Chip Merlin, Ashley Harris and I settled an Equipment Breakdown Coverage (aka Mechanical Breakdown Coverage) lawsuit in New Jersey yesterday. Chip Merlin took this picture of Ashley and me after the settlement. While the settlement is confidential, there are a number of lessons to be learned and reasons why this coverage is so important to small business manufacturers.
Equipment breakdown coverage used to be known as “boiler and machinery coverage.” It is so much broader today and covers property and perils so much greater than boiler and machinery losses. Many people fail to realize this. For small businesses, failing to purchase this coverage can lead to financial ruin.
The International Risk Management Institute says this about equipment breakdown coverage:
Coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well. Equipment breakdown insurance is increasingly replacing traditional boiler and machinery (BM) insurance, in part simply because the title is more descriptive of the coverage provided. Also, today’s equipment breakdown policies typically provide slightly broader coverage than traditional BM policies, and they usually do not use the specialized terminology found in traditional BM policies.
Obviously, businesses should purchase this often-overlooked coverage, and agents should always suggest purchasing it as well.
Ashley Harris previously wrote about this coverage in Mechanical Breakdown Insurance.