10 reasons for machinery insurance and machinery business interruption insurance
“Aren’t these policies designed only for large manufacturers with processing equipment?”
“I don’t think these policies include many risks that my business faces.”
“Don’t I get this cover as part of my warranty?”
These are common misconceptions when considering machinery insurance and machinery business interruption insurance.
Here are 10 reasons you may need machinery insurance and machinery business interruption insurance.
- A property policy will typically provide cover for perils such as fire, flood and theft
Standalone machinery products will often cover events such as mechanical failure, electrical short circuiting or motor burnout, as well as damage resulting from an accidental event, explosion or collapse.
- Cover is suited to businesses of all sizes from a wide variety of sectors
Generally, machinery policies are designed to suit, or can be tailored to suit, a large range of risks, from small textile manufacturers to large shopping centres.
- If an event is out of the business’s control, there’s often little they can do to prevent it
Machinery business interruption policies can be extended to cover failure of supplies. Such as, flooding of the local substation or thirdparty damage to water pipes.
- People make mistakes
Unlike a property policy, a machinery policy will cover operator errors, for example, when a machine has been set up incorrectly and damages itself while in use.
- Where liability has been admitted, a business may be able to receive money before it’s trading again
‘Payments on Account’ extensions are available for business interruption, meaning partial pay-outs will be provided before the end of the indemnity period.
- A modern office building is dependent on management systems to control the working environment
Cover can include interruption due to failure of building management systems.
- Machinery insurance can help businesses meet leasing companies’ requirements
Lease agreements often state that it is the lessor’s responsibility to repair or replace machinery if it is damaged or destroyed while in their care.
- Financial stability can be safeguarded
Any downtime for any business can result in a loss of income and/or additional expenditure, and many firms may start to have serious liquidity problems within a few weeks of essential machinery being unavailable.
- Payments can be provided to avoid loss of business during the indemnity period
Depending on the operable covers available, additional costs to avoid or minimise financial loss, such as overtime or wages for temporary workers, can be paid.
- Maintenance is no guarantee
Your client may be meticulous with their inspections and maintenance programmes, but damage does happen and the consequences can be catastrophic.
A Scottish distillery used an evaporator to turn the bi-product of its whisky making process into animal feed. When the evaporator failed, the distillery was unable to transform the ‘pot ale’ into a commercially saleable product. The sudden failure of the bearings in the evaporator caused other significant damage within the item, but the client’s machinery insurance policy was able to meet the cost of the repairs and get the item back up and running.