Can you afford a $1 million power surge? Featured

7:00pm EDT January 24, 2005
Most business owners recognize the need to plan for obstacles and bumps in the road by purchasing business insurance. And, these same business owners would likely acknowledge that their operations continue to become more and more dependent on electrical systems and equipment.

With those facts, it's hard to believe that out of the approximately 9 million U.S. businesses that purchase property insurance, more than 8 million overlook the purchase of equipment breakdown coverage.

Equipment breakdown insurance covers your loss of business income if a breakdown interrupts operations. It covers costs to speed restoration of operations and, in the case of temperature controlled goods, spoilage loss. This coverage fills the gaps in fire and property policies and becomes increasingly important when compared to warranties and maintenance contracts that don't typically cover damage to or breakdown of a piece of machinery or equipment.

Sometimes the best way to show the value of coverage is by example. Consider these actual claims.


Office building: Electrical arcing destroyed three main electrical panels and left an office building without power. Temporary measures were taken to restore power to tenants, particularly to an accounting firm at the height of the tax season crunch.

Total loss: $1,597,389

Furniture manufacturer: Sawdust in an electrical distribution panel severely damaged the interior of the panel. Overtime was required to make up lost production.

Repair cost: $21,087

Business interruption: $14,600

Total loss: $35,687

Business equipment and systems

Service station: A power surge damaged a service station's electronics, including the computerized diagnostic, telephone, paging and security systems.

Total loss: $33,388

Office building: Electrical power supply voltage fluctuation caused two telephone system terminal boards to burn out.

Total loss: $52,500

Air conditioning and refrigeration

Food processor: An ammonia line ruptured when a compressor crankshaft and its connecting rod broke. Fresh scallops were contaminated with ammonia. Rental units were needed while the new compressor was installed.

Total loss: $65,289


Machine shop: A power surge from a utility line damaged two computer circuit boards, halting a metal shearing operation for nearly a week. Materials and workers were sent to another plant several hundred miles away to meet production requirements.

Repair cost: $9,485

Extra expenses: $42,541

Total loss: $52,026

Dependence on electronics and equipment

Businesses rely on costly and specialized equipment for day-to-day operations. Phone systems, scanners, computer-controlled machinery and even a building's electrical system are examples. As technology moves forward, the complexity and vulnerability of these systems moves right along with it.

Equipment and systems can be rendered inoperable by relatively simple problems such as loose connections, moisture, line disturbance or short circuiting, among others. The likelihood of this type of loss is greater than many business owners realize.

Equipment breakdown coverage

None of the scenarios described above is improbable. Yet all of these losses would have been excluded from the common property coverage form many business owners purchase.

Make it a priority to review your equipment challenges. Then contact your insurance agent for more information about equipment breakdown and other business solutions.

Reach Terry Ewing, senior commercial lines analyst, at (330) 887-6865 or In business for more than 156 years, Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product it offers is peace of mind and its promise of protection is supported by a commitment to service excellence. For more information, visit