An unplanned breakdown or failure of your complex equipment or machinery isn’t just inconvenient — it’s costly to your reputation and your bottom line. Unfortunately, recovering from these types of failures is often expensive and time-consuming.
Modern equipment is smarter and more interconnected than ever, often embedded with sensors, circuitry, and software that allows them to connect to a network of components and systems. That means failures can be hard to predict, diagnose, and fix.
While advancements in technology has improved productivity and safety, they’ve also increased the risk of breakdowns. If critical equipment breaks down, your business may come to a standstill or result in electrical arcing, fires, or explosions that cause extensive property damage and possible injury to workers.
Whether you’re a facility manager, a risk manager, or an operations executive, a risk mitigation strategy can help you minimize the impacts of these risks (or avoid them altogether), so you can get back to work faster. That’s why having the right insurance can help cover costs related to the breakdown of your complex equipment.
Why equipment breakdown is a costly risk for large businesses?
Large businesses face a number of risks, from theft and cyberattacks to natural catastrophes. But a costly (and sometimes overlooked) risk is the breakdown or failure of your mission-critical equipment or machinery.
While all equipment requires downtime at regular intervals for planned maintenance, an unplanned, unexpected failure could result in property damage, workplace injuries, business interruption, and reputational damage.
According to ABB’s 2023 Value of Reliability survey, 68 per cent of Canadian industrial businesses experience unplanned outages at least once a month, costing approximately $242,000 per hour. Despite these significant costs, 19 per cent of Canadian businesses still rely on run-to-fail maintenance strategies.
Complex equipment incorporates sophisticated, and often fragile components that can be sensitive to conditions like high humidity that could cause condensation or corrosion on a computer circuit. Even a loose wire can trigger overheating, leading to arcing, which could melt or burn electrical components and potentially injure employees.
These days, many companies are using just-in-time inventory management, which helps them save money by not carrying excess inventory or spare parts. But this can backfire, making breakdowns more disruptive and, in turn, higher losses in production or sales.
Why complex machinery breakdowns are challenging to recover from?
Complex equipment often consists of multiple interconnected components — in some cases, thousands of components. If one component fails, it can have a cascading effect that results in broader damage or failure, making it difficult to isolate the root cause.
In some cases, components can be hard to source or replace, especially if they are custom-built or need to be imported. Supply chain disruptions or the need to source parts from overseas suppliers require longer shipping times, which can bring your business to a halt while waiting on one specific part.
As machinery becomes increasingly specialized, repairs are also getting more complicated and expensive. Equipment that’s built into your facility or located in hard-to-reach areas takes longer to fix or replace. On top of that, repairs often require specialized technicians, which can be costly and difficult to arrange. Moreover, it can also be harder to obtain spare parts — and many businesses these days aren’t holding onto spares stock, to save money. If equipment is built-to-order or heavily customized, this can take even longer.
Failures can also be caused by human error, poor maintenance, or gradual degradation — adding more unpredictability into the mix.
How to protect your business from unplanned downtime?
If your business relies on property insurance to cover equipment failures, you may not have all the coverage you need. Property insurance typically covers financial losses related to damage or destruction of property caused by external events such as fire, natural disasters, theft, or vandalism.
However, property insurance does not account for mechanical or electrical failures. That’s where equipment breakdown insurance can help, by supporting your business to recover faster by covering:
- The cost of repair or replacement, including parts and labour
- Loss of business income resulting from production downtime or spoilage of temperature-sensitive or humidity-sensitive stock
If you’re unsure whether your equipment is covered under your current policy, it’s worth reviewing your coverage and consulting with your insurer to make sure your business is properly protected.
Protect your business with insurance
Despite your best efforts, unexpected breakdowns can happen. Equipment breakdown insurance can help cover your critical systems, keeping your business running smoothly. Safeguard your business against both external threats, such as severe weather, and internal causes, such as a mechanical breakdown, ensuring minimal downtime and maximum productivity, by visiting our Machinery and Equipment Manufacturers’ Insurance page today!
