Which is Covered: Equipment Breakdown Dictionary

When it comes to insurance coverage, understanding what's included and what's not is crucial to ensure you're fully protected. One common area of confusion is equipment breakdowns. What exactly is covered under equipment breakdown insurance, and what's not? Let's dive into this topic to help you make an informed decision.

Equipment breakdown insurance, also known as equipment failure or mechanical breakdown coverage, is designed to protect your business against financial loss due to sudden and accidental damage to equipment caused by mechanical or electrical faults. However, not all equipment breakdowns are covered. Let's explore which types of equipment breakdowns are typically covered and which are not.

Covered Equipment Breakdowns

In general, equipment breakdown insurance covers a wide range of equipment, including boilers, machinery, and sprinkler systems. Here are some specific examples of covered equipment breakdowns:

Mechanical Breakdowns

Mechanical breakdowns refer to failures caused by wear and tear or a sudden malfunction. For instance, if a motor in your machinery fails due to age or a sudden issue, this would be considered a covered loss. Similarly, if a bearing seizes up, leading to a breakdown, this is also typically covered.

Examples of mechanical breakdowns that are usually covered include:

• Failed motors, bearings, or other moving parts
• Leaks from sealed parts due to damage or fatigue
• Electrical failures causing equipment to stop working

Electrical Failures

Electrical failures are another type of breakdown that is typically covered by equipment breakdown insurance. This includes failures of electrical equipment, such as transformers, switchgear, or electrical motors.

Examples of electrical failures that are usually covered include:

• Short circuits or overloading electrical equipment
• Electrical arc flash events, which can cause damage to nearby equipment
• Loss of electrical power to machinery or equipment

Excluded Equipment Breakdowns

While equipment breakdown insurance covers a wide range of breakdowns, there are also several exclusions to be aware of. Understanding these exclusions can help you ensure you have adequate coverage for your specific needs.

Gradual Deterioration

Gradual deterioration or wear and tear is typically not covered by equipment breakdown insurance. This type of damage occurs slowly over time, rather than suddenly and unexpectedly.

Examples of gradual deterioration that are usually not covered include:

• Corrosion or rust
• Worn-out parts due to age or normal usage
• Damage caused by extreme weather conditions, such as freezing or thawing

Exclusions Based on Other Policies

Some equipment breakdowns may be covered by other types of insurance policies, rather than equipment breakdown insurance. For instance:

• Commercial Property Insurance: This policy typically covers direct physical loss or damage to property caused by specified perils, such as fire, theft, or vandalism.
• Business Interruption Insurance: This policy covers the loss of income experienced by a business when it is unable to operate due to a covered event, such as a fire or storm damage.

Therefore, equipment breakdowns that are covered by these policies may not be covered under an equipment breakdown insurance policy.

In conclusion, understanding which equipment breakdowns are covered and which are not is crucial for ensuring you have the right insurance protection for your business. By familiarizing yourself with the types of breakdowns typically covered and excluded, you can make informed decisions about your insurance needs and protect your business from unexpected financial loss.