physical damage to any property, contents or stock that is insured. So, if you have a computer or piece of machinery then there has to be an insured peril in evidence that has damaged the property. Insured perils are the definitions, or events, that your policy covers you for. These include, accidental damage, burst pipes, fire, theft etc. There are certain things which are not covered, for example theft as a result of shoplifting.
With many pieces of modern plant and equipment being run or managed by computers or other electronic machines, there is more and more chance of a business suffering a financial loss from the cost of a piece of equipment that simply stops working. Where a machine stops working, this is not usually something that can be covered by an insurance policy. Nowadays though there are certain insurers that provide cover for equipment breakdown. However, the number of commercial insurers that offer this cover only a small number. Most of the companies that offer policies do not offer this option.
The way to find a policy that actually covers this is, as ever, to speak to a business insurance broker. The good thing is that most of the insurers that provide this cover actually include this free of charge. It is not an optional, add on that is separately charged for. You will find that in the background, it is the main commercial insurer, passing this risk on to a specialist, engineering insurer that understands the reasons why machines breakdown and the need for urgent replacement.
The two main types of policies that include this cover “free” are office insurance packages and commercial combined insurance policies. Offices need the cover because computers, printers, faxes, photocopiers do tend to simply stop working. If it is a fault of the main workings of the machine, then this is something that would ordinarily be covered by equipment breakdown cover.
There is one very important thing to note though. These policies will have restrictions in place as to what is and what is not covered. You need to, in conjunction with your broker, consider the wording in detail. You will not get cover for equipment that is over a certain age. For example, freezers and refrigeration equipment may fall under this cover. There will usually be a restriction that the equipment has to be under fiver years of age, which is reasonable, for cover to apply.
The main important note though is that the equipment has to be under a maintenance contract. Business insurance policies will not cover losses as a result of general wear and tear. In the same vein, your equipment breakdown covers will not cover items of plant, computers or equipment that is not regularly maintained. When insurers are faced with a breakdown claim, the result is usually that a new piece of equipment is needed. You do not tend to repair computers or modern day technical equipment. Hence the losses can be quite high. So, you can understand the insurers having a requirement that they will only pay out on equipment that has been properly maintained, or looked after. The way to prove this is to have evidence that at least annually the item of plant is checked over by a qualified maintenance engineer.
