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Do Farmers Need Equipment Breakdown Coverage?

Post written by: Pat Ploucha

WFI_Farming-Injuries The simple answer is yes, because all farms have equipment breakdown exposure.

Farming operations continue to evolve in an effort to improve overall efficiencies and reduce costs. Today’s farms depend on many types of electrical, mechanical, and high tech computer equipment. Many farm and farm risks do not realize how vulnerable they are to an expensive equipment breakdown loss that could paralyze their operations. The loss to just one piece of equipment could have a devastating impact on the farm’s bottom line. Much of today’s farm equipment is older, and is operated for longer periods of times in difficult, arduous conditions. This only adds to the equipment breakdown loss potential.

Another reason farming risks need equipment breakdown coverage is that farm and farm risk policies typically contain exclusionary language for losses associated with equipment breakdown type situations or equipment breakdown accidents.

What Does It Cover?

Equipment breakdown coverage is designed to provide protection from potential costly losses by reducing the coverage gaps that exist in many property insurance policies today. The intent of the coverage is to pay for physical damage to covered equipment caused by a mechanical and electrical breakdown. Coverage may also cover business income or spoilage losses due to an equipment breakdown, and the extra expenses to limit the loss or to expedite repairs.

Equipment breakdown coverage provides insurance protection for accidents to covered equipment, including physical damage caused by events such as:

  • Business computer breakdown and data restoration
  • Electrical short circuit and electrical arcing
  • Mechanical breakdown
  • Motor burnout
  • Pressure vessel bulging, cracking, collapse
  • Utility service interruption

Covered farm equipment includes:

  • Electrical distribution systems
  • Heating and cooling systems
  • Refrigeration systems
  • Boilers and pressure vessels
  • Computers and electronic equipment
  • Mechanical equipment
  • Irrigation equipment, including center pivot, wheels, drive mechanisms, motors and gears
  • Vehicle mounted GPS equipment

The Hartford Steam Boiler Inspection and Insurance Company, a leading provider of equipment breakdown coverage, has provided the following actual losses indicating the risk to losses are real:

  • During a power outage, an emergency generator was called into service. After several hours of operation, the generator unexpectedly shut down. The generator was found to have a hole in side of its engine block. An apparent loss of lubrication oil caused internal damage and a piston broke apart, damaging the engine block. A replacement engine was needed. Total paid loss: $28,390.
  • The main switchgear arcing caused arcing in various compressors and two water heaters. Total paid loss: $20,809.
  •  A 15-horsepower refrigeration compressor for milk cooler failed. The compressor had internal mechanical damage. Repairs were expedited, so no milk spoiled. The compressor needed to be replaced. Total paid loss: $12, 044.

Equipment Breakdown Coverage: A Must for Modern Farmers

Today’s farms have changed, and so have equipment exposures. Unfortunately, farmers often underestimate the exposures associated with equipment breakdown coverage. This could result in a loss and a costly disruption in an insured’s operation – leading many to the conclusion that indeed, yes, farm and farm risks need equipment breakdown coverage.

Your independent agent can tailor the proper equipment breakdown coverage to fit your insurance needs and provide you the necessary peace of mind.

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