Two special modules of commercial property insurance are machinery breakdown and business interruption. Neither is a "mandatory element" – the question is always how much the company depends on a given machine or on continuous operation.
- Machinery breakdown covers internally caused failures – what fire and natural-perils cover does not.
- Business interruption does not replace lost profit, as many hope – it typically pays the fixed costs that keep running during a standstill; in practice a rarely purchased cover.
- The key is dependency: key machine, replacement time, lost margin – we calculate that, not the general custom.
Machinery breakdown: what it does that property cover does not
Classic property insurance pays for external events: fire, storm, water. Machinery breakdown covers the machine's internal failures: material defects, design faults, operating errors, overvoltage, sudden mechanical fracture. CNC machines, printing presses, refrigeration compressors, special production lines – justified where replacing a machine is expensive and slow.
It is not for everything: wear and tear, neglected maintenance and wearing parts are typically excluded – breakdown cover is not a service substitute but protection against unexpected large failures.
Business interruption: honestly about a rarely bought cover
Business interruption insurance answers the financial consequences of a property-damage standstill – but the picture must be precise: it does not replace lost profit, as many hope; it typically pays the fixed costs that keep running (such as building-related overheads) and, depending on the contract, retained employees' wages for a limited time. Honesty belongs to the picture: in domestic SME practice this cover is rarely purchased – partly for its data needs, partly its price. Nor is it for everyone.
Where justified, though, it is very much so: single-site manufacturing, a key machine with long replacement time, strong seasonality – there a longer standstill can threaten the company's existence, and the cover's price is dwarfed by the risk.
Deciding with numbers
The decision stands on three numbers: how long restoration would take (machine replacement, building repair), how much margin is lost meanwhile, and what costs keep running (wages, rent, loans). If their product exceeds the company's reserves, interruption cover deserves consideration; if it is absorbable, reserves plus property cover is a defensible position.
We do this calculation as part of the needs assessment – and if the result is that it does not pay for you, that is what I will say. Cover is good when it answers the risk, not the catalogue.
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This article is deliberately an overview: the detailed information – covers, exclusions, practical examples – lives on the area's own specialist site.
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