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September 8, 2022

What is Equipment Breakdown Insurance?

In today’s fast-paced environment, we never seem to run out of new technology, tools or equipment that will safely and efficiently speed up projects.

However, there is no guarantee that those tools, equipment, and technology will not suddenly break down along the way. This includes whether you own your own construction tools, rent new or used equipment, or your service provider offers a warranty.

According to a survey, equipment breakdown contributes to almost one-third of property-related expenses and losses. And despite implementing prevention and proper training, other factors such as extreme weather can cause equipment breakdown.

Sudden equipment breakdown can lead to delays in your project timeline, additional repair or replacement expenses, and, in some cases, affect your reputation.

So if you are a contractor looking to buy or rent tools and equipment for your next construction project, you should consider asking these questions before signing an agreement with your supplier and insurance service provider:

  • What happens if a piece of equipment suddenly stops working?
  • Will you provide repair services or replace a machine if it suddenly malfunctions after transportation?
  • Does your warranty include data restoration if I lose my data due to a power outage?

And if your supplier could not provide answers to those questions, it is about time that you consider getting equipment breakdown insurance.

What Is Equipment Breakdown Insurance?

Equipment breakdown insurance (also known as mechanical breakdown insurance and also previously known as boiler and machinery insurance) is an optional plan that covers repair and replacement expenses that arise from sudden equipment breakdowns. 

You can add it as additional coverage to your existing insurance plans, especially those that only cover damage and accident expenses to a certain extent.

What Does Equipment Breakdown Insurance Cover?

Just like any insurance, equipment breakdown insurance can only cover specific types of cases, equipment, and expenses. Read on below to find out if you should get this type of insurance, considering if your business heavily depends on equipment and machines prone to breaking down.

Causes of Equipment Breakdown

A standard equipment breakdown insurance covers sudden equipment breakdown repairs and replacement expenses caused by the following:

  • Electrical and mechanical failure
  • Motor burnout
  • Power outage and surge
  • Extreme pressure
  • Mishandling of equipment

In short, equipment breakdown insurance can cover any internal (electrical and mechanical) or external (misuse or unpredictable environment) force that causes a piece of equipment to break down. However, this type of insurance does not cover breakdowns due to the following:

  • Wear and tear
  • Rust
  • Leakage

A contractor at his latest construction project

Types of Equipment Covered

Equipment breakdown insurance can cover a range of equipment and machines that help run your business. Some examples are:

  • Computer and mobile devices
  • Transportable equipment
  • Electrical panels, cables and transformers
  • Escalators and elevators
  • Manufacturing machines
  • Telephone and network systems
  • Heating and ventilation systems
  • Fire and security systems

Some insurance providers can also include your data in your policy, which you should consider if you heavily rely on cloud-based services for your business.

Types of Fees and Expenses Covered

Aside from covering standard repair and replacement fees, this type of insurance can also cover the following types of fees and expenses:

  • Professional fees
  • Property damage
  • Business interruption
  • Expedite charge for urgent repairs
  • Inspection fees
  • Building and demolition compliance fees

And unlike other insurance policies, you can implement equipment breakdown insurance coverages when a sudden equipment breakdown occurs.

How Is Equipment Breakdown Insurance Different from Other Insurances?

As a contractor, you have probably heard of or bought the following types of insurance:

So what differentiates equipment breakdown insurance from the rest? In simple terms, equipment breakdown insurance starts where other insurances end. 

For example, commercial property insurance covers a specific commercial property for theft and natural disasters like fire. 

But if you transport a piece of equipment and it breaks down and causes damage to a different commercial property, your standard commercial property insurance cannot cover those expenses. However, equipment breakdown insurance can take care of that.

Builder’s risk insurance, construction equipment insurance and construction equipment rental insurance can cover damages caused by theft, vandalism, and natural disasters. But when it comes to damages caused by electrical or mechanical failure, you will need equipment breakdown insurance to cover those damages.

And if you consider how you manage your business with today’s technology, there’s a big chance you heavily depend on cloud-based services to store data and documents. And if a power outage or surge causes you to suddenly lose all of that in a blink of an eye, those insurances listed above cannot help you.

There’s nothing wrong with getting multiple insurances. To be honest, insurance bundling is something we encourage! But if you think the listed insurances above are enough to protect your business, we’d like you to think again.

A hard hat left at a construction site

Your Partner in Creating a Customized Equipment Breakdown Insurance for Your Business

If you’re looking for a type of insurance that will protect your business and can serve as a good investment down the line, you don’t have to look further. Equipment breakdown insurance is a type of insurance that will have your back. 

And to fully experience its benefits, you need to find the right partner.

Contractors Insurance is an award-winning insurance brokerage firm well-known and trusted among contractors, tradespeople, and professionals for utmost transparency and educating their partners to help them create customized insurance for their business.

Whether you’re considering getting equipment breakdown insurance or a completely different one, we’re here to help you get the best out of every plan. Learn more about what we can do for you by connecting with us here.


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