Chapter 10 - Equipment Breakdown Insurance

Equipment Breakdown Conditions Most are comparable to other coverageso Abandonment, appraisal, duties in the event of loss (notice, proof of loss, etc.), otherinsurance provisions Valuation is replacement costo Though outdated equipment may have endorsement for ACV (if anything)o Finished stock is at selling price (less discounts and shipping costs)o Coverage for upgrades (up to 25% more) is available for improved equipmento New equipment may be more efficient (energy or otherwise) and safer Suspensiono If covered equipment is in danger, coverage can be suspended Each year, insured must report:o Value of insured propertyo Estimated annual income (similar to Business Income Worksheet in BIC)o Reported property values help determine premiums next period Typically, only limited application of coinsurance for business income coverageo If annual reports are timely, no coinsurance penaltyo If reports are late, insured may share in business income loss if actual business income ismore than previously reportedJoint or Disputed Loss Agreement When property and equipment breakdown insurance is provided by different insurers, disputes mayoccuro What type of explosion?o Separation between explosion and resulting fire? Disputes may delay payment to policyholder When policy language includes the Joint/Disputed Loss Agreemento Each insurer pays the amount that is covered under contract plus ½ the disputedamount (immediately)o Insurers then settle differences through arbitrationChapter 10 Summary Identify the types of exclusions in commercial property coverage and how equipment breakdownfills the gaps List the types of equipment that are candidates for equipment breakdown insurance Discuss the various coverages under equipment breakdown