How Spending a Few Dollars Can Save Thousands

Equipment breakdown

When Hurricane Matthew slammed into the southeast and mid-Atlantic states, up to 16 inches of rainfall caused widespread flooding in Eastern North Carolina and South Carolina. In North Carolina, one of our policyholders had floodwater damage to their building and its contents, and lost power to their facility. When the clean-up was done and power was restored, the freezer and ice machine on the premises were not working.

This equipment was an integral part of the client’s business. They now faced both the out-of-pocket expense to replace it and a loss of income due to business interruption. Unfortunately, the policyholder’s property coverage contained the typical flood exclusion, so coverage did not apply for this equipment. Fortunately, though, this client had also purchased our Equipment Breakdown coverage.

Great American’s claims adjuster determined that the loss to the equipment was due to a power surge when the power returned to the premises after a 20-hour disruption and that the flood waters had not risen high enough to affect the control panels of the equipment.

This is a great example of why policyholders should consider adding Equipment Breakdown coverage to a policy. The power surge was covered by the Equipment Breakdown portion of the policy. In the end, Great American paid $8,850 for the freezer and ice machine and $14,846 for lost business income.

How Equipment Breakdown insurance enhances your clients’ Property coverage

  Property Coverage Standard Exclusions   Equipment Breakdown Insurance
Excludes: Mechanical Breakdown    Covers: Mechanical Breakdown, including rupture or bursting by centrifugal force.
Excludes: Electrical arcing    Covers: Artificially generated electrical current that disturbs electrical devices, appliances or wires.
Excludes: Explosions of steam boilers, piping, engines, turbines    Covers: Explosions of Steam Boilers, Piping, Engines, Turbines caused by or resulting from any condition or event inside such equipment.
Excludes: Loss or damage to Steam Boilers    Covers: Loss or damage to Steam Boilers caused by or resulting from any condition or event inside such equipment.
Excludes: Loss or damage to Hot Water Boilers    Covers: Loss or damage to Hot Water Boilers, or other water heating equipment caused by or resulting from any condition or event inside such boilers or equipment.

Your Great American underwriter can help you navigate the eligibility requirements for adding this coverage to a policy. Contact us or view our product concierge to learn more about the coverages we offer and the markets we serve.

This claims scenarios is provided to illustrate an exposure you could encounter. The facts of any situation that may actually arise and the terms, conditions, exclusions and limitations in any policy in effect at the time are unique. Thus, no representation is made that any specific insurance coverage applies to this claims scenario.