For plant owners and managers like you, all equipment in your jurisdiction is as important as the people who work there. This factory equipment simplifies the process. So when an insurance agent comes and offers you insurance for your plant equipment, you research its benefits and think hard before saying yes or no.
Having insurance is really necessary for equipment that you use in your business. Remember that your profit will be based on the actual produced items, and the products will not be completely finished without passing through all equipment. Clarify and specify with the agent that coverage of equipment breakdown should include cost of replacing and repairing the damaged equipment. It would be best to include other clauses for specialties like coverage for "service interruption" and "business interruption" that will cover you against loss of income or business caused by "downtime." If this additional coverage is not included in your policy, you may have to ask for them. Inquire also if insurance can cover theft.
The following is a list of some advantages in buying insurance for production equipment.
- Assurance of continued plant production. There should be no lost sales whatever reason the equipment broke down. This is especially the case for companies with “just in time” production. Faulty wiring, failure in machine, short circuit or even employee mishandling can be paid by insurance as long as you include this.
- Savings. Emergency cash outs or loans needed to buy a replacement will not be needed if you are insured. Production machines are expensive. They are investments, and you know that you cannot invest yearly in a replacement. This is also the case even if you do not replace. If the equipment breaks, you call up equipment rental shops and borrow for the meantime, and spend money for actual repair, cost for parts, labor, and to speed up restoration. Plus there might be additional expenses for spoiled materials ruined in the middle of the breakdown. If the equipment is insured, you do not pay for the costs above. Another way that production equipment insurance can lead to savings is when the breakdown is in the middle of a big deadline. You look for repair companies who can fix it in the easiest time AT ALL COST. You would not have time to canvass and compare costs. The first service provider who can commit the earlier, the better. If you are insured, you just use your savings for expansion and training.
- Yearly budget is more accurate. Financial cash flow will already include the annual, semi-annual or monthly premium for the insurance. There is a plan already for the payouts. You do not need to allocate budget for breakdown.
- No schedule interruptions. A production factory usually plans at least a week before actual production. These are based on schedule of delivery communicated to the customers. If one machine breaks down and there is no insurance, there must be decisions to be made. This could cause a domino effect in the production.
- Business running smoothly. Worries are lessened so you can focus on the company’s real priorities.
It does not matter if your company is big or small, is buying or leasing industry equipment, or has paid the machine fully or partially. Whatever category you fall into, you must order insurance.
With the right business equipment insurance in place, you'll be able to rest easy and focus on growing your business.