HSB BI&I - Why protect air conditioning and refrigeration systems?

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Why Protect Air Conditioning and Refrigeration?

Air conditioning and refrigeration systems represent the number one source of claims, and account for about half of all equipment breakdowns.
While both systems remove heat, air conditioning systems are also designed to control humidity and air quality, and distribute conditioned air throughout a building.

Breakdowns are common because these systems contain a variety of equipment components, such as pressure vessel, mechanical, electrical and electronic. If one component of the system does not work properly, the whole system may fail. Only equipment breakdown insurance covers losses caused by the accidental breakdown of these components.

Provincial governments regulate acceptable temperature ranges for health care facilities, long term care homes; and commercial establishments, such as factories, stores and offices.

Let's examine the impact on your business if your air conditioning or refrigeration fails:
Immediately, your operations are interrupted, and customers may be turned away. You may suffer hefty losses – refrigerant replacement can cost thousands; and many air conditioning units are located on the roof, which may require a crane or helicopter to remove or replace a unit. If you urgently require cooling, you may need to rent a portable refrigeration unit. You may also suffer loss of inventory due to spoilage.

Common causes of breakdowns include:

  • Inadequate or improper maintenance.
  • Failure to maintain or replace controls, such as room thermostats, electronic or mechanical controls. These are usually inexpensive items, but their failure can result in a major system breakdown.
  • Power surges or brown-outs, which can damage windings, connections and motors.


Loss examples
A water cooled chiller serving a hotel leaked, damaging compressors of the air conditioning system. The hotel was fully booked for the weekend. Paid losses, including business interruption, totalled $171,000.

A fish processing plant had 4.5 million pounds of cod at risk when a flange on a suction strainer in the refrigeration system broke and 500 pounds of ammonia leaked into the cold storage room. Paid losses, including spoilage and business interruption, totalled over $96,000.

The motor of an office tower's air conditioning system's 600-ton chiller shorted. Once the machine was dismantled, inspectors discovered that the core had melted. The rental unit stayed on line until the new motor arrived – six months later. Paid losses, including extra expense, totalled over $230,000.

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