Chapter 10 - Equipment Breakdown Insurance
Chapter 10 - Equipment Breakdown Insurance Chapter 10 - Equipment Breakdown Insurance
Equipment Breakdown Coverage Ten insuring agreements are available and coverage is provided if a limit is indicate for eachcoverage on Declarations1. Property damage2. Expediting expenses3. Business income and extra expense (or extra expense only)4. Spoilage damage5. Utility interruption6. Newly acquired premises7. Ordinance or law coverage8. Errors and Omissions9. Brands and labels10. Contingent business income (dependent properties)Covered Cause of Loss “Breakdown” to “covered equipment”o Once triggered, coverage from all insuring agreements applieso Protects equipment plus consequences including:• Business personal property of insured (or in care, custody or control of insured)• Business income loss "Breakdown"o Means the following direct physical loss that causes damage to "Covered Equipment“ andnecessitates its repair or replacement:1) Failure of pressure or vacuum equipment;2) Mechanical failure including rupture or bursting caused by centrifugal force; or3) Electrical failure including arcing;“Covered Equipment”1) Equipment built to operate under internal pressure or vacuum other than weight of contents;2) Electrical or mechanical equipment that is used in the generation, transmission or utilization ofenergy;3) Communication equipment and "Computer Equipment"; and4) Equipment in Paragraphs (1), (2) and (3) that is owned by a public or private utility and used solelyto supply utility services to your premises.…the "Covered Equipment" must be located at a premises described in the Declarations and beowned, leased or operated under your control (Except for (4))Equipment Breakdown Coverages: Property Damage and Expediting Expenses Again, coverage is broader than damage to “covered equipment” Includes all property of the insured that is damaged as a result of breakdown of covered equipmento Buildingo Business personal propertyo Personal property of others BPP would exclude coverage for most property losses anyway Expediting expenses are for costs incurred to temporarily repair or speed up permanent repairs fordamaged propertyo Not as broad as extra expense coverage
Equipment Breakdown Coverages: Spoilage Damage Covers damage to:o Raw materials,o Goods in process of manufacture, ando Finished goods Must result from breakdown of covered equipment that causes lack or excess:o Heato Lighto Steamo Refrigeration Includes loss due to contamination from ammonia (used in refrigeration) Also pays for expenses that help reduce spoilage lossEquipment Breakdown Coverages: Time Element Coverages Business income coverage pays for:o Actual loss of business incomeo During period of restoration (continues 5 days after equipment is replaced)o Due to suspension of operations (full or partial)o Caused by breakdown of covered equipmento Extra expense coverage too Utility interruptiono Extends business income and extra expense to include breakdown of equipment ofutility companieso Includes spoilage protection Contingent business incomeo Adds business income loss (or extra expense) from equipment breakdown at dependentproperties (supplier or end user)o Must specify location of non-owned propertyEquipment Breakdown Coverages: Other Coverages Newly acquired premiseso Extends all equipment breakdown coverages (property and BI) to newly acquiredpropertieso Unlike other coverage forms, number of days must be specified Ordinance or law coverageo Pays for increased cost of construction to repair damaged buildings according toordinance or lawo Also pays for demolition of undamaged portion of a building Brands and labelso Similar to brands and labels endorsement in property insuranceo Insurer pays expenses to remove labels or stamp “salvage” Errors and omissionso If insured makes an error or omission listing property or premises
<strong>Equipment</strong> <strong>Breakdown</strong> Coverages: Spoilage Damage Covers damage to:o Raw materials,o Goods in process of manufacture, ando Finished goods Must result from breakdown of covered equipment that causes lack or excess:o Heato Lighto Steamo Refrigeration Includes loss due to contamination from ammonia (used in refrigeration) Also pays for expenses that help reduce spoilage loss<strong>Equipment</strong> <strong>Breakdown</strong> Coverages: Time Element Coverages Business income coverage pays for:o Actual loss of business incomeo During period of restoration (continues 5 days after equipment is replaced)o Due to suspension of operations (full or partial)o Caused by breakdown of covered equipmento Extra expense coverage too Utility interruptiono Extends business income and extra expense to include breakdown of equipment ofutility companieso Includes spoilage protection Contingent business incomeo Adds business income loss (or extra expense) from equipment breakdown at dependentproperties (supplier or end user)o Must specify location of non-owned property<strong>Equipment</strong> <strong>Breakdown</strong> Coverages: Other Coverages Newly acquired premiseso Extends all equipment breakdown coverages (property and BI) to newly acquiredpropertieso Unlike other coverage forms, number of days must be specified Ordinance or law coverageo Pays for increased cost of construction to repair damaged buildings according toordinance or lawo Also pays for demolition of undamaged portion of a building Brands and labelso Similar to brands and labels endorsement in property insuranceo Insurer pays expenses to remove labels or stamp “salvage” Errors and omissionso If insured makes an error or omission listing property or premises
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