It's an old type of insurance with a new name and a growing need: Equipment breakdown insurance (traditionally called boiler and machinery insurance) has become an important part of a sound risk management strategy for all types of companies.
Historically, this specialty insurance covered boilers and production machinery, explains Mark MacGougan, assistant vice president for product development with Hartford Steam Boiler Inspection and Insurance Co. in Hartford, Connecticut. However, says MacGougan, the term equipment has come to mean much more than that, ranging from telecommunications systems to cash registers: "The way technology has evolved, just about every business is more dependent on equipment than they were even five or 10 years ago."
The policy can also cover related property damage, lost business income and other costs incurred due to the breakdown. MacGougan points out that, for many companies, the cost of lost business due to a breakdown is much more than the cost of repairing the equipment. Covered hazards range from electrical-related damage to mechanical breakdown.
An increasing number of small-business insurance policies include equipment breakdown coverage, but many still do not. Read your policy, or check with your agent to see if you're covered. If you're not, or if the coverage is insufficient, shop for a different package; or consider a stand-alone policy.
Jaquelyn Lynn is a freelance business writer in Orlando, Florida.