Exam 2: Equipment Breakdown Flashcards
Equipment Breakdown Covered Losses
Losses due to accidental breakdown of most equipment
- Steam Boilers
- Electrical Generators
- Pumps
- Turbines
- Engines
- Air Conditioning
- Refrigeration Systems
What is Equipment Breakdown Coverage also known as?
“Boiler and Machinery Coverage”
Where is previous equipment breakdown covered?
BPP
What does BPP exclude?
1) Electrical Breakdown
2) Covers damage to the equipment and damage to other property around it
* Combustible dust
What does equipment breakdown coverage do in relation to the BPP?
- Fills the coverage gaps
- Covers damage to the equipment and damage to other property around it
Insuring Agreement
Breakdown of covered equipment
“Breakdown” (Insuring Agreement)
Direct physical loss to equipment due to pressure, mechanical or electrical failure
“Covered Equipment” (Insuring Agreement)
- Equipment built to operate under internal pressure or vacuum
- Electrical or mechanical equipment generating energy
- Communication and computer equipment
Property Damage
Covers Direct damage to “covered property”
“Covered Property” (Property Damage)
- Property named insured owns
- property in named insured’s care and control and they could be held legally liable
- Must reside at premises named in declarations
Expediting Expenses
- Payment for extra cost to make temporary repairs and - speed up permanent repairs (paying overtime to workers)
- Some coverage duplication exists with extra expense under business income
Spoilage Damage
- Payment for loss of perishable goods due to breakdown
- Will cover any expenses associated with attempting to save goods or reduce loss
Utility Interruption
- Coverage for shut down of equipment due to failure of utility service
- Covers loss of income
Ordinance of Law
If equipment breakdown causes damages that:
- require demolition or extra repairs required by local code
Insurance Limits
- Policy is written with one overall limit (the most insurer will cover for losses from anyone break down
What is the sub limit for Insurance Limits and Why?
$25,000
1) Ammonia Contamination: used as refrigerant in some equipment
2) Hazardous Substance: old electrical transformers may contain PCB’s
3) Consequential Loss: reduction in value of undamaged parts - because the main equipment is damaged/destroyed
4) Data and Media: Applies to the expense to research, replace or restore damaged media/infrastructure
Suspension Provision
Insurer can suspend coverage of it finds it to be in dangerous condition
1) Must deliver or mail written notice
2) Usually the result of a loss control inspection
3) Insured is usually cooperative
Valuation
- Replacement Cost
- Pays the smallest of the following:
1) Cost to repair damaged property with property of same kind, capacity, size or quality
2) Cost to replace damaged property
3) Amount to insured actually spends to repair property
Deductible
- Dollar deductible: exceed a certain amount before losses are paid
- Multiple Daily Value: uses some multiple of daily business income (3X) to set deductible
- Percentage of Loss: 2% deductible of $100,000 loss is $2,000
Dollar deductible
exceed a certain amount before losses are paid
Multiple Daily Value
uses some multiple of daily business income (3X) to set deductible
Percentage of Loss
2% deductible of $100,000 loss is $2,000
