Post written by: Sarah Crowley
When equipment breaks down, not only can it cause damage to equipment, but it can also cause a substantial loss of business income. Many retailers operate seven days a week, so whether you are a tenant or building owner, equipment breakdown is an important coverage no store owner can afford to be without.
What is Equipment Breakdown?
Equipment breakdown coverage is excluded by most standard commercial property policies, leaving a huge gap in coverage for customers. Equipment breakdown coverage will pay for physical damage to equipment, machinery, or technology caused by mechanical and electrical breakdowns. It can also cover business income and extra expenses, expediting expenses and spoilage costs accrued during a breakdown.
Protection for retailers from covered losses caused by…
- Short Circuits
- Motor Burnout
- Electrical Arcing
- Boiler Damage
- Power Surges
- Operator Error
- Mechanical Breakdown
These causes of loss are not covered by most standard commercial property policies.
Common Losses in Retail
The most common type of loss is “electrical breakdown,” and retail is no exception, with an average of $9,227 per loss paid out. Electrical losses cause not only loss of income, but loss of customers as well.
Other common types of equipment breakdowns in the retail industry are:
- Heat and Hot Water
- Boilers used to provide heat and hot water are susceptible to breakdowns resulting from pump failure or low-water cut-off mechanism failure.
- Air Conditioning
- Vulnerable to breakdowns that can result in costly repairs.
- Due to the ban on CFCs (chlorofluorocarbons), replacing the system’s refrigerant can cost thousands of dollars.
- Buildings Systems
- Technology, including modern telephone systems, point of sale equipment (electronic cash registers and credit card readers) and security systems are susceptible to severe damage and can be costly to repair or replace due to their complex circuitry.
- Communication and Building Automation Systems
- An electrical surge/spike could severely damage electronic equipment operating a building’s boilers, air conditioning, lights, or fire detection systems.
- In addition, technological devices like computers and telephones have become necessary tools to support everyday operations. This equipment is costly to repair since it contains sophisticated, fragile circuitry susceptible to electrical surges and spikes.
HSB IQ: Education for YOU
HSB (Hartford Steam Boiler) provides an interactive tool, HSB IQ, which describes equipment exposures specific to a retail business and also shares various examples of losses related to this industry.
To view Real Life Loss Scenarios see the links below:
How to Obtain Equipment Breakdown Coverage
Westfield Insurance offers this product with expertise provided by Hartford Steam Boiler (HSB). Equipment Breakdown coverage can be obtained by contacting your Westfield agent.
Agents – See our marketing materials today via Agents Web Passport and contact your underwriter for additional information on adding this essential coverage.
Image credit: Flickr via Bill Jacobus