Monday, March 23, 2015

Are You Prepared for an Equipment Breakdown?

Most people have heard of boiler and machinery insurance at the Lake of the Ozarks and feel that they have no exposure to this type of loss. Many would be incorrect in this assumption. The term boiler and machinery is gradually being replaced by the term equipment breakdown or mechanical breakdown. Equipment Breakdown fills gaps left by the commercial property policy and pays for financial loss when equipment breaks down suddenly and accidentally.

Equipment Breakdown Coverage

Commercial Property policies cover many perils such as fire, wind, and lightning; however, they are not designed to cover unique losses caused by equipment failure. Most property policies will exclude losses that are a result of mechanical breakdown, electrical arcing, centrifugal force or explosion of vessels under steam pressure. Not only would the property damage not be covered, but the resulting loss for the interruption of operations would also not be covered. Equipment breakdown coverage would pick up coverage for electrical equipment, air conditioning & refrigeration systems, mechanical equipment and pressure vessels.

Covered Situations

Here are a few examples that would likely be covered under breakdown and not under the stand alone property policy:
  1. An overload or power surge hits your phone system or switchboard causing damage to the system and downtime at your office.   
  2. A restaurant’s refrigeration unit is damaged when a bearing is thrown causing damage to the refrigerator and spoiling $5,000 worth in meat and fish.  (You would also need spoilage coverage to get the full benefit.)  
  3. Vibration causes moving parts in an air conditioning unit to seize, resulting in damage to the system.  
These are just a few common situations.

Policies are Different

Not all Boiler and Machinery/ Equipment Breakdown policies are the same.  Some have Basic coverage only for the Boiler and machinery and others have Broad or Comprehensive coverage picking up additional electrical exposures.  Also, some policies will exclude certain types of equipment such as medical devices or devices used in research.

Be sure to discuss your specific situation and operational exposures with your Lake of the Ozarks insurance agent.  Steven Naught is a Certified Insurance Counselor with the Naught-Naught Agency.  He can be reached at 573-348-2794.

Contact Insure the Lake today for all your Lake of the Ozarks business insurance needs! 

About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.

Steve Naught, CIC

3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral

T: 573-348-2794
F: 573-348-0191