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Many companies operate on tight margins in troubled economic circumstances. Reducing overheads can be very important. Having the appropriate business equipment insurance is not a luxury, it's a necessity. It's essential not to postpone obtaining solid cover to protect your business.

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The alternative could be catastrophic for the long term survival of your business. Your cash flow may be interrupted, and your credit may be insufficient to continue without the right insurance to replace your lost or damaged equipment. While meanwhile, revenue and sales might be right down.

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It's sensible to protect your business when literally everything is potentially at stake. And once you find the right insurance partner, and with the appropriate insurance portfolio, you will feel great peace of mind knowing that you are protected against many contingencies. Safe in the knowledge that the future of your business is almost assured.

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Business Equipment Insurance

The Importance of Equipment Insurance
Business equipment insurance is a key priority for companies. Whether your equipment is owned or leased, the right business equipment insurance will help protect your company from negative future contingencies and provide you with peace of mind.

Your equipment and machinery can be damaged, suffer downtime or be lost due to mechanical failure, electrical faults, power surges or short circuits, employee error, accidents or theft. There are various other mishaps that could befall your business inventory. So it is vital that you make the time to ensure that you have the appropriate business insurance cover for any such eventualities.

Hidden Liability
Your equipment could be stolen at any time, and again, it's fundamental to have the right business equipment insurance coverage to protect your company. Remember, your potential losses can extend well beyond the money value of just the items themselves. As the saying goes, "Time is Money."

In the worst case scenario, for a company with low cash reserves, selecting the appropriate business equipment insurance could make the difference between success and failure, survival and bankruptcy.

business data picAny loss or damage to your equipment may have a hidden cost to your business. This hidden liability is reflected in any downtime your business suffers in that eventuality. The loss or damage to a $1,000 machine could cost you many times that in lost down time, productivity and under utilized wages.

Business interruption insurance may cover you in the event that circumstances prevent you from continuing your business for a temporary period. This could include loss of income, additional operating costs (for example, renting replacements or relocation) and outstanding debts (for example, if your accounts are destroyed).

Protect Your Business
Protecting your future business income (and indeed survival) is important to consider in the context of selecting the best insurance policy for your needs. And, plan for the consequences of all possible scenarios regarding equipment loss or failure.

For example, the loss of a computer worth only $2000 (which may be fully covered) may also lead to the loss of $50,000 worth of data and records (which may not be covered). Modern computers and electronic equipment are very sensitive to electrical fluctuations.

Similarly, any hypothetical cost of repairs to damaged or failed equipment should be considered when your business is evaluating the various insurance options available to protect your company, and whether or not non-warranty repairs are covered in available policies.

Leased Equipment Insurance
insurance shield graphicIf your equipment and machinery is leased, it's vitally important that your business selects the appropriate insurance. It could be a severe blow to your company if the loss of an item leaves you with thousands of dollars worth of liabilities to your leasing company. Especially if your business is new or running on tight margins. The cost of repair or replacement can be a key issue for your business along with any hypothetical non-productive debt to your leasing company.

One final point is to be sure to read the fine print to ensure that every possible eventuality is covered, whether it be theft, vandalism, fire, flood, earthquake, storm, transportation and repairs, among others. And be sure to investigate if your leased business equipment is covered, and to what extent and in what contingencies, by the leasing company's own insurance cover, if any.

Other Factors
Other factors that may need to be considered include the cost of time and labor to replace your equipment, lost income caused by the interruption to your business, temporary measures taken to facilitate resumption of business activities, and the cost of any associated assets (such as data in the case of computers, or perishables in the case of refrigeration).

As an example, if a restaurant loses the use of an oven, it could lose a day's trade while a replacement is organized, which raises the question — is that day's lost trade covered by insurance?

The actual loss suffered may be many times the value of the apparent loss. For example, a stolen computer might only have been worth $1000, while the data on it might have been worth $20,000 to future business. In situations like these, consideration should be given as to what level of insurance is truly appropriate after weighing up the potential seriousness and probabilities.

The right business equipment insurance or breakdown cover can provide much more protection than any warranty the equipment purely on its own may have. Some cover can be obtained which is exceptionally comprehensive, for example, it is possible to even obtain insurance to cover breakdown at your suppliers.

Speaking of fine print, be sure to read it all very carefully. For example, your insurance coverage will ideally provide replacement value cost of your equipment, not merely the dollar cost of what it was originally purchased for, which could be much less.

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Examine whether your policy covers future equipment purchases or leases, or whether you will need to periodically update or upgrade your policies. And don't hesitate to contact your insurance company or agent if you have any concerns.

Business Inventory & Security
Protecting your business against future contingencies is a priority. There are many more things to consider apart from those already mentioned. Keep a current, updated list of your inventory, receipts, prices paid and serial numbers etc. It's recommended to take photos of valuable equipment. Then, you are well prepared in the event of an inconvenient crisis and should be better prepared to overcome it.

Even if you have full insurance, take serious security precautions as well. Any negligence when it comes to sensible security and legally required safety precautions could invalidate any claim. As the saying goes, it's better to be safe than sorry. And the more time you spend on this important issue, the greater your peace of mind.

Insurance Claims
When selecting your insurance partner, enquire about their claims procedures. For example, for a valid claim, the policy holder may have to provide a detailed description of any damage to equipment, including names, models, serial numbers etc, and in the event of serious or expensive damage, a consultant or expert report may be required.

If proceeding with a claim, in general, you should not dispose of any damaged equipment before consulting your insurance agent.

Prior to commencing any repairs, you may need to consult your insurance agent for authorization — in expensive situations they may require more than one quote. You may need to prove that you took all reasonable steps to prevent any damage, loss or theft (for example, by running regular safety audits in your business premises etc).

Business Equipment Insurance
Other things to consider include the following non-comprehensive list:

Does the insurance cover mobile equipment that is used in multiple locations?

What liabilities are covered, whether property or personal?

Are legal expenses covered in the event of personal or property damage associated with business equipment use or failure?

What period of time is covered in the event of a claim for loss of income?

Does the insurance company provide a dedicated personal representative?

Are the policies written in plain English? (You may be able to read sample policies).

Can premiums be paid by direct debit, and paid monthly or only annually?

Finally, it is wise to research your insurance needs very thoroughly by comparing the available policies of a number of reputable insurance companies prior to selection. Then, discuss your situation with your chosen insurance agent.

Evaluate the worst case scenarios and act now to protect your business assets. Because prevention is the name of the game.

Public Liability Insurance
Public Liability Insurance provides important protection against potential lawsuits. Unpredictable, one in a million accidents can happen. A customer, visitor or sub-contractor could suffer an accident to themselves or damage to their property. Or they could suffer an illness from bad food or a chemical spill.

Public Liability is of particular importance to contractors working on external premises where the risk of an accident or property damage is potentially higher. For example, someone could trip over your tools or you could damage some valuable property. Additionally, some private and government employers make having Public Liability Insurance compulsory.

A key feature of this type of insurance is that the payee of any such claim is not usually a signatory to the original insurance policy which was theoretically issued to cover companies for third party insurance claims.

In a similar way to Professional Indemnity Insurance etc (which are not covered by the scope of this article) a Public Liability Insurance policy indemnifies (up to a set limit) a company against potential claims by victims of accidents, losses or other mishaps which may occur. It's important here to distinguish the difference between genuinely unforeseeable accidents and negligence.

Another important issue is whether these kinds of insurance policies are mandatory. This can vary between jurisdictions. As with all kinds of insurance, it is vital that you obtain independent expert advice to ensure that your insurance portfolio protects against all possible eventualities.

Inadequate cover exposes you to unacceptable risk and even the risk of loss of your company. Finally, read your insurance policies carefully, paying particular attention to any exclusions (for example legal fees etc) or any other limitations.

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