If you are a construction contractor, you probably know how important it is to keep your projects on schedule. You also likely know that a sudden malfunction in your tools or other equipment might throw a wrench into those plans. As a result, you might see the project grind to a halt. That could cost your business time and money. Do you have insurance available to help you during the recovery period?
Often, the answer to this question is yes. When mechanical failures occur involving your essential equipment, you'll likely need to turn to equipment breakdown insurance to help you out. This is a special type of insurance that differs from the average equipment insurance policy.
Contractor Equipment Insurance — What It Won't Cover
Contractors and builder's risk insurance policies often cover the equipment the contractor owns and uses in the course of its operations. However, all policies have their limitations, and certain types of equipment damage might have no coverage under the standard policy.
Suppose that you are in charge of building a Sunroom onto someone's house. You'll likely use such essential equipment as saws, drills, welding equipment or generators.
But, suppose one day that a severe storm hits the area. It causes property damage to the construction site, and to the equipment you were using at the time. In most cases, standard business property and equipment insurance can help you cover the costs to repair or replace the damaged equipment.
However, equipment might fail even when it's sunny out. Suppose that one day, an electrical surge causes a failure in your generator, essentially forcing operations to halt. Standard equipment insurance usually excludes such electrical damage risks, so it might not pay for your saw's damage.
This might be a case for equipment breakdown insurance to help out. Some commercial equipment policies automatically include this coverage. In other cases, you might have to buy it as an endorsement.
Expand Protection With Equipment Breakdown Insurance
Equipment breakdown insurance applies in cases where an unexpected force causes damage to essential equipment. It will apply to situations where you couldn't anticipate or reasonably prevent the damage. The case where a power surge suddenly fries a generator is a good example of when your coverage might be able to step in.
The right equipment breakdown coverage might help the business owner pay:
- The costs to repair damaged machinery.
- Replacement costs of completely-destroyed items.
- Income lost during the operational shutdown.
- Certain other essential costs you incur during the shutdown.
One thing to remember is to tell your insurer where you plan to use certain equipment. They will want to know if equipment will always remain on your business property, or will travel with you to work sites.