The difference between Equipment Breakdown Insurance and Standard Property Coverage is a vital aspect to be aware of. Both of these insurances serve unique purposes, but they do provide different types of protection for your business assets.
In this article, we’ll break down the difference between the two types of insurance, along with the coverages that might fit best for you.
What is Standard Property Coverage?
Standard Property Coverage, part of Commercial Property Insurance, protects your personal business from competitors and other external factors, such as threats of theft, violence, issues, or vandalism. This policy covers things in detail, as given below;
- Furniture and inventory are prone to getting damaged by many external forces.
- Buildings can sustain physical damage to their structures.
- Equipment that is lost to other business property, lost to natural disasters, or stolen.
On the downside, property coverage, which is known as the critical coverage for a business to have, does not cover the cost of equipment failure. This is when equipment breakdown insurance comes into play.
What is Equipment Breakdown Insurance?
Equipment Breakdown Insurance is a policy that covers replacement and repair costs for machinery that fails. Unlike property insurance, this coverage focuses on damage caused by external factors. This policy primarily focuses on internal breakdowns, including mechanical issues, HVAC failures, and other electrical surges.
Many business industries, such as those that provide food, manufacturing, and healthcare, often rely on costly equipment to operate.
This policy typically covers:
- Electrical surges can damage essential technology or computers.
- Mechanical breakdowns do disrupt our computers.
- Call it replacement or recovery cost for costly equipment that stops working.
If you run a business without this coverage, you can face a strict downfall. Failure to address critical issues results in significant revenue loss and a substantial impact on the business itself. At the NAIC, the cost of business ranges from $3,000 to $30,000, depending on the severity of the issues.
Key Differences Between Equipment Breakdown and Property Coverage
The primary difference between Standard Property Coverage and Equipment Breakdown Insurance is in what each does. Let us compare their scope of coverage with each other.
Coverage Scope:
- Property insurance coverage protects businesses from external strikes, such as storms or vandalism. However, it doesn’t cover internal malfunctions and failures that disrupt business operations.
- Equipment breakdown insurance does cover electrical and mechanical failures that happen. Be sure that your business recovers quickly from equipment-related disruptions.
Types of Equipment Covered:
- Property coverage causes physical damage to tangible structures but does not include machine equipment or internal systems.
- Equipment Breakdown Insurance has Business Interruption Coverage. It means your lost income due to equipment failure can be covered, giving your business more comprehensive and better protection.
Business Continuity:
- Property coverage here does not cover loss caused by equipment breakdown. If your business operation grinds to a halt and machinery fails, property coverage will not be responsible for your lost revenue.
- Equipment Breakdown Insurance includes Business Interruption Coverage, which provides coverage in the event of a loss of income due to equipment failure, giving your business more comprehensive protection.
Costs:
- Property Coverage covers a wide range of businesses, serving as a foundation for business insurance. This premium is considered higher because it protects against numerous potential risks.
- Equipment Breakdown Insurance is considered easier on the pocket rather than property coverage insurance. It is a perfect addition to your existing insurance policy, which targets coverage for internal risks.
Which Insurance Does Your Business Need?
The right decisions for your specific business plans totally depend on you. A few of the things to consider before deciding are:
- Type of Business: If your business is based on a specific tool, like a restaurant that must have a fridge, refrigerators, or a functioning oven, it uses a machine for production. Here, equipment breakdown insurance is a must.
- Risk Exposure: If your equipment is prone to wear and tear, or your company relies heavily on machinery or technology, then even Equipment breakdown insurance will help you maintain smooth business operations.
- Size of Business: Small businesses do need Property insurance, but businesses with larger equipment or machinery must consider both policies.
Protect Your Business with Comprehensive Coverage
Being a business owner comes with the responsibility and worry of protecting your own business and property. Both equipment breakdown insurance and standard property coverage have different business risks, but combining them provides robust protection from other operations.
As we’ve discussed, standard property coverage shows protection against theft and natural disasters. However, breakdown insurance can help make sure that the business can continue running even when a system or machinery fails. This helps cover the repair costs for items such as the computer system, HVAC system, and other essential business equipment.
At Omaha Insurance Services, we can help put together a plan that covers all of you business’ needs. Whether you need protection from property damage, contractual risks, or slip or fall accidents, we’ll to guide you in the selection of the right coverage at the right price. Contact us today to get professional help!
Frequently Asked Questions
1- Can I add Equipment Breakdown Insurance to my existing Property Coverage?
Yes, Equipment Breakdown Insurance is an affordable and easy-to-go option for an existing insurance system. IT helps to provide coverage protection against internal risks that Property Coverage does not address.
2- How much does Equipment Breakdown Insurance cost?
The cost of Equipment Breakdown Insurance depends on the size of the business. You require a specific level of coverage and certain types of equipment. However, generally, it is a cost-effective way to protect business operations.