Introducing 

Prezi AI.

Your new presentation assistant.

Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.

Loading…
Transcript

Talking with the Tierney's - Examples of Broad Use of Equipment Breakdown Insurance

  • Causes of loss related to equipment breakdown are often user/operator error, faulty design or improper installation
  • Risk management efforts are very important

Equipment breakdown insurance used to be (and still sometimes is) referred to as "boiler and machinery" insurance

Equipment Breakdown: Loss Exposures: Other

Equipment Breakdown Insurance: Intro, Definitions and First 3 Agreements

Mechanical Equipment

Electrical Equipment

Common Types:

Property Damage

Examples

  • Definition of property covered is much broader than "covered equipment"
  • Power transformers
  • Compressors
  • Switch boards
  • For example: a boiler explodes and damages the property around it
  • Pumps
  • Distribution panels
  • Includes any property the insured owns
  • Blowers
  • Circuit breakers
  • Covers damage to an insured's building, personal property, and customer's property in the care, custody, and control of the insured
  • Fans
  • Cables, motors and generators
  • Turbines

Types of Losses:

  • Gear Sets
  • Electrical shorting of wingdings

Examples of Causes of Loss

Check out covered equipment on page 10.14 - especially look at the first 4 "it doesn't include"

  • Insulator, connector, or control failure
  • Metal fatigue
  • Bearing failure in rotating equipment
  • Weld failure

Common Perils

  • Mechanical stess
  • Supply line shortages
  • Excessive moisture
  • Lubrication failure

Introduction to Equipment Breakdown Insurance

Insuring Agreements

Policy Definition of "Breakdown"

Office Equipment and Systems

  • Property Damage
  • Expediting Expense
  • Business Income and Extra Expense (or Extra Expense Only)

Air Conditioning and Refrigeration Equipment

  • Spoilage Damage
  • Traditionally not covered by Equipment Breakdown insurance
  • Utility Interruption
  • Newly Acquired Premises
  • Ordinance or Law Coverage
  • With the widespread use of complicated office equipment, this category has been added
  • Errors and Omissions

Examples of components of this:

  • Brands and Labels
  • Motors
  • Examples of Office Equip/Systems:
  • Contingent Business Income and Extra Expense (or Ex Exp Only)
  • Compressors

Spoilage Damage

  • Computer systems
  • Fans
  • Automated phone systems

Covers spoilage damage due to...

  • Switchboards
  • Copiers

Expediting Expense

  • Coils, pipes and vessels
  • Raw materials
  • Examples of covered causes of loss:
  • Circuit board failures
  • Finished products while in storage
  • Expenses incurred to speed up the repair or replacement of covered property

Causes of Loss:

  • Distortion or breakage of parts
  • Control failure
  • Examples:
  • Vibration
  • Finished products in the course of being manufactured
  • Overtime wages
  • Insulator, connector or control failure
  • Improper control settings
  • Overnight shipping

Spoilage must have resulted from lack of or excess power, light, heat, steam or refrigeration

  • Not as broad as "extra expense coverage"

Examples of loss:

Cracks or breaks in piping

  • Doesn't cover rent for a substitute facility

Outline of Equipment Breakdown Insurance Assignment 10

  • Equipment Breakdown Exposures

Equipment Breakdown Loss Exposures: Pressure Vessels

Insuring Agreements for Time Element Coverage

  • Boilers and pressure vessels

Boilers are a fired pressure vessel constructed of cast iron or steel in which water is heated to produce steam or hot water

  • Electrical equipment

Business Income and Extra Expense (or Ex. Expense Only)

  • Fired pressure vessels
  • Mechanical equipment

Utility Interruption

Common types of boiler breakdown:

-Explosion caused by excessive internal pressure of steam

  • Insurer agrees to pay the insured's actual loss of business income during the period of restoration resulting from breakdown to covered equipment

-Overheating, aka "dry-firing" (usually because of low water)

  • A closed container that is heated by the direct fire of burning fuel and can withstand internal pressure

- Cracking of cast iron-e.g. expansion stresses

  • Air conditioning and refrigeration equipment

-Bulging, aka bagging e.g. buildup of scale expansion stresses

  • Extends any business income, extra expense, or spoilage damge coverage to include loss resulting from breakdown of equipment owned or operated by a public utility
  • Extra expense coverage applies to extra expenses the insured incurs to operate the business during the period of restoration (e.g. relocation, rent, etc...)
  • Boilers are the most common type of these
  • Office equipment and systems
  • e.g. Water, sewer, heating, gas, etc...
  • Many buildings are heated by boilers
  • Equipment Breakdown Insuring Agreements
  • Unfired pressure vessels

Contingent Business Income and Extra Expense

Common Perils covered by Equipment Breakdown Policies:

  • Boiler explosion
  • Definitions and First 3 Insuring Agreements
  • Electrical breakdown
  • Mechanical breakdown
  • A closed vessel that can withstand internal pressure but is not heated by the direct line of fuel
  • Rupture or bursting from centrigal force

Covers business income and extra expense from breakdown to covered equipment:

Not covered by EB but covered by CPP:

  • Insuring Agreements for Time Element Exposures
  • Explosion of unfired pressure vessels
  • At the dependent property shown in the declarations
  • Furnace explosion
  • Fire
  • Not owned or operated by the insured
  • Other Insuring Agreements

Perils of an unfired pressure vessel are explosion, bulging, cracking, and collapse

  • Exclusions
  • Coverage Provisions

Coverage Provisions

Other Insuring Agreements

When there is more than one location, the limit should be set at the maximum possible loss at any one location bc there is virtually no chance of a catastrophic loss with this exposure

  • Limits of Insurance
  • Generally there is a "limit per breakdown"
  • Limit for certain exposures is $25,000
  • Spoilage from ammonia contamination
  • Newly Acquired Premises
  • Reduction in value of undamaged parts
  • Ordinance or Law Coverage
  • Deductibles
  • Insurer will not pay for loss that doesn't exceed deductible
  • Errors and Omissions
  • Time deductibles are used for time-element coverages
  • Brands and Labels
  • Time deductibles may be expressed in hours or days
  • May be a Multiple of Daily Value Deductible, e.g. 5, the deductible is amount of Business Income lost/days *5
  • Lost $45,000 in 9 days

$5,000 per day

  • $45,000/9 =

= $25,000 deductible

  • $5,000 * 5

Exclusions

  • Has exclusions similar to the CPP (e.g. earth movement, nuclear hazard, etc...
  • Other exclusions:
  • Fire or combustion that results in a breakdown
  • Water or other means of extinguishing fire
  • Breakdown caused by several other perils such as: freezing caused by cold weather, windstorm or hail, vandalism (usually provided by CPP)

Equipment Breakdown Insurance

Learn more about creating dynamic, engaging presentations with Prezi