We live and work in a world where technology is constantly evolving; creating new forms of machinery and equipment, and applications for them. Whilst technology brings many benefits, ever more reliance on electronic components and software is increasing the risk to businesses of equipment failure and breakdown.
Common Equipment Breakdowns
- Electrical Systems
- Air Conditioning and Refrigeration
- Boilers and Pressure Vessels
- Computers and Communication Equipment
- Mechanical Systems
What protection does your business have today again equipment breakdown losses?
Property insurance – policies typically provide cover for fire, flood and theft, all of which can have a significant impact on business interruption. However, equipment breakdown is usually excluded from property policies. Business operating machinery and equipment, including CNC, usually needs to be covered under a specialist engineering insurance policy.
Warranties – whilst warranties provide a level of cover, they are often only for a limited period of time and do not cover operator error or loss of income. Because your business may depend on functioning equipment to operate and maintain revenue, a breakdown could be devastating.
Without insurance cover a mechanical failure could result in loss of business and revenue or even reputational risk. Claims costs can lead to significant financial impact on a business. A leading engineering insurer provided examples of claims, some of which cost over £1m for both damage and business interruption losses.
The threat of breakdown is increasingly prevalent because technologically advanced equipment tends to be sensitive and can easily sustain damage that causes breakdowns. The losses sustained will continue to increase with the rise of just-in-time manufacturing, Internet marketing and improved supply chain management. Problems with your equipment can be extremely risky if you are not properly insured.
Equipment Breakdown Insurance will cover you in the event of damage or a breakdown. There are usually three main sections of cover:
Equipment breakdown and damage
This section insures damage and breakdown cover, including operator error and electronic derangement; failure during its normal operation; in transit; or while it is temporarily removed for the purposes of operation or repair.
Deterioration of stock
Deterioration of stock insurance under an equipment breakdown policy covers the deterioration of the stock resulting from a change in the temperature of a chamber or caused by the action of refrigerant fumes that have escaped from the cold chamber. Extra cover is available for the cleaning and disinfecting of chambers; removing, disposing and replacement of deteriorated stock.
Loss of income
This covers financial loss as a result of equipment breakdown and damage or deterioration of stock, including increased costs of working. Cover also available for contractual obligations to pay direct customers and suppliers if they suffer financial loss due to an insured event.
Elements of typical cover available under equipment breakdown insurance
- Cover for the failure of any electronic or computer equipment that controls the machinery or equipment, even if there is no physical damage.
- Public relations cover for professional public relations support when equipment breakdown poses a risk to a business’s reputation.
- Loss of income cover if damage occurs at an anchor location and affects profits.
- Deterioration of stock cover for stock in refrigerated vehicles or temporary storage.
- Operator error included as standard.
- Cover for undamaged non-compatible parts included as standard.
- Cover for insured equipment being operated off-site.
- Reinstatement of machinery or equipment as new.
- Cover for temporary loan or hire.
Please call your usual contact at RS Risk Solutions on 01342 580106 to discuss your requirements and obtain more information.