Imagine it’s a typical summer day. You own a 30,000-square-foot office building that is 85 percent occupied. And the air conditioning and ventilation systems stop working. The outside temperature is in the 90s and the humidity is high. It doesn’t take long before the tenants start to complain.

The contractor you hire determines that an electrical arc fried the circuit board that controls the environmental systems.

The board must be replaced, but it will take up to five business days for it to arrive. In the meantime, the building is unfit for people to work in, and the leases oblige you to credit tenants’ rents for periods when the building in uninhabitable for more than a day. In short, you face thousands of dollars in repairs and much more in lost rents.

While your property insurance policy will cover the resulting property damage from fires or explosions, it will not cover the equipment or lost income from the downtime during repairs. But equipment breakdown insurance will.

Equipment breakdown insurance

This form of insurance is not a substitute for other property coverage. It will not pay for damage caused by fire, lightning, explosions from sources other than pressure vessels, floods, earthquakes, vandalism, and other causes of loss covered elsewhere.

Equipment breakdown policies are designed to fill in the gaps left by other policies, not to replace them. Also, they do not cover mechanical breakdowns that result from normal wear and tear as a device ages.

A number of events can trigger a claim for equipment, such as:

• Mechanical breakdown in equipment that generates, transmits or uses energy, including telephone and computer systems.
• Electrical surges that damage appliances, devices or wiring.
• Boiler explosions, ruptures or bursts.
• Events inside steam boilers and pipes or hot water heaters and similar equipment that damages them.

Business owners often overlook equipment breakdown coverage. Bur, virtually all of them have some need for this insurance.

What equipment breakdown insurance covers:

• The cost of repairing or replacing the equipment.
• Lost business income from a covered event.
• Extra expenses you incur due to a covered event.
• Limited coverage for losses like food spoilage in freezers that break down.

Most businesses rely heavily on machines in their daily operations, from computers to refrigeration equipment and elevators to manufacturing equipment.

For some, the cost of repairs to this equipment and resulting downtime can have a serious impact. Such businesses should seriously consider buying equipment breakdown insurance.

Call us today if you would like to discuss this crucial form of coverage.