Businesses that depend on machinery for daily operations should consider the financial consequences of a major breakdown.

What businesses can have significant exposure? #

Examples include:

• Manufacturers.
• Restaurants.
• Hotels.
• Food producers.
• Butchers.
• Bakeries.
• Commercial property owners.
• Workshops.
• Warehouses.
• Medical facilities.
• Cold-storage businesses.

What questions should a business consider? #

Ask:

• How critical is the machinery?
• What would replacement cost?
• How long would repairs take?
• Is specialist equipment involved?
• Could temporary machinery be hired?
• Would a breakdown stop production?
• Could stock spoil?

Is low-value machinery worth insuring? #

It depends on the exposure.

A machine can have a relatively modest replacement value but still create a substantial business interruption if operations depend on it.

What about leased equipment? #

Leased machinery should be disclosed.

The business should understand:

• Who is responsible for insuring it.
• What the lease requires.
• Who pays for breakdown repairs.
• Whether the owner already has insurance.

Can breakdown also affect Business Interruption? #

Yes.

A machinery failure can sometimes cause a larger financial loss through lost production or turnover than through the repair cost itself.

Separate Business Interruption or machinery-related consequential loss cover may therefore need to be considered.