The cost of repairing machinery may only be part of the financial impact of a breakdown.

A critical machine being unavailable can also interrupt normal business operations.

What financial losses can arise? #

Examples include:

• Lost production.
• Lost turnover.
• Reduced gross profit.
• Additional labour costs.
• Outsourcing production.
• Hiring replacement machinery.
• Additional freight.
• Overtime.
• Other increased operating costs.

Does Machinery Breakdown automatically cover lost income? #

Not necessarily.

Basic Machinery Breakdown cover commonly focuses on the cost of repairing or replacing the damaged machinery.

Business Interruption or consequential loss cover may need to be separately included.

Why does the repair period matter? #

Some specialist machinery can take a long time to:

• Diagnose.
• Repair.
• Replace.
• Import.
• Install.
• Commission.

The potential interruption period should be considered when selecting Business Interruption cover.

What if temporary machinery can be hired? #

Some Machinery Breakdown policies provide limited cover for temporary machinery hire or expediting expenses.

This can help reduce the length of an interruption.

However, the available amount may be much lower than the overall financial loss suffered by the business.

What should businesses assess? #

Consider:

• Which machinery is critical.
• Availability of spare equipment.
• Replacement lead times.
• Alternative production options.
• Maximum possible downtime.
• Financial impact of the shutdown.

The repair value and Business Interruption exposure should be assessed separately.