Does Your Company Need Systems Breakdown Insurance?
Texas has a gigantic manufacturing industry, and San Antonio happens to be one of the state’s biggest suppliers of manufacturing jobs. According to the Texas Comptroller, it’s one of the only Texas cities that did not see job loss during the COVID-19 crisis, with a 0.6% increase in manufacturing jobs. But, of course, when running a manufacturing company, you want workers to complete the job in three ways: 1) safely, 2) correctly, and 3) efficiently. So what happens when a machine’s software updates improperly, or if a production line employee accidentally drops a tool in the ever-so-sensitive machinery? The clock starts ticking, and your company can begin to be out thousands, sometimes millions, of dollars.
According to Industry Week, the average downtime incident costs $17,000. The automobile industry can lose even more, at $50,000 per minute, equalling $3 million an hour. So what can you do to prevent this from happening to your manufacturing company? Unfortunately, you can’t always control how the incident occurs, but you can protect your company with systems breakdown insurance. Of course, commercial property insurance protects all the run-of-the-mill issues of working in a manufacturing plant, like a fire, flood, or other natural disasters. But does it cover the unfortunate event of a machine giving out during the workday? Not likely.
Systems breakdown insurance is specialized business insurance that covers the “sudden and accidental physical damage to equipment that requires its repair or replacement.” This insurance can protect your business bank account by covering repair and replacement costs of the faulty machinery and time lost. Some policies even cover equipment used during the day that’s not directly related to the actual manufacturing, such as elevators. Some employees use elevators to transport heavy materials safely from one floor to the next. Even though that machine isn’t producing the widget itself, it is still a piece of equipment used along the way in that widget production, qualifying it as a systems breakdown.
Spoiled inventory and lost income are two other significant points worth considering when deciding on systems breakdown insurance. For example, suppose your product requires refrigeration and the cooling system goes down. In that case, you are now out of the cost of repair for the refrigerator system and the thousands of dollars worth of food that requires refrigeration to maintain its quality. In addition, loss of income from employees waiting around during their shift for a machine to be repaired can also cost your company hundreds of dollars, leaving your company in a terrible financial spot and for your employees who count on that income for a living.
Did you know that human error causes an average of 23% of a manufacturing plant’s systems breakdowns and unplanned downtime? For example, think of an employee accidentally overloading a circuit board. Unfortunately, this type of breakdown is covered by systems breakdown insurance and is not likely covered by your typical manufacturer warranties of the circuit board.
Save your company a headache (and potentially millions of dollars worth of equipment repairs or replacement) by securing systems breakdown insurance today!
In case you missed it: Check out “Umbrella Insurance: Are you Under-Insured?” to learn about how you can be protected to the fullest.