Boiler and Machinery Insurance Canada
Two words sum up the value of boiler and machinery insurance: collateral damage. As much as your business may have coverage in place for key elements such as commercial property, general liability and directors and officers, the breakdown of a critical piece of machinery has the potential to wreck havoc across multiple facets of your operations.
Just one event can quickly add up to a significant and costly amount of collateral damage to your organization. For example:
During a lightning storm, the roof of a food processing plant is struck. The company’s HVAC equipment is housed on the building’s roof and is destroyed. This leads to a chain reaction with $1,278,329 of finished product spoiling and being discarded.
In a company’s boiler room, a pressure value suddenly explodes. The heating system is damaged as a result of the explosion that, in turn, leads to a $478,190 loss of perishable goods.
Boiler and Machinery Insurance Defined
The International Risk Management Institute (IRMI) notes that an object is “a boiler and machinery (BM) insurance term for equipment or machinery. BM coverage applies to losses or damages resulting from an accident (such as a breakdown or explosion) to a covered object.” 1
Related Matters: A Guide to Equipment Breakdown Insurance
Examples of an object that could be covered under a boiler and machinery or equipment/machinery breakdown insurance policy include a roof top HVAC unit, manufacturing equipment, a pressure vessel or the actual boiler itself.
Beyond Boilers: Covering a Range of Equipment Breakdowns
The International Risk Management Institute further defines equipment breakdown insurance as “coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well.
Equipment breakdown insurance is increasingly replacing traditional boiler and machinery (BM) insurance, in part simply because the title is more descriptive of the coverage provided. Also, today’s equipment breakdown policies typically provide slightly broader coverage than traditional BM policies, and they usually do not use the specialized terminology found in traditional BM policies.” 2
4 Ways to Proactively Manage Equipment Risk
Physical surveys. Knowing your potential exposures can help you reduce the likelihood of downtime and associated losses. An expert from your insurance company can survey your machinery and equipment. They may use infrared thermography to inspect mechanical and electrical equipment for “hot spots” such as loose connections, faulty insulation and dust accumulation. If left unattended, these can lead to electrical fires that could cause much greater damage to your operations.
Preventative maintenance. By proactively developing instructions, logs, timelines and recommended actions you can keep on top of equipment maintenance schedules.
Regulation compliance. Your insurance company may provide a representative to inspect your boilers and pressure vessels to ensure your equipment remains in compliance with provincial and jurisdictional regulations.
Accident investigations. In the event of a loss, your insurance company will send in an expert. They will review the causes of the loss, help you resume regular business operations as well as recommend ways to reduce recurrence and mitigate the cost of the loss.
Talk to an ALIGNED Insurance advocate today about what objects can be covered by boiler and machinery insurance. We can help you secure the best products, services and solutions for your business.
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100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours.
Sources: 1, 2 IRMI A Guide to Equipment Breakdown Insurance