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The Simple Seven
Equipment is vital in today's world. Protecting it from costly breakdowns is paramount, with periodic engineering inspections of workplace machinery and equipment also forming a vital part of an employer's duty.
The Simple Seven makes it easy to understand common equipment risks, and what HSB Machinery and Technology Combined can cover. Click on each equipment category below for descriptions of equipment risks, common causes, and real-life losses. It's that Simple.
1. Air Conditioning & Refrigeration
Air conditioning and refrigeration contain components that are prone to breakdown. Compressors, which are particularly prone to breakdown can cost $10,000 to $20,000 or more. And, replacement refrigerant can cost thousands.
However, the property damage is just the beginning. A refrigeration breakdown can result in business interruption and spoilage that may far exceed the property loss. Lack of air conditioning can result in lost sales, forcing business owners to rent temporary equipment or relocate during repairs. Restaurants, hotels, schools, hospitals and nursing homes have high refrigeration and spoilage exposures. Equipment breakdown insurance helps pay for these expenses.
Example losses
Freezer breakdown and loss of stock
The insured's walk-in freezer had broken down, resulting in their frozen stock perishing. It was determined that the freezer's condensing unit had failed due to an electrical failure.
The settled claim covered both the repair costs and loss of stock.
Example loss: Freezer room fire
The cause of the damage was identified as an electrical breakdown.
Example loss: Freezer room breakdown
The expansion valve in a hospitality company's freezer room became stuck, causing the temperature to increase and stock to defrost. It was determined that small particles of debris had become loose, causing a blockage in the freezer's orifice tube, resulting in a mechanical failure.
The settled claim covered both the repair costs and loss of stock.
2. Boilers & Pressure Vessels
Boilers and pressure vessels are used for heat, hot water, cooking, sterilization and production. A boiler or pressure vessel breakdown can impact a business' ability to operate. And, extra expense beyond the physical damage is incurred when rental units to restore operations are needed. Equipment breakdown insurance covers these expenses.
Equipment repair costs also can be costly. Low water conditions are a frequent cause for breakdown, which can result in cracking, collapse, bulging, and in the worst case, explosion of the vessel. Pump or control failure, scale build-up or safety mechanism malfunction are also common causes for breakdown.
Example loss: Boiler breakdown - Heat exchanger
Example loss: Boiler breakdown - Mechanical controller
Example loss: Boiler breakdown - Gas valve
3. Computers & Communication
Connectivity – computers, servers, systems, telecommunications and other electronics are at the heart of today's businesses. This technology depends on surge sensitive circuitry. Businesses and business income come to a halt when computers and communication equipment goes down. Diagnostic equipment such as CT scans and MRI machines are also susceptible to power problems.
Large repair or replacement bills are common when critical systems break down. Power surges, interruption and electrical fluctuations are often the culprit – damaging sensitive circuitry. And surge protection is often inadequate. Equipment breakdown insurance protects against these losses.
Example loss: Telephone system
In order to carry out an electrical system inspection, an insured turned off the power to all of their systems. When the power was turned back on, an electrical surge was created; causing damage to the central motherboard.
It was determined that the electrical system was not repairable, and that the hubs would need to be replaced across two sites in order to restore the system to its full working order.
Example loss: Computer failure
4. Electrical
Electrical systems pose breakdown risks to building owners and tenants alike. Electrical systems present a huge loss potential since these systems constitute a sizeable percentage of a property's total value. Electrical panels and cables are all interconnected, so a short circuit in one part can spread and destroy a large part of the system.
Equipment breakdown covers damage to electrical systems and other costs of a breakdown, such as the expense of renting a generator, or relocating tenants. It also covers business interruption. Service interruption also applies to tenants' income loss if the building owner's electrical system breaks down.
Example loss: Alarm system
The alarm at a child care centre was sounding when the centre opened, but there wasn't any information displayed on the alarm unit's screen. The unit was re-set but the display remained blank, leaving the insured unable to unable to use any of the alarm's functions.
It was determined the panel had experienced an electrical failure.
Example loss: Transformer
Example loss: Petrol/service station
5. Lifting Machinery
Lifting equipment – which can include passenger/goods lifts, escalators, electric chain blocks, fork-lift trucks, and patient hoists; to name a few – is regularly used by various industry sectors, and within numerous building occupancy types, and are often subject to breakdowns. Causes can include ineffective maintenance being undertaken, wear, insufficient/incorrect lubrication, poor adjustment, increased loadings, misuse/abuse, and operator error.
Equipment repair and replacement costs can be costly. HSB's equipment breakdown insurance solutions can offer protection from these losses.
Example loss: Lift drive failure
Example loss: Lift door
6. Mechanical
Buildings are loaded with mechanical equipment, such as elevators, escalators, compressors and back-up generators. Mechanical equipment also includes pumps, motors, conveyers, and more. This equipment suffers breakdowns from oil contamination, misalignment, metal fatigue, and operator error. This equipment often has sensitive technology that is fragile and prone to breakdown.
Virtually every type of business has mechanical equipment exposures. A breakdown can cost thousands to repair. And, since much of this equipment is mission critical to business operations, mechanical breakdown can result in lost income and business interruption; losses that HSB's equipment breakdown insurance covers.
Example loss: Printer breakdown
Example loss: Dentist's air compressor
Example loss: Condenser breakdown
7. Production Systems
Today's production systems - CNC manufacturing equipment, robotics, machining tools, food process equipment and many other types - the heart of any manufacturer. When this machinery breaks down, it can bring a company and its income to a halt. Modern systems employ electronics and software to maximize production and energy efficiency. A power surge that damages the electronics or interrupts the information flow between machines can render the system as inoperable as a physical breakdown.
Modern systems with sensitive electronics require skilled specialists to repair. Replacements may need to be custom-made or obtained from abroad. Equipment breakdown insurance offers protection from these losses.
