But not everything that could bring your business to a grinding halt is the kind of event that makes the news. Often, it’s something much closer to home — a piece of equipment you rely on to trade goes kaput.
So, what would you do then? What’s your Plan B if a piece of equipment fails and stops you being able to operate as normal?
Capricorn Risk Services’ New South Wales and Australian Capital Territory Sales Manager Rob Sedkey said while more than half of Members have business interruption protection, only 30% have the kind of protection that covers them in the event of equipment failure.
“You may have seen this referred to as machinery breakdown or electronic equipment breakdown cover, at Capricorn Mutual we simply refer to engineering,” Rob said.
“It doesn’t just relate to you being an engineer, it relates to any machinery, or electronic component.
Rob said while business protection for equipment failure doesn’t cover for “wear and tear”, it is an incredibly valuable form of protection against some major risks.
“Say you’re a smash repairer and you’ve got compressors, welders, spray booths and other electronic equipment,” Rob said. “It’s worth a lot of money. Some spray booths can be worth around $100,000 or even up to $200,000. When you add up all the electronic equipment in your workshop it can be worth well above $20,000 and upwards of $50,000 or more.
“What happens if there’s a power surge or a major malfunction due to an unforeseen circumstance? You could be out of pocket tens of thousands of dollars.”
Rob said business interruption protection for equipment breakdown includes not just traditional pieces of machinery but also electronic equipment like laptops, air conditioners and even CCTV cameras.
“We had one Member who had a really large workshop and, therefore, really quite an intricate CCTV system they’d spent a lot of money on,” Rob said. “Believe it or not, a possum climbed into one of the nearby substations, so the power company had to turn off the power to fix things.
“When they turned it back on it created a major surge to many businesses in the area — and we’re talking major voltage — that was so powerful the kill switches in the workshop couldn’t stop it. It fried about seven cameras.”
Rob said the claim amount to replace the CCTV cameras came to about $26,000 and was covered by the Member’s ‘Engineering section’.
Business interruption can happen in ways you don’t expect and couldn’t foresee — like one poor possum making a bad decision. To avoid the heartache of business interruption, Rob recommends creating a checklist of all the machinery and electronic equipment in your workshop, or associated with your business, and then calling your Risk Account Manager to make sure you are protected.
AU: Products sold through Capricorn Risk Services Pty Ltd (ABN 93 111 632 789) are: (i) discretionary risk protection products issued by Capricorn Mutual Ltd; and (ii) general insurance products issued by a range of insurers and brokered through Capricorn Insurance Services Pty Ltd. Before deciding to acquire any product you should consider the Product Disclosure Statement available from Capricorn Risk Services Pty Ltd to see if the product is appropriate for you. Capricorn Risk Services Pty Ltd is a Corporate Authorised Representative (No. 460893) of Capricorn Mutual Ltd (AFSL 230038) and Capricorn Insurance Services Pty Ltd (AFSL 435197).
NZ: Products sold through Capricorn Risk Services Pty Ltd (NZBN 9429041139813) include discretionary risk protection and general insurance products. Discretionary risk protection is issued out of Australia by Capricorn Mutual Ltd. Before deciding to acquire discretionary risk protection you should consider the Product Disclosure Statement to see if it is appropriate for you. This can be obtained from Capricorn Risk Services Pty Ltd by phoning 0800 555 303 via email email@example.com or by visiting website capricornrisk.com. General insurance products are issued by a range of insurers and are available through Capricorn Risk Services Pty Ltd as a member broker of PSC Connect NZ Limited. Capricorn Risk Services Pty Ltd is a registered financial services provider (390446) and a corporate Authorised Representative (No. 460893) of Capricorn Mutual Ltd (AFSL 230038).