Small Business Equipment Insurance

Many businesses are dependent on expensive equipment needed in the manufacturing process. Often, the equipment is leased rather than purchased, and it is wise to insure the equipment, irrespective of ownership. This is because in case of a breakdown, there are two types of expenses involved.

First is the cost of repair, and second is the expense incurred due to loss of business income due to the equipment being out of order. Leased equipment poses a greater risk, especially if it is not insured fully. In such a case, a damage or loss will put the business in a tight spot because it will lose out on the manufacturing process and also have to pay for replacing the machine for the company from where it was leased.

Need for Business Equipment Insurance

Business equipment that gets covered in insurance extends from manufacturing machines, to cell phones and smart phones used by the sales personnel. It also includes the data and software installed on computers. The need for business equipment insurance is justified because:

• Numerous businesses employ new technology, sensitive electronic equipment, high technology computers that are very expensive to purchase and maintain
• The latest business practices like internet marketing etc are highly dependent on computers and cannot function without them
• Businesses dependent on critical information that can only be accessed on computers suffer in case of a computer breakdown
• The mobile work force has on its person numerous gadgets and equipment like barcode scanners, printers, smart phones, laptops and others. A theft or accident can cost the business a hefty amount of money if all of them are not insured.
• Mechanical disasters can lead to financial bankruptcy if not sufficiently covered with insurance.

Insurance on business equipment must cover both aspects then, loss of business income due to non functioning of the equipment, and for damage to the equipment. Purchase or lease of new equipment must be combined with updating the insurance as well to cover a sudden crisis involving new equipment.

Replacement cost coverage is preferable to actual cost coverage, though the latter is much cheaper in terms of premium.
Insurance overlaps occur for business equipment when a piece of equipment is covered by manufacturer’s warranty and also by the insurance policy taken by the small business owner.

Types of damages covered for equipment

A well thought insurance cover for equipment should cover the following:

• Fire, earthquake or other natural disaster
• Theft or robbery in the premises or while on the move-this is significant for employees who move from place to place
• Breakdown of equipment
• Loss of revenue due to lack of production due to a breakdown
• Insurance updates for new equipment added
• For recovery of data and sensitive information stored on computers-this is essential because sometimes the cost of retrieving data can run into hundreds of dollars
• Farm equipment, photography equipment, electronic devices often form the main investment of a small business and can lead to the closure of the business if not insured.

Small businesses have a tougher battle to fight for survival in the business world. Hence an expense which can save it from catastrophe is preferable to a small saving of premium that has to be paid for a bigger insurance cover for equipment.