Understanding equipment insurance vs. equipment breakdown insurance

3 minute read  

No matter what type of work you do, whether you’re a professional service provider, a retail shop owner, a contractor, or a skilled tradesperson, you likely rely on some sort of equipment to complete your day-to-day tasks. Because of this, it’s important to ensure you have the proper insurance coverage to protect your equipment in the event of a loss.

Your commercial property insurance includes equipment insurance that will cover your business equipment in many scenarios. However, certain situations may require additional coverage called equipment breakdown insurance. Understanding the differences between equipment insurance and equipment breakdown insurance can help you protect your small business from costly repair or replacement expenses when your equipment gets damaged.

What is the difference between equipment insurance and equipment breakdown insurance?

Equipment insurance:

Commercial property insurance for small businesses is designed to protect both the building you operate your business out of and the contents inside, including your equipment. This type of insurance coverage can protect items in your building, including inventory, furniture, and tools. It can also provide protection for things outside of your building, including outdoor signs, fencing, and landscaping.

Commercial property insurance will typically provide coverage for your equipment if it has been damaged by external sources. For example, if a fire breaks out in a neighbouring store causing fire damage to your bakery kitchen equipment, you could look to your property insurance policy for coverage. Some other examples of external sources of damage typically covered are:

Unfortunately, your commercial property policy may not cover another common problem: the sudden, accidental breakdown of your company’s equipment caused by internal sources. To be covered for this, you would need equipment breakdown insurance, not just equipment insurance.

Equipment breakdown insurance:

Equipment breakdown insurance is a form of additional coverage that goes above and beyond your commercial property policy. If your equipment requires repairs or replacement due to internal issues, your equipment breakdown coverage can help mitigate some of those costs. Some forms of damage typically covered by equipment breakdown insurance include:

Explosion damage from boilers and piping containing steam or water under steam pressure.
Explosion damage from other pressure vessels.
Mechanical or electrical breakdown, derangement, or centrifugal force.

Mechanical and electrical breakdowns are common for small business owners. For instance, a contractor’s electric saw might short circuit and stop working. Without proper coverage, it could cost the contractor a lot of time and money before they manage to get their business back up and running.

Consider a restaurant owner who depends on various equipment to run their establishment. In the event of an unexpected power surge damaging the air conditioning system on a hot summer day, or the commercial oven malfunctioning, the impact could be significant. Without equipment breakdown coverage, the owner could face costly repairs as their property policy may not cover these damages.

Overall, equipment insurance protects from damage resulting from external causes, whereas equipment breakdown insurance helps with damage caused by internal issues.

Do you need equipment breakdown insurance?

Small business owners rely on new technology and equipment more than ever. In addition, newer technology may be less durable than traditional equipment, making equipment breakdown insurance a key coverage type to consider.

If you’re a retailer, you may rely on an electronic register to process customer purchases and store customer information. What would you do if it broke down suddenly and without warning? Without proper coverage, you’d have a hard time getting your business back up-and-running, which could impact your bottom line. Retailers aren’t the only ones who could be impacted though. Here are some other businesses that should consider additional equipment breakdown coverage:

Bakeries and restaurants that rely on electrical kitchen equipment
Contractors and other skilled tradespeople who require equipment on jobsites
Professional or creative service providers who rely on computers, networks, or other electrical systems for their day-to-day operations

Ensure you’re covered with equipment breakdown insurance

Nearly every small business owner relies on some piece of technical, digital, or electrical equipment for their day-to-day operations, putting them at risk for sudden or accidental equipment breakdown. It’s important to ensure that your equipment is protected with the right small business insurance policy. To learn more, visit our equipment breakdown insurance page today!

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.