If your business uses machinery as a core part of its operations, suddenly having these break down could have significant financial consequences. The financial strain from the cost of repairs and downtime would be difficult to recover from regardless of the industry your business is in. Taking out cover for your machinery in the event of a breakdown may help any business that relies on machinery to operate. Below, we’ll go into detail about how Machinery Breakdown Cover works, and how it can help to protect your business.

Machinery Breakdown is designed to cover (or partially cover) the cost to repair or replace machinery within your business that unexpectedly breaks down. This includes sudden, unforeseen, physical damage that prevents the machinery from operating normally. While it is typically available as a cover section under Business Insurance Pack policies, for certain types of businesses, Machinery Breakdown can also be taken out as a standalone policy.

Machinery Breakdown Insurance can also offer cover for additional areas or expenses you might incur in the event of a breakdown. These include the following:

Additional increased costs

If you experience your machinery breaking down, you might incur additional costs as a result (in addition to the repair cost of the machinery), such as hiring alternative equipment to keep your business running. This additional cost may be covered under the additional increased costs section of a Machinery Breakdown cover, provided it is part of a covered machinery breakdown claim, and the additional equipment you hire is in fact preventing/or reducing your financial loss, this cover may also be an optional extension which means additional premium may apply to include the cover

Business Interruption

Business Interruption is another cover section under Business Insurance Packs, however when it comes to machinery breakdown the business interruption cover (if selected) is typically an optional extension under the breakdown section and is designed to cover (or partially cover) the income and/or revenue your business loses whilst your machinery is broken down. In order for Business Interruption to be covered, the breakdown claim itself must be covered under the policy, that is, Business Interruption cannot be claimed as a standalone event. You will also usually be required to demonstrate evidence of loss or reduction of revenue resulting from Business Interruption in order to be able to claim under Business Interruption. This feature may not be available under all Machinery Breakdown policies, so it’s important to check with your broker before assuming any cover.

Deterioration of stock in cold storage

If your business holds stock in cold storage, then Machinery Breakdown cover may also cover the stock if they are damaged or spoiled as a result of the breakdown, typically this is an extension under the breakdown section that must be selected. Again, this cover will only be applicable as part of an insured Machinery Breakdown claim, and cannot be claimed as a standalone incident.

A wide variety of machinery can be covered under Machinery Breakdown cover, and the industry you operate in and type of equipment you own will determine the policy you might choose. Some examples of machinery that can be insured under this cover includes manufacturing equipment, air conditioning units, cool rooms (if you’re a food & beverage outlet), laser machine (for beauty therapists).

When you take out Machinery Breakdown cover, you may be required to specify the exact item(s) to be covered, including the make, model and the maximum sum insured. Some policies may also allow you to cover multiple items under a single sum insured (without having to specify the items).

It’s important to remember that Machinery Breakdown is intended to cover unexpected or unforeseen damage to equipment. If your machinery breaks down due to wear and tear (for example, wearing out of parts), or lack of maintenance, this would not be covered under Machinery Breakdown. Scratching and denting to machinery is also typically excluded under Machinery Breakdown cover.

The claim process for Machinery Breakdown claims is fairly similar to other property policies. You are likely to be required to provide some evidence of the damage or breakdown, as well as proof of purchase. If you claim for loss of revenue under Business Interruption, then this will also require additional evidence, such as bank statements; previous profit & loss statements, and any other documentation you can provide.

While Machinery Breakdown is designed to cover your machinery if it breaks down unexpectedly, remember that you may still need to consider other forms of cover under Business Insurance packs to fully cover your equipment. For example, if a fire at your premises, damaged your equipment, this would not be covered under the Machinery Breakdown section, but under the ‘Fire’ section of a Business Insurance Pack.

Machinery Breakdown cover can be an invaluable cover in safeguarding your business’s financial livelihood. If you think about how much you paid for the machinery you used, you can probably also imagine the cost to repair them if they broke down unexpectedly, and coming up with that kind of cash might not be easy for a small business owner. If you would like to look into Machinery Breakdown cover, contact an Aon broker to discuss your options.