Importance of Equipment Insurance
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.
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.
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
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.
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
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).
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.
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.
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.
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.
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.
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).
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?
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.
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.
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.
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.
Inventory & Security
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.
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.
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.
with a claim, in general, you should not dispose of any damaged equipment
before consulting your insurance agent.
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).
things to consider include the following non-comprehensive list:
the insurance cover mobile equipment that is used in multiple locations?
liabilities are covered, whether property or personal?
expenses covered in the event of personal or property damage associated
with business equipment use or failure?
period of time is covered in the event of a claim for loss of income?
the insurance company provide a dedicated personal representative?
policies written in plain English? (You may be able to read sample
be paid by direct debit, and paid monthly or only annually?
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
the worst case scenarios and act now to protect your business assets.
Because prevention is the name of the game.
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.
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
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.
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.