Whether you run a small, medium-sized, or large business, you always look for risk mitigation opportunities. With thousands to millions of dollars worth of equipment involved in the production cycle, you have to keep your business equipment insured to cover breakdowns, malfunctions, and theft.
Read on to learn everything you should know about equipment insurance, including how to choose the right coverage for your specific business.
Equipment insurance is an optional coverage that helps pay for equipment repair or replacement costs after a covered accident.
Important: The terms equipment insurance, tool insurance, equipment breakdown insurance, business equipment insurance, and machinery insurance are interchangeable but may include different coverage depending on the insurer and the policy.
Equipment insurance covers business equipment, machinery, and tools. This includes security systems, air conditioning, elevators, ventilation systems, boilers, computers, point-of-sale devices, personal tools, appliances, etc.
Most equipment insurance policies cover:
In most cases, coverage will only be provided if the breakdown resulted from one of the accidents named (covered) in the policy. These usually include mechanical breakdowns, short circuits, burnouts of essential equipment parts, and damaged goods. Note that your policy may cover more accidents or exclude some of the aforementioned, so make sure to peruse the policy when looking for coverage.
The usual exclusions are:
Last but not least, everything that exceeds the limits of the policy will have to be paid out of pocket.
Insurers are free to include different covered items in the policy, including but not limited to computers, refrigerators, security systems, alarm systems, manufacturing equipment, telephone equipment, etc.
Whether you need equipment insurance depends on how much equipment you have, how expensive it is, and how important the equipment is for the uninterrupted operation of your business. Note that a halt in a production cycle may cost you way more than even the most expensive insurance.
The amount of coverage you need depends on your equipment’s total cost and risk tolerance. To avoid underinsuring or overinsuring your equipment, calculate the total cost of your equipment and consult with a knowledgeable insurance agent.
The cost of equipment coverage largely depends on the cost and amount of equipment, coverage limits, and other factors. The monthly premium can be as low as $15 for contractor’s tools and equipment insurance or as high as $250 for heavy equipment insurance.
Many renowned insurance providers offer equipment insurance, including Progressive, Allstate, USAA, the Hartford, Nationwide, and Liberty Mutual. Make sure to research and compare several insurers to pinpoint the best coverage for your business.
The interchangeable terms include equipment insurance, tool insurance, equipment breakdown insurance, machinery insurance, business equipment insurance, and more. Whether the name is equipment insurance, business equipment insurance, machinery insurance, or something else has little to do with the contents of the coverage.
There’s no universal list of items covered by equipment insurance, so you’ll have to check it with your insurer.
You can buy equipment insurance from your insurer just like any other coverage. For example, it may come as an endorsement to your business owners or commercial property insurance.
Some insurance companies do provide coverage for damaged, borrowed, and stolen equipment.
Whether equipment insurance works for non-listed events depends on the policy. Some companies cover equipment breakdowns and malfunctions regardless of the cause. That said, such policies will likely cost more than policies covering specific events.
You can buy equipment breakdown coverage as an addendum to your homeowners policy to cover your home systems (heating, conditioning, etc.), equipment, and appliances from damage caused by lightning, fire, and other listed perils.
Oleksandr is an expert in deep research. He covers various insurance topics across verticals, adopting to every local law.
