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Equipment Breakdown Insurance Is A Priority For Real Estate Owners

Loss prevention and control is one of the major selling points of equipment breakdown insurance (also known as boiler and machinery insurance). Engineers that are employed by insurers are supposed to inspect the objects being covered in order to prevent any explosions or breakdowns.

The fact is that boilers (and other fired and unfired vessels), generators and kindred equipment may explode or break down, despite inspections by qualified personnel to prevent such events from occurring. This means that insurance often may be the necessary alternative to cushioning against losses that habitational real estate owners might not otherwise be able to retain.

There are currently existing laws that require habitational structures containing a certain number of families, which includes public buildings, as well as privately owned business establishments, containing steam or hot water heaters be state-inspected, unless owners or operators maintain insurance. The cost of state inspections was, at one time, a little lower than the price of insurance. Whatever the situation is today, offering prospective clients the opportunity of inspectionsplusinsurance seems like a better deal, at least for the owners peace of mind.

Be aware of restrictions and exclusions under insurance policy

It is important for the habitational owner to understand the extent to which a property policy will or will not cover certain equipment from breakdown. Most of the exclusions applicable to equipment breakdown policies are meant to apply to remote or indirect losses that can be expected to happen over time, such as wear and tear, corrosion, and things of that nature.

Another exclusion common to these policies concerns the increase in loss caused by or resulting from the enforcement of any ordinance, law, regulation, rule or ruling regulating or restricting the repair, alteration, operation, construction or installation of covered equipment. If ordinance or law coverage is obtained against physical loss or damage to a building or structure with respect to property coverage, it also stands to reason that this same coverage should be considered with respect to equipment breakdown insurance where the subject of potential loss is explosion of a boiler.

A tale-tell sign that ordinance or law coverage may be required is when an equipment breakdown policy covers a boiler on an actual cash value basis. As a general rule, underwriters are receptive to giving replacement cost on boilers, unless they are old and cannot be replaced. That being the case, the building or structure housing these vessels also is likely to be a candidate for ordinance or law coverage.

Talk to an insurance agent about Equipment Breakdown insurance, and be sure to have annual inspections to ensure the maintenance and care of these vital assets.

by: William A. Riggs




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