Most business owners do not realize their commercial property policy does not cover internal causes of equipment failure, such as electrical short circuit or arcing.

Only equipment breakdown coverage offers businesses a more complete protection package against mechanical breakdown. According to entrepreneur.com, there are several reasons why businesses should consider adding this coverage to their policy:

  • New technology can breakdown more frequently and cost more to repair than traditional mechanical equipment.
  • Internet marketing and just-in-time inventory make businesses more dependent on computer systems.
  • Many businesses now store business information needed for daily operations on the Internet. Therefore, this information might be inaccessible during periods of equipment breakdown.
  • Business owners and employees now travel with types of equipment that were once fixed in an office space. This means breakdowns can happen in locations that might not be covered in a traditional property policy.

Mark MacGougan, assistant vice president of The Hartford Steam Boiler Inspection and Insurance Company, told entrepreneur.com that, “Equipment breakdown coverage is hardware insurance, not software insurance. Meaning there has to be some type of physical damage, as would occur when a power surge destroys a computer hard drive.”

If your current business policy does not include equipment breakdown coverage, talk to your independent insurance agent to make sure your business equipment is covered in the event of a loss.