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Three reasons why your business needs Machinery Breakdown Loss of Profits Insurance

As a manufacturer, you will understand the need to insure your machinery against damage and theft, but are you aware that the breakdown of your machinery wouldn’t be covered under a standard contents insurance policy? The loss of machinery due to breakdown could have potentially serious consequences to your business, such as a reduction in turnover and a subsequent loss of profit.

To protect your organisation from this risk, you need Machinery Breakdown and Machinery Loss of Profits Insurance, and here are 3 reasons why:

Written by Kate Slater on 26th October 2015

Three reasons why your business needs Machinery Breakdown Loss of Profits Insurance

As a manufacturer, you will understand the need to insure your machinery against damage and theft, but are you aware that the breakdown of your machinery wouldn’t be covered under a standard contents insurance policy? The loss of machinery due to breakdown could have potentially serious consequences to your business, such as a reduction in turnover and a subsequent loss of profit.

To protect your organisation from this risk, you need Machinery Breakdown and Machinery Loss of Profits Insurance, and here are 3 reasons why:

Losses incurred following machinery breakdown

Just as machinery damage caused by fire, explosion or collapse could cause your business a lot of problems. A machinery breakdown caused by say mechanical failure, electrical short circuiting, or a motor burnout can have an equally devastating effect. Following an incident, your downtime can be significant as most machinery is manufactured abroad and lead time for parts, or a new machine, can be lengthy. Your business could temporarily be brought to a standstill leading to financial strain pending the replacement of the affected machinery – this is avoidable.

A Machinery Breakdown policy will pay to repair or replace the damaged machine and a Machinery Loss of Profits Insurance policy, based on the lead time for replacement parts or sourcing a new machine, will provide you with cover against loss of profits incurred due to an insured event.

Machinery manufacturer’s warranty exemptions

It can be a common misconception that a manufacturer’s warranty will cover all types of breakdown at any time, but this isn’t the case. Machinery manufacturer’s warranties usually apply for a limited time period only, and exclude events such as operator error.

Losses due to operator error

Whilst all of your employees will be trained to operate your machinery it is still possible that damage caused to machinery can be due to user error.

If a machine has been set up, or used incorrectly and damage occurs whilst in use, you will be left in an unforeseen situation requiring a repair, or replacement and downtime that could potentially impact your profits. If the damaged piece of machinery is one that your business relies heavily upon, it could lead to a significant reduction in your turnover resulting in a loss of profit. This would be picked up by a Machinery Breakdown and Machinery Loss of Profits policy.

The next steps

To ensure that you are protected from any possible event that could happen to your machine, you need to consider a Machinery Breakdown and Machinery Loss of Profits Insurance policy. If you would like more information on this policy, please get in touch today.

Or if you’re interested in finding out more information about other insurance policies that your manufacturing business should have, please download our Manufacturing Insurance guide here.

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