Business owner's guide to equipment breakdown coverage

Posted in Business

A large green tractor and other farming supplies sit in a large warehouse with an open garage door.

Your business’s success depends on the equipment used to run it, but breakdowns happen. Whether it’s a copy machine, a delivery truck or a piece of heavy machinery, equipment breakdowns are inconvenient and inefficient to your bottom line. However, you can take measures to try to prevent the disruption like adding equipment breakdown coverage to your commercial insurance policy. 

What is equipment breakdown coverage? 

Equipment breakdown coverage is the best attempt to mitigate the loss equipment failures bring. These can range from loss of revenue and extended timelines to the cost of repairs or replacement. If your business isn’t covered, these unexpected costs could be detrimental. 

Adding this coverage to your business insurance policy can cover what your commercial property insurance doesn’t, including: 

  • Computers
  • HVAC systems
  • Refrigeration
  • Generators 
  • Manufacturing equipment 
  • Construction equipment 

For example, imagine you own a food manufacturing company, and a power surge causes an outage. Your refrigeration system shuts down and you suffer a loss of revenue from spoiled products. These unexpected issues can cause serious damage to your business in no time. Fortunately, Integrity offers additional policies called Optimum Endorsement Enhancements for both contractors and manufacturers. Speak with an independent Integrity agent about enhancing your existing policy to include equipment breakdown coverage .

What’s the difference between equipment breakdown coverage and commercial property insurance?

Understanding commercial insurance policies is the first step in finding gaps in your coverage. If you have a business insurance package, you may have commercial property insurance. Although the two coverages protect your business property, they protect it for different reasons.

Commercial property insurance can protect your business in the event of a fire, vandalism, theft and more. Whereas equipment breakdown coverage takes effect when your equipment abruptly stops working. 

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How to maintain your equipment and prevent breakdowns

Sometimes, equipment breakdowns just happen without any warning. Supplement your business insurance policy with equipment breakdown coverage, but consider these tips to prevent your equipment from breaking down in the first place:

Correctly operate equipment

Human error is a large factor in equipment failure and breakdowns as well as employee injury and fatality. Proper training on equipment operation is the best way to prevent these occurrences from happening.

Additional training courses and Standard Operating Procedures from organizations like OSHA and NSC may help to reduce these risks. Integrity Insurance and the experts at J.J. Keller partnered to offer a suite of materials to commercial customers including safety policies and programs, toolbox talks, training PowerPoint presentations and videos. Contact your Loss Control Representative for access to these materials. 

Store equipment properly 

Seasonal weather is unpredictable. Protect your equipment through proper storage if you aren’t using it during certain times of the year. For example, a lawn care service may store away their lawn mowers during the winter months, or a snow removal service may do the same for their snow blowers in spring and summer months. Avoid high repair and replacement costs and take the necessary steps to prevent a breakdown: 

  • Top off your gas
  • Check your oil
  • Check your tires
  • Cover machines with a tarp
  • Store in a heated facility
  • Store in a covered area away from direct sunlight and wind if an indoor facility isn’t available

Perform necessary maintenance to your equipment

It’s a good business practice to regularly inspect your equipment. If anything needs repaired or general maintenance, it’s best to do it when you find an issue as well as on a regular maintenance schedule. In fact, downtime costs roughly $260,000 per hour across all businesses. Procrastinating maintenance due to cost is understandable, but the cost may be greater if you wait too long.

Your equipment breakdown coverage may not cover these expenses if it’s from general wear and tear. Preventative maintenance may ultimately save you money in the long run.

Upgrade your equipment

New equipment doesn’t only help with avoiding sudden breakdowns, but it helps your business run more efficiently. When you own older equipment and it breaks down, it may be more difficult to find the parts to replace or a mechanic who knows how to repair it.

Similar to preventative maintenance, the cost to buy new equipment is high. However, the reduced risk of revenue loss and downtime can outweigh the price.

Understand your options with Integrity Insurance

Integrity offers risk and loss control services through its team of experts. Our team works with business owners to prevent and minimize risks and protect employees. Speak to an independent Integrity agent about your options as a commercial customer including on-site inspections, assistance in developing a workplace safety program, complying with OSHA and more.

Coverages described herein may not be available in all states. Please contact one of our local independent agents for complete details on coverages and discounts. If the policy coverage descriptions herein conflict with the language in the policy, the language in the policy applies. The material provided above is for informational, educational and/or suggestion purposes only, and does not imply coverage. WE RESERVE THE RIGHT TO REFUSE TO QUOTE ANY INDIVIDUAL PREMIUM RATE FOR THE INSURANCE HEREIN ADVERTISED. Applicable policies may be underwritten by Grange Insurance Company, Trustgard Insurance Company, Grange Indemnity Insurance Company, Grange Insurance Company of Michigan* and Grange Property & Casualty Insurance Company*, Integrity Insurance Company*, Integrity Property & Casualty Insurance Company*, Integrity Select Insurance Company*. *Not licensed in Pennsylvania

Aberdeen Strategy & Research
Insurance Information Institute

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