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Breakdown Of Electrical & Mechanical Equipment Must Be Insured Properly

By: Thomas M Kallman

If you have electricity, you need Boiler & Machinery coverage. Property policies don’t cover certain types of losses such as those resulting from electrical arcing, mechanical breakdown, or a ruptured boiler.

Equipment breakdown insurance, commonly referred to as boiler and machinery insurance covers the physical and financial damage that can result from an equipment breakdown. Equipment breakdown insurance often pays for direct property loss meaning the cost to repair or replace damaged equipment, lost business income and costs for temporary replacement equipment, other expenses incurred to limit the loss or speed restoration of operations, the lost value of spoiled products or materials as well as business recovery expenses.

Most property policies exclude the very losses that equipment breakdown insurance is designed to cover.

These special policies provide the following additional layers of coverage:
• Mechanical breakdown
• Electrical arcing
• Artificially generated electrical currents
• Centrifugal force
• Boiler overheating, cracking, bulging, sagging
• Bulging, cracking or collapse of pressure vessels

Broad definition of equipment, including the following:
• Boilers, pressure vessels, water heaters
• Electrical distribution systems
• Heating and cooling systems
• Refrigeration (including lost refrigerant)
• Production equipment
• Office equipment
• Computer technology
• Communications systems, including phone and voice-mail systems
• Security and fire detection systems
• Ovens, stoves, furnaces
• Elevators, escalators, cranes, hoists and lifts
• Cash registers and inventory control systems
• Diagnostic equipment

Keep in mind that mechanical breakdown coverage encompasses much more than just boilers and pressure vessels. It also can include refrigeration equipment, air conditioning equipment, various types of piping, turbines, engines, pumps, compressors, blowers, gearing, shafting, electric motors, generators, transformers and assorted other types of mechanical and electrical equipment.

Warranties and service contracts are important but they don’t cover many of the common causes of equipment breakdowns. Maintenance contracts cover routine service such as cleaning or adjustment. But they don’t pay for damage due to operator error, the cause of over 35% of equipment breakdowns. Equipment breakdown insurance does. Warranties and maintenance contracts also don’t pay for business interruption or income loss resulting from breakdown. Nor do they pay for spoilage, damage to surrounding property or extra expenses to restore operations. Equipment breakdown insurance can cover all these risks.

You don’t have to own a building to face an equipment breakdown risk. If you are a tenant you still have equipment such as phone systems, fax machines, computers, air conditioners and an electrical system. Your lease may also make you responsible for other equipment that services your premises. Lastly, your operations and income are dependent upon equipment of others. If the electrical, heating or cooling system of your landlord broke down, the interruption of those services could impact you. The right equipment breakdown coverage can protect you in this time of need.

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