News & Events

Taking the mystery out of Equipment Breakdown Insurance.

A small but important part of your insurance coverage should be Equipment Breakdown Insurance, also known as Boiler Insurance.  A standard insurance policy or package will typically exclude coverage for Equipment Breakdown - something you should be aware of.  If a loss were to occur during harvest and production, it could set you back more than you may anticipate.

Insured winery equipment includes water pumps & compressors, refrigeration equipment such as chillers, jacketed fermentation and aging tanks, ventilation fans, electrical motors, generators, electrical power panels, engines, power transformers, production machinery, business computers and many others.

Today, a lot of mechanical equipment (especially computer controlled production machinery) contains sophisticated but fragile computer technology.  Mechanical equipment is mission critical so breakdowns often also lead to loss of business income.

Equipment Breakdown Insurance is designed to pay for repair or replacement of equipment due to breakdowns resulting from mechanical breakdown, centrifugal force, electrical arcing, short circuits, power surges, boiler breakdowns, vibration, metal fatigue, seizing, misalignment or simple human error such as not adding engine oil or operator error.

LOSS EXAMPLES:

1. a 600' deep well pump on a farm broke when a 3" tube failed. $41,000 Loss
2. A food processors ammonia line ruptured when a compressor crankshaft and its connecting rod broke, contaminating the food under process.  Rental units were needed while a new compressor was installed. $65,000 Loss.
3. A circuit board failure caused controls to automatic dispensing pumps to fail and release the entire contents. $31,500 Loss.
4. A Farm experienced a power surge because of line problems, blowing a fuse on the boiler controls and causing extensive damage to a transformer switch. Switch Replacement $6,500.
5. A switch panel on an irrigation pump shorted. $12,500 Loss.
6. A jacketed wine tank cracked with chilled water contaminating the wine.  As well as the damaged tank, the entire batch of wine spoiled. $175,800 Loss.

As mentioned above these situations are normally excluded under the property section of a typical business insurance policy so the insurance industry developed Boiler and Machinery coverage which can be added as a rider or separate insurance policy.

Standard insurance packages may not be appropriate for vintners.  When selecting an insurance broker it is very important they understand your business and your unique exposures to financial loss.

Your insurance broker should offer more than price alone and should be a trusted advisor looking for ways to help you reduce your exposure to financial loss and assist you become more successful.  To accomplish this they must have a clear understanding of your present position and future plans.  Look for a broker that can also assist your business with Employee Benefits, Leasing and financing requirements. 

In future articles we will cover other insurance coverages.