By Anthony Giannone, president of Travelers' Boiler & Machinery division

A company that contracts to provide call center services to other businesses probably does not give a moment's thought to boiler and machinery coverage. Similarly, a hospital or a restaurant may pay little attention to insurance that sounds more attuned to big factories and foundries.

But agents and brokers know that today's version of boiler and machinery--often called equipment breakdown coverage--is a critical component of modern corporate protection. Consider this:

o A voltage spike surges through the electrical lines at a business, burning out its computers and telephone equipment, just as the company is facing a deadline to complete work under a major contract.

The proper equipment breakdown policy can cover repairs or replacement as needed, make up for lost income during downtime and get a company back into business quickly by expediting a solution. A knowledgeable agent can not only help customers understand the value of equipment breakdown coverage, but also can make sure the right policy is in place to meet a specific company's needs. Agents can start by looking at five factors.

1. The right fit

A simple business may do well with typical property coverage that has equipment breakdown embedded within the policy. A more sophisticated operation may benefit from having a specific endorsement to its property policy.

By providing underwriters with comprehensive information about the business operation, an agent can get sound guidance on the best coverage.

However, no matter how the coverage is provided, agents will want to ensure that any specified limits are adequate to address the customer's needs, specifically limits related to water damage, spoilage/ammonia contamination, expediting expenses, and hazardous substances.

2. Quality counts

Agents should be aware that if a business has extensive equipment breakdown exposure, some property insurers who offer quotes may turn to a secondary carrier for the equipment breakdown coverage. Agents may want to ask questions about services that are included.

State or local authorities often have information about which carriers are up to date on inspections. In addition, agents can check with underwriters about any problems they anticipate in providing high-quality service.

3. The green stuff

Agents can check to see if coverage includes paying the additional expense of replacing equipment that cannot be repaired with state-of-the-art technology orgreen alternative products. Policies may also cover green construction, disposal and recycling methods to repair or replace property.

Agents may also want to ask about special provisions that will cover the cost of regaining green certification if damaged property has to be repaired, as well as addressing losses if following green standards during repair causes a further disruption in business income.

4. Claims expertise

Agents can help their customers not only by identifying carriers that excel in claims handling, but also by encouraging policyholders to take the right steps when a loss occurs.

A carrier's equipment breakdown experts may be able to assist in identifying sources for repairs, unusual part needs or replacement equipment that can be obtained quickly.

By having complete information about any equipment problem that results in a property loss, agents can start a claim off in the right direction and help their customers get appropriate assistance faster.

5. Risk management resources

Some carriers provide a broader range of services than others. For example, a rich offering of online resources can be invaluable to small businesses that lack funding for their own specialized staff. Information can range from maintenance guidelines and checklists to crisis planning templates.

For larger businesses, carriers may offer specific services, such as infrared scanning technology to detect loose electrical connections or onsite inspections to identify maintenance needs and analyze safety processes, as well as emergency planning assistance.

When it comes to equipment operation, many companies may not understand how vulnerable they are in today's electronic world, and they may not know about the options available to them under equipment breakdown coverage.

An agent can help customers understand that most of the causes of breakdowns are sometimes unpredictable and often unavoidable.

Customers should recognize that breakdowns could substantially impact their business. The loss of a critical piece of equipment may not only bring production to a halt, but also damage the company's reputation for reliability.

The bottom line: Customers looking for peace of mind can rely on equipment breakdown coverage to address the cost of replacement or repairs, expedite the steps necessary to get back into business and take up the slack of lost income. Agents who understand the five areas involved in selecting equipment breakdown policies will be in a good position to guide their customers to the most effective protection.

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Anthony Giannone is president of Travelers' Boiler & Machinery division.

Special Reports /

Equipment breakdown coverage evolves to meet modern risks

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