Your existing business and commercial property insurance won’t cover accidental physical damage to your essential equipment

Key takeaways

  • Business interruptions can occur for many reasons
  • Your company needs to consider every possible thing that can go wrong
  • It’s unlikely your current insurance plan covers accidental equipment damage
  • Business equipment insurance increases your protection

All businesses rely on specific pieces of equipment to keep them operational. For example, offices must have computers and servers, construction sites need tools and machinery, and grocery stores require coolers and scanners to operate. Without this equipment, day-to-day tasks become next to impossible, and losses from business interruptions could be insurmountable.

If any of this equipment is damaged, the results can be catastrophic. And if the damage results from operator error, motor burnout, electrical shorts, mechanical breakdowns, or power surges, there’s a chance your basic insurance policy won’t cover it. Taking some steps to cover yourself is essential.

Fortunately, you can invest in additional insurance to protect your company in these situations. Business equipment insurance provides coverage if an accident causes physical damage to your equipment that makes it inoperable. Here’s a look at how business equipment insurance protects your company by helping pay for repairs and reimbursing your organization for losses.

Disruptions you could encounter

Nearly every business in the country relies on equipment to perform specific tasks. Damage to these devices could quickly sink the company and make its day-to-day operations extremely challenging. A business can’t make money if its essential equipment isn’t working.

For instance, if an ice cream shop loses its refrigeration unit, it can’t function. A hospital can run into significant problems if an employee accidentally damages its diagnostic equipment. The same goes for an online web design firm encountering a power surge that ruins its servers.

The cost of repairing or replacing damaged equipment can be devastating, especially for a small business. These companies simply don’t have the capital to offset these setbacks. But having the right insurance policy in place can bail you out. 

What this insurance covers

First, business equipment insurance covers the cost of replacing or repairing failed equipment – including labor. As a result, you can bring in a contractor to look at your broken refrigeration system, air conditioner, computers, servers, or construction equipment. Your insurance will cover all of these expenses.

Next, business equipment insurance reimburses you for any business income lost due to an equipment-caused business stoppage. For example, the policy covers a construction company that has to turn down jobs because of non-functional equipment essential to its operations. It could also cover a supermarket that can’t accept some payment methods when computer equipment goes down.

Your insurance policy should also cover any additional expenses needed to get your equipment and business back up and running faster. These expenses could include after-hours work by contractors, the expedited delivery of parts or new equipment, or purchasing equipment from a local vendor. The faster you need these items, the more you can expect to pay.

Finally, your insurance policy should reimburse lost goods or stock related to broken equipment. For example, the ice cream shop with a broken refrigeration unit would receive a payout for the value of spoiled ice cream. It could also receive reimbursement for any other losses it incurred during the shutdown.

In short, business equipment insurance offers protection in a variety of potentially disastrous situations. It offers the additional protection companies need to stay afloat. It is essential for most businesses – especially small ones.

Limitations in warranties

You might be wondering about your equipment’s warranties and whether they limit your need for additional insurance. While these warranties do offer some protection, there are limitations. You should know about what your warranty does and doesn’t cover when selecting an insurance solution.

First, warranties are only valid for a select period. Once the warranty expires, you’re probably out of luck regarding any reimbursement from the manufacturer or retailer. At that point, you’d have to pay out of pocket if you don’t have insurance.

Also, these warranties cover only specific causes of equipment breakdown, which rarely include operator error. This means you won’t have coverage if an employee accidentally damages a piece of equipment that temporarily limits your operations. Employee errors are common, so you need the right protection.

Finally, your warranty won’t offer any protection from income loss while your equipment is being repaired. These losses could be significant if the repair takes some time to complete. However, the right insurance policy can assist.

Business equipment insurance for leased equipment

Many companies lease equipment instead of purchasing it. This practice is beneficial because the supplier will handle any repairs that arise. However, you could still benefit from a business equipment insurance policy because the equipment owner won’t reimburse you for any downtime you encounter while waiting for a repair.

You don’t want to end up in a situation where you can’t run your company adequately for weeks because your provider can’t get its hands on the parts needed to fix your equipment. Having the right insurance will cover these losses. It could also keep your company in business.

Getting the right policy

As you review your business insurance policy, you need to look for gaps in coverage. The commercial policies you have in place might not cover all contingencies. These gaps could leave you in a challenging position if you end up with equipment damage.

You’ll also want to determine if your policy covers business interruptions and losses resulting from equipment damage. After all, these expenses could significantly hinder your organization moving forward. Understanding what your policy does and doesn’t cover is an excellent first step.

Avante Insurance offers business equipment insurance and other forms of commercial coverage to companies in Florida. Our agents will help you understand the inherent hazards involved in business operations and why they might make an additional policy worth your while. Contact Avante Insurance today to learn more about our commercial insurance offerings.


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