Restaurants typically have $40,000-$200,000 worth of equipment in the kitchen alone. As with other expensive assets, obtaining insurance to cover losses in the event of equipment failure is essential. Adding equipment breakdown coverage to your restaurant insurance policy provides peace of mind and financial protection.
Find out how equipment breakdown insurance differs from commercial property coverage and learn about the common restaurant equipment failures insured with equipment breakdown coverage.
Equipment Breakdown vs. Property Coverage
Restaurant insurance should include commercial property and equipment breakdown coverage. Both policies protect restaurant equipment but work in different situations.
Commercial property insurance covers equipment damaged or stolen due to external events, such as theft, vandalism, and fire. Assume that a natural disaster causes a fire, damaging the equipment in a commercial kitchen.
Because an external force caused the damage, you’ll be covered by property coverage. Remember that it only protects against losses caused by cover events, though. For example, your policy may not pay for a kitchen fire started by a staff member.
Equipment breakdown insurance protects against financial losses due to covered internal events. For example, suppose a power surge damages your restaurant equipment. In that case, you can file a claim against your equipment breakdown insurance policy.
What Is Equipment Breakdown Coverage?
Equipment breakdown insurance doesn’t cover breakdowns due to neglect, improper maintenance, or normal wear and tear. Instead, it covers damages associated with internal malfunctions caused by power surges, motor burnout, electrical shorts, mechanical failures, and other events included in the policy.
Reviewing your policy to see what it covers and excludes is essential. Still, most policies protect against damage and losses to the following items:
Boilers and pressurized equipment- HVAC systems
- Refrigerators and refrigeration equipment
- Food processing equipment
- Computer systems
- Phones
- Point-of-service devices
- Security systems
You can make a claim against your policy if you suffer a covered loss. The insurance will cover the costs of repairing or replacing the equipment. Since restaurants need to address damaged equipment quickly to become operational, insurance also covers the cost of rush repairs.
With this type of restaurant insurance, you can limit downtime after equipment breaks down or malfunctions. Some equipment breakdown insurance policies provide additional protection.
For instance, some policies replace lost income when restaurants temporarily close while waiting for equipment repair or replacement. This allows restaurant owners to pay bills and wages while waiting for their establishments to reopen.
Food spoilage coverage is also added to some equipment breakdown policies. Restaurant owners can lose significant amounts of food when equipment malfunctions. With this coverage, they can replace the food without using their money.
How Equipment Breakdown Coverage Works Under Restaurant Insurance Works
Your insurance agent can discuss the details of your specific policy to ensure you understand how it works. Still, you can get a general idea by looking at an example of equipment breakdown coverage. Remember that this is an example, and your policy may differ.
Assume your restaurant serves customers for dine-in and carry-out. Carry-out customers can call or place orders online, while dine-in customers place orders with waitstaff.
A power surge causes the power to go out inside the restaurant, taking down the internet and phone lines. As a result, carry-out customers can’t place orders, and dine-in customers can’t receive food since the kitchen staff can’t operate without power.
The electricity is restored but causes a power surge that damages the computers, phone systems, and walk-in refrigerator. Your equipment breakdown insurance will pay to repair or replace the computers, phones, and refrigerator. You’ll likely need to rush the repair to reopen; your policy will also cover that.
Since you can’t operate without these pieces of equipment, your policy will also pay for the lost income as long as it is included in your policy. You can add business income insurance coverage to your policy if it’s not included. It’s essential to do this before a covered issue causes you to shut down temporarily.
With the above example, you’ll also lose food due to the damaged refrigerator. If food spoilage coverage is included, the food will be replaced at no cost to you. Again, you can add food spoilage coverage to your policy if it isn’t covered.
Get a Quote for Restaurant Equipment Breakdown Insurance
You’ll only be covered if you purchase equipment breakdown insurance before experiencing a loss. Otherwise, you’ll have to pay out of pocket and use your coverage for future losses.
Contact Pro Insurance Group today to discuss coverage options and purchase a policy. Once your coverage is in place, you’ll enjoy the peace of mind that comes with a robust insurance policy.