A machine breaking down can be catastrophic for a small business. In many cases, the repair alone costs more than the price of buying a new one. And when you’re just starting up as an entrepreneur, every shilling counts. One way to protect your business from this kind of risk is by purchasing machine breakdown insurance. It may not be something you think about; however, this type of insurance can help protect your business from the unexpected in case of emergency repairs. Let’s take a look at some key benefits of purchasing this type of insurance and see if it’s right for your business. Read on to learn more!
Machine breakdown insurance covers the cost of replacement if a key piece of equipment fails. It’s often referred to as “contents insurance” or “business equipment coverage”, where small businesses often have separate policies for their inventory and their equipment. It’s important to note that this type of insurance does not cover repair costs for your equipment. Instead, it provides a replacement value payment to buy new equipment if your machine breaks down. The premium amount you pay is typically calculated based on the value of your equipment. If a piece breaks or malfunctions, you submit a claim and the insurance company pays you a certain amount to buy a new equivalent machine.
The amount you receive typically covers the cost of the new equipment, plus a bit extra for the inconvenience of having to replace it. The equipment doesn’t have to be new; the insurance company can choose any make or model as long as it’s equivalent to the one that broke down. Machine breakdown insurance doesn’t just cover manufacturing equipment. It can also protect your business if key tools or office equipment fails. Some policies are even designed to provide coverage for items as diverse as your computer, fax machine, and items in your inventory.
If a machine in your business breaks down and requires repair, you have two options: You can either fix it, or you can replace it. As an entrepreneur, you’ll likely be paying for both of these things out of your pocket, but with machine breakdown insurance, you’ll have the funds available to cover the replacement costs. There are a few different ways machine breakdown insurance can work.
Your policy might be a “claims-made” policy, in which you’re covered for any equipment breakdowns that occur during the term of your policy, as long as you file a claim within a certain time frame (typically 30 to 90 days). Alternatively, you could have an “occurrence” policy that covers equipment breakdowns that happen during the term of your policy, even if you don’t report them right away. Most policies are “claims-made,” and many will provide coverage retroactively if you purchase the policy and then report the breakdown later.
By its very nature, Machinery breakdown insurance is all risks insurance for machinery, supplementing the coverage afforded by Fire insurance. Thus it covers unforeseen and sudden physical loss of or damage to the insured’s items, necessitating their repair or replacement. Loss or damage covered under Machinery insurance is mainly due to one of the following causes:
The individual exclusions from the cover mainly comprise loss or damage caused by:
You should consider getting machine breakdown insurance if one or more of your key pieces of equipment has a high risk of breaking down, or if it’s very expensive to replace. If you’re just starting, it may be difficult to determine how much you should spend on each piece of equipment. That’s where machine breakdown insurance can come in handy. It can provide coverage if a machine breaks down, while also helping you determine how much you should spend on each item. It’s important to note that machines don’t have to be brand new to be covered under your policy.
They just have to be capable of doing the same job as the broken machine. For example, if your laser breaks and it’s the only way you can cut certain materials, you might need a new laser. If you’re unable to get the same brand and model, your insurance company might replace it with a different laser that performs the same function.
Machine breakdown insurance provides a type of protection that many other business insurance policies don’t. It also provides an element of financial certainty that’s hard to find in other forms of insurance. That said, it’s important to weigh your options and determine if machine breakdown insurance is right for your business. First, figure out what types of machines are essential for your business. After all, you can only file one claim per year for each type of equipment. Next, determine how much each machine costs.
Finally, add up the cost of replacing each piece of equipment. If the total amount is more than your budget, you may want to explore other forms of protection. Machine breakdown insurance won’t cover every type of risk your business faces. For example, it doesn’t protect against natural disasters like floods or fires. It also doesn’t cover theft or vandalism. That said, it can provide a level of protection that’s hard to find in other forms of insurance.
Before buying machine breakdown insurance, you should always ensure the company you’re dealing with is reputable. Here are a few tips to help you avoid con artists:
Machine breakdown insurance is a type of coverage that protects against critical pieces of equipment breaking down inside your business. It’s not something that every business needs, but it’s important to understand the benefits of this type of coverage and how it works. Before you decide to buy machine breakdown insurance for your business, be sure to weigh the pros and cons and shop around for the best deal.