An often-overlooked benefit of SC Municipal Insurance and Risk Financing Fund policies is equipment breakdown coverage. This coverage addresses many of the costs associated with repairing or replacing damaged or broken-down equipment after a covered incident.
Breakdown causes
The loss must occur because of one of several reasons:
- Mechanical breakdown
- Artificially generated electrical current
- Explosion of certain steam equipment
- Other internal events that occur within certain steam components
- Internal events occurring inside hot water boilers and other water heating equipment
Coverage contract exclusions
The exclusions of the SCMIRF coverage contract will apply unless coverage is specifically provided by the equipment breakdown coverage. Exclusions include the member's failure to protect property after a loss occurs; or damage caused by a hydrostatic, pneumatic or gas pressure test of boiler or pressure equipment or damage caused by electrical insulation breakdown testing.
Programming issues, malicious computer events, or loss of data may not be covered. In situations where lack of maintenance causes damage, only damage resulting from the breakdown may be covered, but not from the lack of maintenance. Perils covered by the standard SCMIRF property coverage are not covered under the equipment breakdown coverage.
Filing a claim
The first step a member should take when a potentially covered equipment breakdown loss occurs is to report the loss to SCMIRF through the claims portal. Claims staff will then report the loss to Liberty Mutual. Liberty Mutual staff will work with SCMIRF and the member to determine what occurred, whether there is coverage, and what the amount of the damages are.
Value of coverage
The equipment covered by equipment breakdown coverage is costly to purchase and costly to repair. The equipment typically has built in fail-safes to keep losses from occurring. SCMIRF has only seen 15 equipment breakdown claims over the years. While the number is small in comparison to other types of property losses, the value of the equipment and the cost of repairs makes the coverage a must-have for all members.
For any questions about the equipment breakdown coverage offered by SCMIRF, contact Robert Collins, underwriting manager at 803.933.1279 or rcollins@masc.sc.