What is electronic equipment insurance and how is it different to machinery breakdown?

Many medical practices across Australia have the need to insure the equipment they use on a daily basis that generates their revenue under the sections provided in their practice insurance, but what piece of equipment should be insured under what policy section?

With each insurer offering different versions of cover – some even combining the electronic equipment and machinery breakdown – it can be confusing, and it’s important to understand the differences in coverage in each policy section and where your equipment should be insured.

What does electronic equipment breakdown cover?

One insurer, as an example, defines the breakdown of electronic equipment as:

The actual breaking, distortion or electrical burnout of any item of electronic equipment or part thereof whilst in use at an insured location, causing stoppage of its normal function and requiring its repair or replacement before normal operating conditions prevail.

The insurer goes on to specify what electronic equipment is:

Electronic equipment means:

1. Electronic data processing equipment;

2. Telecommunication transmission and receiving equipment;

3. Lighting facilities, audio visual, amplification and surveillance equipment;

4. Any electronic machine, device or instrument used for research, diagnosis or medical treatment; and

5. Office machines owned by you or for which you are legally liable.

Alternatively, machinery breakdown is defined as:

The actual failure, distortion, breaking or burning out of any part of a machine whilst in use, arising from either mechanical or electrical defects in the machinery or failure or fluctuation of the electricity supply causing sudden stoppage of the functions thereof and necessitating repair or replacement before it can resume working. It will not include within its meaning damage from any extraneous cause.

The insurer then provides a broad definition of what classifies as machinery and plant:

Machinery and plant means any:

1. Boiler, fired pressure vessel, unfired pressure vessel normally subject to vacuum or internal pressure other than weight of its content, refrigerating and air conditioning vessels, including metal piping and accessory equipment connected thereto; and

2. Mechanical or electrical machine apparatus used for the generation, transmission or utilisation of mechanical or electrical power.

As you can see, the definitions and what is required to be covered under each section can be confusing.

iMed Insurance can assist in identifying the risk that your company equipment carries and how best to alleviate that risk via the appropriate insurance program.