I’m working with a commercial printing business in the Chicago Illinois suburbs to potentially handle their property and general liability insurance (wish me luck). While reviewing their coverage I picked up on a major mistake made by their current agent. Some background on the issue:
Properly insuring production equipment is an integral part of an insurance program for any manufacturer. Not only for the direct damage caused to the equipment but also the loss of income while the machine is inoperable.
A standard Property Insurance form does not include Equipment Breakdown coverage. The most common occurrence triggering equipment breakdown coverage stems from a power surge. We have claims where power goes down and a surge will occur when the grid goes back online. With printing equipment being highly electronic – there can be a large loss potential.
Equipment Breakdown Coverage
- Loss or damage caused by artificially generated electric current, including electric arcing, that disturbs electrical devices, appliances, or wires.
- Loss or damage caused by mechanical breakdown, including rupture or bursting caused by centrifugal force.
Many companies will build equipment breakdown coverage into their property policy at a reasonable premium but many have a sublimit for production equipment. There are many nationally known companies with a $100,000 sublimit or less. The problem on this account was that the current agent switched insurance carriers from an insurance company with no sublimit to one with a $100,000 limitation on production equipment. This particular business has $1,000,000+ in printers at their shop.
- Make sure your property insurance policy includes coverage for Equipment Breakdown
- And, if you have production equipment that is highly electronic – review your equipment breakdown form for any limitations on this equipment.