Equipment Breakdown vs. Contents Insurance for Restaurants

Should any of the items in your restaurant sustain damage, that might mean a loss to the business. However, which of your restaurant insurance policies applies to the damage might vary. Sometimes, you’ll file against your equipment breakdown coverage. In other cases, you’ll use your possessions or contents coverage. Here’s how each type of coverage applies.

Understanding Business Property Insurance

Your restaurant has a lot of expensive items inside. Aside from food, it might also include furnishings, tables, cutlery, glassware and other hosting materials. The restaurant also, critically, will contain essential materials like cookware, appliances, refrigeration systems and cash registers. All items need insurance, but different policies might apply in different cases.

Equipment breakdown insurance and contents coverage fall under a greater, more generalized umbrella of property insurance. Property insurance covers the costs risks that might threaten your business in case physical assets and possessions sustain damage or losses.

Consider what might happen if damage occurs to any of the assets within your restaurant.

• You might be unable to provide full service to customers.
• Certain losses might cause service to halt altogether. Temporary closures might even become long-term, unsustainable shutdowns. Some losses might even cause the total failure of the business in worst-case scenarios.
• The business might not be able to afford to repair or replace the lost items. Some items might even be irreplaceable. That’s money and productivity lost.
• Any interruption in service equals time, and therefore money, lost. If your restaurant cannot meet its operating costs, then it cannot sustain itself. Any loss in income might therefore put the business at-risk of failure.

Property insurance seeks to assuage the risks that damage to business contents and equipment will cause significant hardships.

Should an accidental, unpreventable or unavoidable mishap damage the contents of the business, property insurance might be able to step in to cover the losses of the business. However, because property insurance is a wide definition, you might actually wind up using a couple of policies—usually equipment breakdown or contents coverage.

Each of these policies differ in how they apply to damage to restaurant contents. Therefore, you likely need both of them within your restaurant’s policy portfolio. In most cases, you have to buy each policy element separately. However, they remain closely related in a lot of ways.

Equipment Breakdown Coverage

You might be able to use equipment breakdown insurance in case everyday, internal or even extraordinary occurrences damage your restaurant’s essential systems.

Consider for example, a breakdown in your stove. You might not know the exact cause of the damage. It could range from anything from electrical short circuits to sudden malfunctions. However, the effects could be significant, in either case.

If your stove system doesn’t work, then you can’t serve your customers. That’s a loss of business and revenue. The existing damage might also pose an imminent threat of harm to other systems, and indeed the rest of the business. That could mean even more cost losses could beckon.

With equipment breakdown insurance, you’ll be able to respond to these losses quickly and efficiently. Coverage can:

• Help you pay for the repairs or replacement of damaged machinery
• Cover repairs to other items damage triggered by the initial malfunction
• Replace lost income sustained during the failure
• Pay extra expenses you have to cover because the damage occurred
• Replace food or inventory spoiled as a result

A neat thing about this coverage is that it can often apply to multiple items in restaurants, like:

• Stoves, grills, ovens and other appliances
• Refrigeration systems
• Air conditioners and exhaust fans
• Electrical systems
• Computers
• Phones
• Security and fire alarms
• Cash registers (and related appliances)

It is with this coverage’s help that you can get back on your feet quickly following failures. You also won’t have to worry whether you will experience significant losses as a result of problems.

Policies will include limitations, of course. For example, if clear neglect, or wear and tear, led to the equipment damage, then the insurer might not cover your losses. Also, there are times when equipment breakdown coverage doesn’t apply as well as your commercial contents insurance might. That is why you need both types of coverage.

Don’t Forget Contents Insurance

Equipment breakdown insurance isn’t for every type of equipment loss. If circumstances outside your control (and usually outside your business) cause the damage, then you might be able to make a claim on your property insurance.

Contents policies usually don’t cover damage from malfunctions or breakdowns. Rather, they apply more to damage caused by external threats.

For example, if a fire, vandalism or severe weather damages restaurant possessions, then contents coverage might help you pay for the damage. This is distinct from equipment breakdown coverage. Furthermore, equipment breakdown coverage might not apply to damage to non-mechanical items, like cutlery or decorations. Contents coverage might, however.

Like breakdown coverage, contents insurance will have its limitations and exclusions. Therefore, don’t hesitate to contact your Buschbach Insurance agent to develop a comprehensive policy package of both types of coverage.