A mechanical breakdown, an electrical failure or the sudden breakdown of insured equipment can bring your operations to a halt, damage your goods and lead to significant financial losses. A refrigeration system that stops working, a faulty compressor or the failure of a critical piece of equipment can quickly result in business interruption, unexpected costs and lost revenue.
Equipment breakdown insurance is designed to protect your business against the financial consequences of certain sudden and accidental failures of insured equipment.
Commercial property insurance does not necessarily cover every cause of damage to equipment. Some internal mechanical, electrical or electronic failures may require specific coverage.
Equipment breakdown insurance is designed to cover certain sudden and accidental physical damage to insured equipment. Depending on the coverage in your policy, it can also protect your business against certain resulting financial losses.
This coverage can include:
Eligible equipment and coverage conditions vary from one policy to another.
A breakdown can lead to costs well beyond repairing the equipment. Depending on the coverage you have, your insurance can cover:
Example: A refrigeration system failure at an agri-food business can lead to costly repairs, loss of goods and business interruption. Some of these losses could be covered, depending on the terms of the policy.
Equipment breakdown insurance does not automatically cover every breakdown or defect. Normal wear and tear, corrosion, rust and other forms of gradual deterioration, as well as routine maintenance, are generally not covered as accidental breakdowns. Other exclusions, deductibles and limits may also apply.
It is also essential to review coverage for loss of income, perishable goods and extra expenses separately.
Water heaters, heating and air-conditioning systems, electrical systems, IT equipment, production machinery: virtually every business relies on equipment whose breakdown could cause significant damage.
However, property insurance generally excludes certain damage caused by mechanical or electrical breakdown of equipment. Equipment breakdown insurance is often an important complement to property insurance, since it addresses certain risks that property insurance does not necessarily cover in the same way.
Not necessarily. It is included only if specific coverage is added to your policy by endorsement or if a separate policy is purchased.
Depending on the coverage you have, certain damage caused by an electrical breakdown, a power surge or electrical arcing may be covered. The exact terms, however, vary from one policy to another.
No. A manufacturer’s warranty covers certain defects or failures, according to its terms. Equipment breakdown insurance can protect against other physical damage and, where applicable, certain resulting financial losses.
Generally, yes. Equipment breakdown insurance usually covers physical damage resulting from a sudden and accidental failure of insured equipment. The exact terms, however, vary from one policy to another.
A single breakdown can have a significant impact on a company’s operations. Reviewing your commercial insurance helps you confirm that your essential equipment, and the potential consequences of a breakdown, are properly taken into account.
Want to make sure your current coverage meets your business’s needs? Visit our Equipment Breakdown page or contact our team for advice tailored to your situation.
