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    Mechanical Breakdown Insurance for Small Businesses

    Mechanical Breakdown Insurance for Small Businesses

    For small businesses, any unforeseen cost or equipment breakdown can impact your ability to serve your customers. For instance, an electrical power surge can lead to business income losses if you're unable to operate machinery in a cafe or restaurant. In addition to this, car failure can cause massive issues if you're running a delivery or transportation service.

    To remedy this, insurance coverages for car repairs such as mechanical breakdown insurance can cover the cost of repairs for engine trouble or electrical issues that may occur. Furthermore, equipment breakdown insurance can also protect your company's network of computers, electrical systems, and other forms of machinery commonly excluded by most property insurance policies.

    What Does Mechanical Breakdown Insurance Cover?

    Mechanical breakdown insurance, or MBI for short, covers the cost of car repairs that are not the result of an accident. It can be purchased through a car insurance company as an alternative to an extended warranty from your local dealership. One of its major benefits is that it is regulated by the insurance industry in terms of claims and can be added to your existing auto policy.

    Depending on the insurance company you choose, MBI coverage can vary across providers. However, it typically includes coverage for:

    • Roadside assistance or towing
    • Assistance with rental vehicles
    • Trip interruptions
    • Repair for car parts and systems (e.g. electrical, transmission, engine)
    • Road hazard tire protection

    However, it excludes coverage for business equipment and typical wear-and-tear to tires and brakes.

    Does Your Business Need Mechanical Breakdown Insurance?

    Investing in mechanical breakdown insurance can be a good idea for your business if it is highly dependent on vehicles. Car malfunction is very common in older cars, so if you own several used vehicles it may be a good idea to obtain mechanical breakdown coverage.

    On the other hand, newer cars tend to break down much less compared to older models. Depending on your car's make and model, you can check Consumer Reports to determine its reliability in accordance with its age.

    It's important to note that MBI doesn't cover minor repairs, and most plans come with deductibles ranging between $200 to $400. If the projected cost of covered repairs exceeds these amounts by a large factor, it might be worth getting coverage.

    Not to mention, depending on your coverage limits, physical damage to someone else's car along with medical expenses can quickly add up, so it's best to get higher limits to begin with.

    Other Business Insurance Coverages to Consider

    Another key form of insurance that business owners should consider investing in is equipment breakdown coverage. While commercial property insurance covers damage caused by external forces, such as a fire, equipment breakdown insurance can cover the cost of equipment repair caused by power surges, mechanical breakdowns, and more.

    In addition to physical damage caused by equipment breakdown, it can also provide coverage for the loss of business income during a power surge or other covered event.

    How Long Does Equipment Breakdown Insurance Last?

    Like any insurance policy, equipment breakdown insurance lasts for as long as the time frame listed on your contract, whether you pay for coverage on a yearly or monthly basis. Ideally, you should have equipment breakdown coverage for as long as you're in business in order to have adequate protection.

    What Is Not Covered By Car Insurance?

    By default, car insurance comes with liability coverage in most states, which covers the cost of damage to other people and properties during an accident. However, not all situations are covered by auto insurance. Common exclusions include the result of natural disasters or events such as floods, tornadoes, and earthquakes. Including such events often require an additional add-on.

    In addition, you may not have coverage insurance for your business if a family member or a friend drives your car and gets into an accident. Typically, only the listed individuals in your auto insurance policy are covered.

    Ensuring that your auto insurance policy comes with commercial vehicle coverage is crucial if you're driving a car for business purposes. This includes services like ridesharing and making deliveries. Standard auto policies only usually cover the commute from your home to your workplace and nothing beyond this.

    What Is a Fair Price For Car Insurance?

    The average cost of car insurance is around $2,388 per year or $199 per month in the United States. However, the cost of insurance coverage can vary greatly between companies depending on your chosen policy limits and more.

    The laws on legal insurance coverage vary depending on the state you operate and live in. Not to mention, insurance companies take a look at everything from your gender, age, driving history, make and model of car, and more when determining the rate of your insurance plan.

    If you're looking for savings, speaking to an insurance representative about discounts or special payment plans can help you get a better deal on your current plan. You may also be able to save money if you're bundling several insurance plans from one company.

    Choosing Hazard Insurance Policies

    Since equipment breakdown can result in a loss of income, choosing the right equipment breakdown insurance plan from the right provider can give you a safety net when it comes to resuming production and manufacturing. Repair bills and downtime can quickly add up, so equipment breakdown coverage can replace any funds as fast as possible.

    In addition, purchasing mechanical breakdown insurance for your business can give you added protection in case your fleet of vehicles breaks down. The best hazard insurance policies provide sufficient coverage options for your equipment, have a reputation for good customer service, and should have a positive financial rating as well.

    Best Overall Provider of Equipment Breakdown Insurance: Nationwide

    • Apply for a free quote on their website for a cost estimate
    • Covers the cost of time and labor to repair or replace damaged equipment
    • Covers the cost of replacing spoiled food items and other materials

    One of the top providers of equipment breakdown insurance is Nationwide. They have an A+ rating for financial strength from AM Best and offer a wide variety of insurance plans to individuals and businesses. Their equipment breakdown insurance policy covers events like power surges, broken equipment, and the costs of repairing equipment.

    Like many equipment breakdown plans, they can also reimburse costs related to lost business income or damaged inventory that is temperature-sensitive. Although you can apply for a free quote online, you'll need to provide information about your business to find out how much your plan will cost.

    If you're interested in moving forward, you'll need to already have an existing business insurance policy with the company in order to qualify for breakdown insurance coverage and you'll have to speak directly with an agent from their brand.

    Best Equipment Breakdown Coverage for Manufacturers: CNA

    • Need to contact an agent for price ranges since they don't offer online quotes
    • Covers loss to computer or data equipment
    • Their policies are offered on a monoline basis or packaged along with property coverage

    Another great option for equipment breakdown insurance is CNA. Like Nationwide, they also have an A+ rating for financial strength from AM Best and provide other insurance policies. However, they are specialized for companies that operate heavy equipment or deal with manufacturing.

    Since they don't offer online quotes, you can contact a CNA insurance expert directly to see what kind of coverage you need for your business. This can cover things like spoiled inventory or products, loss related to failure from data processing equipment, or refrigerator issues if you're in the food and beverage industry.

    They allow you to pay your bills online and start a claim online so you can get back on your feet as soon as possible after an accidental breakdown of certain machinery. Their plans can be scaled towards both smaller businesses and mid-sized firms depending on your budget and circumstances.

    Best Variety of Mechanical Breakdown Insurance Types: Mercury Mechanical Protection

    • Quotes are available through qualified agents
    • Offers coverage for up to 7 years or 100,000 miles
    • Applies to cars still within the factory warranty period

    If you're looking for mechanical breakdown insurance coverage, Mercury offers a wide variety of options under Mercury Mechanical Protection. Since their mechanical breakdown protection plans are underwritten by the subsidiary American Mercury Insurance, they have an A- financial rating from AM Best, making them a reliable choice for many small businesses.

    They offer four different plans that go up in price depending on your needs. The Basic option covers the cost of repair for issues related to the engine, transmission, drive axle, brakes, electrical, and air conditioning. Other levels provide coverage or problems related to fuel systems, suspension, and steering, while the most advanced levels can cover audio equipment and hardware items as well.

    One downside is that their maximum coverage periods are a bit shorter compared to other insurance plans that also offer MBI, although they do offer many add-ons to customize your insurance plan. This includes benefits like rental vehicle assistance, road hazard tire protection, and roadside assistance that can prove valuable in the event of a worst-case scenario.

    Best for Affordable Mechanical Breakdown Insurance for Cars: Geico

    • Can be added to an existing plan through their online portal
    • Available for new or leased cars that are less than 15 months old and with less than 15,000 miles
    • Can be renewed up to seven years or 100,000 miles

    Geico's MBI is one of the best of its kind, and this is supported by A.M. Best's high rating of A++ rating in terms of financial strength​. Investing in their MBI policy will likely save you more money in the long run compared to paying for an extended car warranty. However, the company tends to issue a higher deductible compared to most other car warranties, which is better for pricey repairs.

    The policy covers damage that occurs due to normal use and excludes intentional damage or breakdowns that occur due to poor maintenance. In addition, damage to your car as a result of vandalism or weather is also not included under their MBI plan. Despite this, many reviewers claim that they process claims quickly and efficiently so that your car can be up and running in no time.

    When you're filing a claim that is covered under Geico's mechanical breakdown insurance, you can go to the repair shop of your choice and provide them with your policy number and contact information. Once Geico authorizes your claim, they will cover the cost of repair in addition to a $250 deductible that you will need to cover.

    Frequently Asked Questions

    How do I choose business insurance?

    If you're an entrepreneur, it's important to protect your business and yourself in a way that fits the size of your company. You'll want to start out by considering what kind of accidents or natural disasters could happen at work or nearby where employees might be hurt.

    From there, find reputable agents through word-of-mouth referrals by other entrepreneurs who are knowledgeable about particular lines of commercial insurance available. Shop around for policies and reassess your needs every year.

    Is business insurance a legal requirement?

    Employers' liability coverage is a mandatory requirement for most businesses that have employees. However, other types of insurance can also be required by regulatory bodies, such as professional indemnity and property damage insurance.

    Can a car be totaled due to mechanical failure?

    From a car insurance company, no. Most mechanical failures can be repaired if the vehicle isn't damaged beyond repair. If you're not in an accident and your repairs are covered under warranty or through other means such as extended coverage care, then the only incurring costs you'll worry about are in terms of time spent away from work.

    Are extended warranties worth the money?

    The average person spends more on their extended warranty than they ever will actually use it. Extended warranties often come with a high price tag and don't necessarily cover everything that could go wrong, meaning you still have to pay for repairs out of pocket if something does happen.

    Can you claim mechanical repairs on car insurance?

    Your insurance company will cover the cost of the repairs in case of a collision that wasn't your fault. The other party's insurer is also liable for these costs, so there shouldn't really be any concern about footing the bill on your own.

    In today's highly competitive atmosphere, protecting your business with equipment breakdown insurance along with mechanical breakdown insurance can cover the cost of expensive repairs to your vehicle or office equipment. It may not be pleasant to think about what can go wrong when launching a new business, but comprehensive insurance coverage can give you some breathing room.

    At the end of the day, it's better to be safe than sorry when it comes to potentially losing manufacturing or production time that can directly impact your bottom line. This is why taking care of equipment breakdowns as soon as they occur is essential. To learn more about protecting your business assets with commercial insurance, reach out to us at Assured Standard today.

    Safeguard your small business from the unexpected with our Mechanical Breakdown Insurance. Click here to learn how our Food Truck Insurance can keep you serving up success!

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