Machinery and equipment breakdown is often an unexpected and inconvenient occurrence for many strata property owners and residents
This can result in major interruptions and financial losses when a piece of equipment - such as an elevator or air conditioner malfunctions.
Each strata complex has equipment that can often be extremely critical in the day-to-day operation of the property. For example, if the heating or air-conditioning systems fail during times of severe weather, residents may experience discomfort and it can also present health hazards.
To help minimise the disruption to the occupants of the property, many strata insurance policies provide an optional section of cover called 'machinery breakdown' or 'equipment breakdown' to guard against monetary losses as a result of the unplanned and unexpected breakdown of machinery. There are various levels of cover available for machinery breakdown, as well as a blanket coverage option.
What types of equipment fall under machinery breakdown?
- Air handling units
- Other heating, ventilation and air-conditioning equipment
- Boilers and thermostats
- Chillers and refrigeration units
- Water pumps
- Sprinkler distribution pumps
- Electrical equipment and control panels
- Back-up electrical generators and compressors.
What does machinery breakdown cover?
- In addition to the actual cost to repair/replace the equipment, certain policies will quite often include additional benefits such as:
- Expediting repairs (including overtime costs)
- Express or air freight costs
- Hiring necessary temporary replacement items
- Temporary accommodation or loss of rent cover.
Staying one step ahead
It is good practice for strata complexes to have an asset schedule that lists all machinery and equipment at the property to ensure there is appropriate cover in place. By having adequate machinery breakdown coverage, strata owners can have peace of mind, knowing they are well-equipped to handle unexpected breakdowns and minimise the resulting financial and operational consequences.
To discuss your machinery breakdown insurance requirements, please feel free to reach out to your Honan contact.
This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Honan shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.