Plug in…. 

 to Systems Breakdown Coverage

...and power up the protection!!

All property policies typically contain three standard exclusions for losses caused by:
• mechanical breakdown
• electrical arcing
• explosions of pressure vessels
These are perils which are traditionally covered by a monoline boiler and machinery policy.

One common myth about Boiler & Machinery coverage is that it is really needed only for those accounts with boilers and pressure vessels.  Ninety three percent of all B&M losses arise from the breakdown of mechanical or electrical systems.  The simple fact is, that any account which has equipment that runs on electricity needs Boiler & Machinery coverage, which is why we now call it Systems Breakdown coverage.

There are several advantages to adding Systems Breakdown by endorsement to your property policy rather than purchasing a monoline boiler policy.  First, a monoline B&M policy will usually cost $750 - $1,000.  However, when we add coverage for B&M by endorsement to our property policy, the premium can be as low as $25 - $250 for insured values of up to $1,000,000.

What are the benefits to the wholesaler and retailer of adding Systems Breakdown coverage to MSU’s property policy?
• It provides increased income potential. 
• It locks out the competition. 
• It minimizes gaps in coverage.
• It reduces the potential for Errors & Omissions. 
• There is one point of contact/service.
• It is easier to sell since it is part of the property policy.
• The coverages dovetail with the property policy.

Every business needs this coverage!  The Mechanical, Electrical & Pressure Systems Breakdown property endorsement virtually covers all equipment that plugs into an electrical outlet (and the outlet itself) including: 

Telephone systems          Production equipment          Switchgear
Computer systems           Cash registers                    Transformers
Office equipment              Refrigeration systems          Air conditioning systems
Heating systems              Security systems                Computerized equipment
Motors & compressors      Boilers

The following situations illustrate how valuable Systems Breakdown Coverage can be.  Imagine if they happened to you?    Are you protected from:

Power surges                 Mechanical breakdown               Short circuit
Motor burnout                 Foreign objects                          Electrical arcing
Operator error                 Vibration                                   Lubrication failure
Improper start-up            Boiler cracking/explosion            Overload conditions
 
The insured’s business suffered a power surge which was caused by down power lines in the insured’s parking lot during an ice storm.  This resulted in computer equipment damage and spoiled food.   Coverage was afforded under the Systems Breakdown Policy since the utility breakdown was within 1000 feet of the insured premises.  Cost of repairs was $3,988 and food spoilage came to $4,277.  Total Systems Breakdown loss was $8,265 and the annual premium for the coverage was $55.

An underground electrical cable shorted to ground leaving two buildings without power.  Temporary service was restored within twelve hours.  Excavation required to replace the cable increased the property damage loss significantly.  Total loss was $25,890.

A motor burned out in a hermetically sealed refrigeration unit resulting in spoilage of food in cold storage.  Repairs were $2,588 and food spoilage was $1,450.

Mechanical breakdown of a piston rod in a main air compressor caused property damage and business interruption until a rental unit could be brought in.  Total loss was $1,200 and 2 days loss of income.

Insulation breakdown of an underground electrical feeder cable occurred.  Replacement required excavation of the parking lot which significantly increased repair costs.  Temporary service was run above ground to avoid a business interruption loss.  Total loss was $33,763.

Electrical breakdown of computer control equipment caused the shutdown of a Vertical Milling Machine.  This loss was a result of a switching surge on the electrical system.  Delay in the receipt of repair parts due to availability caused a partial business interruption loss of three days.  Total loss was $3,300.

For more information about Systems Breakdown coverage, contact your Markel Southwest Underwriters, Inc. contract-appointed producer.