If you are a brewery owner and all of your operations are running smoothly, but you aren't covered with equipment breakdown coverage, you may be in trouble. You might think that your property policy will cover your equipment, which it will, but only for external damages such as fire or a tree falling on your roof. Equipment Breakdown is important to have because breakdowns can happen in any type of business setting and will cover more than the equipment itself. Whether your type of business consists of computer equipment that costs thousands of dollars or a large brewery with brewing equipment costing millions of dollars, you want to have the proper coverage to make sure you can continue running your business if something does happen.
Why is equipment breakdown so important?
Equipment breakdown insurance is one of the best coverage, service and price values in the industry and quite a few brewery owners continue to not carry enough coverage and some even go without the coverage at all. Here is a loss example that impacted a craft brewery that was carrying equipment breakdown insurance:
The cause of a breakdown of an entire system was due to the simple fact that there were several holes in two steel drums of a water tube boiler. This certain brewer's boiler equipment was used to provide steam for their production process. The production that was lost due to the breakdown was unable to be made up over time.
Your thoughts may be that you will take extra precautions to prevent any major damage to your equipment, but it's the small accidents we see that are so detrimental. Consider that not only is the equipment broken due to those small holes, but you will have a loss of income due to lack of production as well as the cost to have a professional come fix it if it is repairable. The total cost of property damage was just over $14,000 and the cost of extra expense was just shy of $42,000. You wouldn't want to have out of pocket expenses totaling close to $56,000 because you weren't carrying equipment breakdown insurance.
What is covered with equipment breakdown?
- Covers costs to fix or replace equipment that has failed
- Costs to get equipment working faster, therefore minimizing loss
- Reimburses for labor and time it takes failed equipment to be replaced
- Will reimburse for related goods or loss of materials, such as a spoiled batch of beer, due to non-operating equipment
- If there is business stoppage due to equipment failure it will replace lost business income
- Disruptions due to power surges, short circuits, centrifugal force, boiler overheating or cracking, and mechanical breakdown.
What if I'm leasing my equipment?
You will have a certain amount of protection from failing equipment even if it is leased. Your equipment supplier or landlord will probably service your broken equipment and get your brewery up and running again. Although you may not be responsible for the fixes that your broken equipment will need, equipment breakdown insurance is still very necessary. During the time that your equipment is broken your business will likely be losing income due to lack of production. The equipment supplier will fix your equipment, but will not reimburse you for lost income during this time, which is greater than the cost of repairs in a lot of cases.
We have many insurance professionals with years of experience in all lines of insurance coverage. If you have any questions about equipment breakdown coverage or general questions regarding insurance, please feel free to contact us. We are here to help!