If your business uses mechanical, electrical, or pressurized equipment, you’ll need more than simple property insurance to operate.
Many businesses rely on equipment, which ranges from simple tools to complex setups. No matter which describes your operations, equipment is critical to your business’ success. After all, an electrical panel is basic equipment, but plays a crucial role because no business can operate without electricity!
While all businesses operate with property insurance, it’s important to consider extra coverage for your machinery and equipment (M&E). Machinery and equipment insurance gives you financial resources to help restore your business to full operation after unforeseen equipment failure. Learn more about M&E insurance with the help of The Cincinnati Insurance Companies.
If your business uses mechanical, electrical, or pressurized equipment, you need more than a property insurance policy. Standard property policies exclude losses caused by:
- mechanical breakdown
- electric arcing or power surges
- the explosion of steam boilers, piping, engines, and/or turbines
- loss or damage to steam boilers
- loss or damage to hot-water boilers
- indirect or consequential losses associated with the above causes
M&E coverage – also called equipment breakdown coverage – protects equipment such as transformers, electric panels, motors, air conditioning units, refrigeration units, production machinery, boilers, and more.
HOW DOES M&E COVERAGE WORK?
M&E coverage reimburses you for expenses related to repairing or replacing covered equipment damaged by an accident. An accident is a sudden and accidental breakdown of the equipment (or a part of the equipment), manifested at the time of the breakdown by physical damage requiring a repair or replacement. Normal in-service deterioration and losses caused by corrosion or erosion are not considered to be accidents.
Mechanical breakdown loss does not stop with the repair bill. Consider the possibility of significant business interruption and consequential losses, as well as extra expenses, you may incur to keep your business running after a covered loss.
Your independent agent can review your company’s equipment breakdown needs and help determine how best to adequately protect your business from equipment breakdown losses.
For example, M&E insurance paid for these loss scenarios:
- The shaft on a city water pump broke after a momentary power interruption. Repairs took a week and cost more than $20,000.
- A nursing home’s emergency generator was damaged when the city lost electric power for two seconds. A rental generator was installed during the repairs. The repairs and rental charges totaled more than $4,000.
- A school’s air conditioning unit was replaced when the driving motor was damaged by a power disturbance. It cost more than $15,000 to replace the unit.
- A church’s heating boiler experienced a low-water condition. A rental boiler was used until a new boiler was installed. The rental and the new boiler cost more than $24,000.
- An air conditioning system broke down, forcing a hotel to close. The business income loss was more than $9,000.
No matter what type of business you operate, you can be better prepared in case of breakdowns with machinery and equipment insurance.
While these hypothetical scenarios are based on actual claims, they are adjusted for the purposes of this article. For actual coverage wording, conditions, and exclusions, take the time to reference your specific policy and/or reach out to your insurance expert. We love talking with businesses about machinery and equipment insurance options that are right for them. If you operate in or around Rochester, NY, reach out to The Feltner Group to start exploring your M&E options.