Downtime can be a significant factor in a business’s profit and productivity. While downtime can happen for various reasons, equipment breakdown is one of the most common. When a machine stops working, it can be hours or days before you can get it repaired. This issue leads to a halt in productivity and hurts your bottom line. Thankfully, you can help reduce the impact of downtime with equipment breakdown insurance. This add-on to your business insurance prevents significant losses from unpredictable equipment breakdowns.
The Impact of Downtime
Downtime can profoundly impact businesses in various ways. The inability to use essential equipment or machinery means a disruption in the production of goods or services, leading to a direct financial loss. Furthermore, if employees, especially hourly workers, are left idle during equipment repairs, it adds to the financial strain on the business.
The repercussions extend beyond the internal workings of a company. Delays in delivering products to clients within agreed timelines can result in a damaged reputation. Clients who rely on timely deliveries may lose trust, impacting the company’s long-term sustainability. Maintaining a positive reputation in the community becomes challenging under such circumstances.
Research has shown the quantifiable cost of downtime for major players in the industry. For instance, a 12-hour Apple store outage in March 2015 incurred a staggering $25 million loss. In August 2016, a five-hour power outage at an operation center caused 2,000 canceled flights and an estimated $150 million loss for Delta Airlines. In March 2019, Facebook faced a 14-hour outage costing an estimated $90 million.
While these incidents highlight the substantial losses experienced by industry giants, it’s crucial to recognize that smaller companies may face proportionally smaller losses with a disproportionately significant impact on their financial health. A study of 101 startups revealed that 29% of those that fail do so due to running out of cash. For startups, even minor financial setbacks can be precarious, making it challenging to weather a major incident without risking closure.
In essence, downtime is a critical issue that goes beyond inconvenience. It is a financial threat capable of eroding customer trust and loyalty and threatening the financial health of businesses. Ignoring the impact of downtime is a dangerous oversight that businesses, regardless of size, cannot afford.
Understanding Equipment Breakdown Insurance
Equipment breakdown insurance is a valuable tool in reducing the risk of significant financial losses from unexpected downtime. Not only does it cover machinery, but it also will often include air conditioning, heating, and electrical systems.
Your insurance will cover the cost of either repairing or replacing equipment. Some policies will also cover the profits lost due to business interruption. In addition, you may be covered for rental equipment you use while you await equipment replacement or repair.
These safeguards can significantly affect how much an equipment breakdown costs you and whether your venture stays afloat. Insurance plans can be customized to match your needs, providing protection and peace of mind in case of unforeseen circumstances.
Mitigating Risks and Choosing Coverage
The specific type of equipment breakdown insurance will depend on various factors. When adding it to your business insurance, consider what equipment you want to cover and what factors may play a role. For example, if you have one machine you depend on for the bulk of your work, you may consider extra coverage to get it repaired as quickly as possible, which can incur a higher fee. Analyzing your risks can help ensure you have an insurance plan that fits your needs.
Don’t Let Downtime Be Your Downfall
Owning and operating a business can be challenging enough, so don’t let unexpected downtime be what sinks your company. Have a business insurance plan that covers equipment breakdowns so you can stay profitable and avoid significant losses from an untimely breakdown. In addition, make sure you are performing regular maintenance on your machines to keep them in the best shape possible.
Get a quote today to protect your business from a financial blow due to equipment breakdown.
About BTC Insurance Services
Founded in 2011, BTC Insurance Services has proudly served Utah businesses with comprehensive and custom-tailored insurance coverages for a decade. We pride ourselves on fostering long-term client relationships with a personalized and hands-on approach, and have established a reputation built on quality and transparency. For more information about our products and services, we invite you to contact one of our reputable agents today at (855) 944-3457, or send us a message here.
