Old Machinery And The Fine Print On Breakdown Policies

Insurance is generally there to put you back in the same position as if you didn’t have a claimable event and most people are familiar with the idea of “new for old” on their home insurance contents policies.

If you have a business package, however, which includes Machinery Breakdown insurance, then it is important to understand how this policy works if you have older equipment or machines – especially if they are now obsolete and parts cannot be sourced.

Machinery Breakdown cover is there to pay for repairing your equipment if it breaks down for something other than general wear and tear. Many policies, however, will have the following fine print:

“…if it is necessary to replace parts that are unavailable, we will not pay more than the estimated cost of similar parts currently available.”

What this means is that if you had a machine worth $5,000 that breaks down and you cannot repair it as parts are no longer available, then the insurer won’t pay you to replace the machine. Instead, all they will pay is the estimated cost of the part and labour to fix it – a completely imaginary exercise which leaves you out of pocket.

If you have critical equipment or older machinery, then specialist covers are available which do not have this limitation and will actually replace your machine – just ask your Account Manager for a quote.