Equipment Breakdown Insurance: It's Not Just About Boilers Anymore
Captive insurers bring real value to the marketplace, including specialized products for those with similar insurance needs. But captives that write homogeneous risks and include Property Coverage may be missing a very cost-effective enhancement. Equipment Breakdown insurance—often called "boiler and machinery" insurance—can improve coverage and help show that captives have a better understanding of the customers they serve.
High-Tech Equipment—High-Tech Risk
Few producers understand the way so-called boiler and machinery exposures have changed over recent years. It's not just about "boilers" anymore. The key exposures covered by Equipment Breakdown insurance today are electrical: telephone systems, elevators, computer controlled environmental systems, security and fire protection systems, office equipment and many other types of high-tech devices.
That's why more than 150 companies have set up programs that automatically include Equipment Breakdown coverage in their property policies. These companies have outsourced the Underwriting, Inspection and Claims work of this specialty coverage area to The Hartford Steam Boiler Inspection and Insurance Co.
Better Coverage That's A Better Fit
What is the advantage of adding Equipment Breakdown coverage? Only a very small percentage of commercial insureds have traditionally purchased boiler and machinery insurance. With this new approach, the intent is to add Equipment Breakdown coverage to all insureds, gaining a much-improved spread of risk. That leads to a very competitive price for Equipment Breakdown coverage. In fact, for some books of business, full participation means the cost of coverage is such that it is just rolled in. It is no longer necessary to market and negotiate the coverage risk-by-risk.
Equipment Breakdown coverage is also a better fit than traditional boiler and machinery insurance. The coverage can be added through a simple endorsement which adds back to cover the mechanical, electrical and pressure vessel exclusions of the property policy that create the need for Equipment Breakdown coverage in the first place. An alternate approach is to remove these exclusions from the property policy.
The new Equipment Breakdown coverage approach provides the insured the same protection for breakdown loss that they would have for a fire or windstorm. If the insured has the right property coverage, they also will have the right Equipment Breakdown protection. The Equipment Breakdown coverage also follows the property deductibles for small and medium sized risks. Not only does this approach improve coverage, it also greatly simplifies handling and lowers processing expenses.
What Works Best For You?
In addition to simplifying the coverage, Hartford Steam Boiler simplifies the rating approach. We often use an Equipment Breakdown rate that is a percentage of the property premium; or we use may use rates per $100 of value. Whatever the approach, we work with the company to develop the rating methodology that works best for them and their customers.
Claim processing also is improved. Typically, most companies want the insured to report the claim initially to them. If it appears to be an Equipment Breakdown loss, they pass the claim on to Hartford Steam Boiler's equipment specialists to investigate, determine coverage and adjust the loss. We work with the company to determine the claim handling procedures that suit them best. Since the company is providing the coverage, they issue the check to the insured and Hartford Steam Boiler will reimburse the company.
This type of approach allows us to handle premiums and losses on a bordereau which eliminates individual cession forms and a lot of other extra paper handling. We have considerable flexibility and can work with a number of different bordereau approaches.
A Wide Range Of Support Services
The Equipment Breakdown endorsements and rates may require filing and we provide documentation and assistance to obtain approval from the appropriate states in a timely fashion. Hartford Steam Boiler also continues to provide inspections for those insureds that operate boilers and pressure vessels. All of our other loss control services for mechanical and electrical equipment are available as needed.
Hartford Steam Boiler can help explain and promote the unique benefits of Equipment Breakdown coverage to customers and producers. We can assist in developing marketing materials, conducting training sessions and attending agency meetings to support the Equipment Breakdown product.
For more information, contact Don Hartford at 1-800-345-1122, Ext. 2311.