Equipment Breakdown Insurance Oregon
Why do I need it?
Most Commercial Property Policies do NOT cover Equipment Breakdown. In other words, losses that are caused by machinery or equipment breakdown are not covered by most Commercial Property forms of insurance.
How do I get it?
At Ferranti-Graybeal we have protected the residents and business of Oregon for years. Our combined knowledge of business insurance and the equipment it takes to run those businesses, is our specialty.
CALL US AT: 541.567.5523 FOR A NO OBLIGATION POLICY REVIEW OF YOUR CURRENT COVERAGE.
Let our experts ensure you are properly protected for only the risks you face in your business! You can also fill out the form to the right and someone from our team will get back with you right away.
Trust us to create an Insurance Protection Plan specifically catered to you!
What is considered a "Breakdown"?
Physical breakdown that causes damage to covered equipment that results in the equipment being repaired or replaced. Some examples of direct physical loss include:
- Damage caused by the explosion of steam pipes/engines/turbines/boilers
- Damage to the steam pipes/engines/turbines/boilers, or other water heating equipment
- Bursting or rupture caused by centrifugal force that results in a mechanical breakdown/failure
- Electrical arcing (electrical breakdown of a gas that produces an ongoing electrical discharge) that disturbs electrical appliances, wires, or devices.
What Equipment is Covered in Oregon?
First, when reading your insurance agreement, if you do not see the item or piece of equipment listed on the first page (called the Declarations Page), then the equipment is not covered. Some examples of covered equipment are as follows:
- Certain Communication Equipment
- Any equipment that is used to generate or transmit energy
- Equipment that is designed or intended to operate under pressure or in a vacuum
- Any programmable or computer equipment that is used to store, retrieve, or process data for the insured, sometimes including keyboards, printers, or monitors
What are the Additional Coverage types under the Equipment Breakdown policy?
There are actually quite a few additional coverage types that can either be purchased in addition (like a rider on the policy, or an endorsement) or they may be automatically included in the coverage already. Let's look at some of those types below.
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Business Income and Extra Expense:
The insured can choose to purchase Business Income and Extra Expense coverage and the insurance company will pay for the actual loss of business income and all extra expenses the insured incurs to be able to continue operating the business during restoration.
Extra Expense only (cannot purchase only business income- has to be combined with extra expense) covers only the necessary expense the insured incurs to keep operations running during the restoration period.
Extended Period of Restoration is when the insurance company extends the payment of business income to 30 days after restoration is completed, or $25,000, whichever is less.
If the lack or excess of heat, light, steam, power or refrigeration causes spoilage, the damage is covered. Also, the property must be in storage or in the manufacturing process and the insured must own or be legally liable for the property under written contract for the property to be covered. The insurance company will then pay for damage or loss caused by property being processed, spoilage of raw materials and to finished products.
Premises- New Acquired:
This coverage automatically extends to newly acquired property. There are some conditions/rules that apply:
- The new premium is calculated from the date of acquisition. The insured party must notify the insurance company in a timely manner and pay the additional required premium once it's calculated.
- Coverage begins immediately and lasts for the length of time that is stated in the insurance policy portion that addresses newly acquired premises.
- The largest amount of coverage of any of the other insured's properties applies here, however, the newly acquired property is also subject to the conditions, terms, and deductibles as well.
If the following conditions are met and the insured has also purchased either Spoilage Damage, Business Income and Extra Expense, or Extra Expense only, then damage or loss resulting from utility interruption is covered. Following are the conditions that must be met:
- There will be a time limit in the insurance policy. If the utility interruption surpasses that time limit, damage or loss is covered and coverage is effective as of the time after limit is reached. The insured is also responsible for any time element deductibles as well. .
- The interruption has to be the direct result of a breakdown to covered equipment that is owned, operated, or controlled by a local public or private utility that directly transmits, generates, distributes, or provides utility services to the insured and covered location.
- The covered equipment must supply electric power, communication services, AC, heating, gas, sewer, water, or steam to the insured's location/premises.
Errors and Omissions:
If there is loss or damage that the insured cannot pay due to any of the following, the insurance company will cover that expense. Also, Errors &Omissions(unintentional) MUST be corrected immediately upon discovery.
- If the insured makes an error or unintentionally omits something that causes a cancellation of coverage at one of their insured locations.
- Error or Omission (unintentional) in describing the property or its location.
- The insured fails (unintentional) to include any owned or occupied locations as of the coverage inception date
Labels and Brands:
If there is covered property that has branded or labeled merchandise in it and it is damaged by an equipment breakdown, the insurance company can cover this at an agreed or appraised value. The insurance company will only pay up to the limit of insurance that is in the insurance agreement. For property retained, the insured has the option to do the following:
- The insured can stamp the word "salvage" on the merchandise or its container, as long as it doesn't damage the merchandise
- Re-label the merchandise (after removing brands/labels) to comply with any applicable laws, as long this doesn't damage the merchandise.
There are a few additional coverage types that are included under this coverage form. Each of the following are subject to a $25,000 limit, unless indicated in the insurance agreement. The limits represent the most the insurance company will pay for direct damage to the property and that are part of the limit of insurance for property damage or the limit per breakdown, NOT in addition to them. They are as follows:
- Ammonia Contamination - If spoilage occurs to covered property due to ammonia
- Consequential Loss- If part of a product is suffers a loss or is damaged, this then applies to the reduction in value of the undamaged part(s) of a product that is now unmarketable.
- Data and Media- If the insured incurs costs because they had to research, replace, or restore damaged data or media, even including the cost to reprogram instructions used in any computer equipment.
- Hazardous Substance- If the insured incurs expenses to clean up, repair, replace, or dispose of covered property that is damaged, contaminated, or polluted by a hazardous substance.
- Water Damage- limited coverage for loss/damage by fungus, wet rot, dry rot that is a result of a breakdown of covered equipment; loss/damage by water to covered property, other than damage from sprinkler system leaking or a leaking domestic water pipe; can also apply to Business Income and Extra Expense or Extra Expense Only if the insured has them...if loss of income or extra expense due to loss/damage to covered property because of fungus, wet rot, or dry rot- it will only cover for 30 days.
Deductibles Applicable to Equipment Breakdown Insurance Oregon
Deductibles apply separately to each coverage type, however, if there is more than one piece of equipment that is involved in a single instance of breakdown, then the higher of the deductibles applies. Also, if a combined deductible is shown for any coverage in the insurance policy agreement, then the insurance company subtracts this amount prior to making payment to insured. There are five different deductible formats that may apply to Equipment Breakdown Insurance:
- Dollar Deductible: A stated dollar amount in the insurance agreement that the insured must pay on any covered loss before the insurance company kicks in.
- Time Deductible: The insurance company is not obligated to pay until the number of hours/days as indicated in the insurance agreement have passed; also referred to as a waiting period (there is a waiting period under Workers Comp insurance also).
- Multiple of Daily Value Deductible:
A. Determine the business income that would have been earned during the period of restoration for the entire premises where the loss occurred, had the loss not occurred.
B. Divide the result by the number of days the business would have operated during the period of restoration. This gives you the daily value.
C. Multiply the daily value by the number days indicated in the insurance agreement. This result is the insured's deductible obligation, which would be subtracted from the amount of loss payable.
- Percentage of Loss Deductible: This deductible format applies a percentage times the amount of the loss as the insured's deductible obligation.
- Minimum or Maximum Deductible: This format is used in conjunction with the Multiple of Daily Value Deductible and/or the Percentage of Loss Deductible. If either of those is being used, the deductible amount is then calculated and compared to the minimum and maximum amount indicated in the insurance policy on the Declarations page. If the calculated amount is within the the range, that is the insured's deductible. If the calculated is less, the insured is obligated to the minimum and vice versa for the maximum.
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