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A misunderstanding about equipment breakdown insurance

Computer crash Boiler & machinery insurance - now known as equipment breakdown insurance - is one of the most misunderstood coverages. Why?

If you are not a manufacturing company or a company that uses large machinery or don’t need a boiler in your business …why would you need equipment breakdown coverage?

Well, here is a situation that you may be able to relate to.

Many businesses these days rely heavily on computers. Say you have an internal power surge or the motherboard of your computer crashes and causes your computers to go down. What would you do?

For those businesses that properly back up their data at an off-site location and work with a company that’s ready to handle this situation – kudos to you.

However, I come into contact with many businesses that do not have this situation planned out. In the event of such an occurrence, a business can lose substantial income should they be without computer access.

So how does equipment breakdown insurance work and what does it offer you? Equipment breakdown insurance covers the cost of repairing and replacing the damaged equipment. And it frequently (but not always) includes "business interruption" and "service interruption" coverage, which will cover you against loss of business or income due to computer-related "downtime."

If these additional coverages are not included in your policy, you may have to ask for them. Perhaps you are a Web-based business that operates via the Internet and your Web site is managed by an independent ISP provider. In this situation, you want to ensure that the ISP has both property/casualty and equipment breakdown coverage.

And make sure your own equipment breakdown policy includes "service interruption" coverage. This should pay for your loss of business caused by a mechanical or electrical breakdown to the ISP's servers or other equipment. Equipment breakdown is not just limited to the above examples; it actually covers many types of equipment and is broken down into the following categories:

  • Electrical
  • Air Conditioning and Refrigeration
  • Boilers and Pressure Vessels
  • Computers and Communications and
  • Mechanical

This coverage can also apply to a personal homeowners policy as well. As with all insurance policies, there are limitations and exclusions. However, I hope you think about equipment breakdown coverage with a whole new meaning now.

Click on the links to learn more about this intriguing coverage, or feel free to contact me with any questions.


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Great information related to disaster recovery from a monetary standpoint. For anyone seeking more information on best practices to ensure business operations can continue from a computer and communications perspective, check out Des Moines-based Iowa Network Services www.iowanetworkservices.com

'Adjusting Today' has a great article on Builder's Risk Insurance. Articles are written from a policyholder's perspective and include real-life examples intended to improve disaster preparedness.


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