Insurer Showcase 2016 - The Sovereign General Insurance Company

IN S U RER
SH OWCASE
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SOVEREIGN GENERAL INSURANCE COMPANY
New terminology and additions
for boiler, machinery protection
S
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overeign General Insurance
“Let’s say you install a new air confurnishings can be installed. Equipment
is urging brokers to advise
ditioning unit, and when you switch it
is insured while the remaining work on
their clients to consider the
on, it breaks down. All these things will
the project is being performed.”
new additions available to
be covered by equipment breakdown
Other endorsements apply to delayed
basic equipment breakdown
insurance, not by property insurance,
startup and rental income, soft costs and
insurance, which is the new
unless you have the extension to property
extra expenses.
terminology used to describe boiler and
coverage.”
Loss of rental income could result if
machinery coverage.
Because building equipment must
there is a delay of many months in the
Michel Rivard, the insurer’s ascompletion of the project because
sistant vp, equipment breakdown
of physical loss or damage, Rivard
insurance in Montreal, says
says. The endorsement for soft
over the past 10 years construccosts will pay for costs or addition has been growing steadily
tional expenses such as financial
in Canada and the insurance
costs, additional interest expensindustry has been adding new
es, legal and accounting expenses
coverage. Still, he says, construcor miscellaneous carrying costs.
tion clients routinely undervalue
Extra expense coverage will
or forget elements when securing
cover fees for temporary rental of
equipment breakdown coverage.
equipment or temporary replace“Basic insurance covers
ment of damaged equipment.
breakdown to any equipment,
Rivard notes that adding all
sudden and accidental,” he says.
the coverage extensions, which
“The equipment includes boiler
are reasonably priced, will proand pressure vessels, mechanical
tect brokers’ clients against many
and electrical equipment. That’s
exposures resulting from an
the basic coverage. And only on
equipment breakdown that are
equipment, no more no less.”
missing in the property insurRivard says coverage is always
ance policy.
excluded under property coverHe encourages brokers to
age, so it has to be added on to
Basic equipment breakdown insurance, the new terminol- avoid liability, make sure clients
the policy.
ogy for boiler and machinery coverage, applies to boiler are totally aware of the insurance
Coverage, Rivard says, also ap- and pressure vessels, mechanical and electrical equipment, and endorsements, and explain
plies to items such as transformtransformers, electrical panels, generators or any machinery all the coverage that applies
ers, electrical panels, generators
used during construction.
through equipment breakdown
or any machinery used during
insurance.
the construction period.
be tested before it’s turned over to the
“If they are diligent in explaining
“If you’re constructing a new buildowner, the policy can be extended to
things, no one can say they weren’t told
ing, for example, you need electricity,
cover testing and commissioning for loss
about the add-ons. They will actually be
and you will use a
or damage caused by a breakdown durdoing a favour to clients who may not be
new generator to
ing a testing period of five days. After the
fully aware of what’s available. But it also
provide electricity.
testing period, a commissioning period
works both ways. Clients should also be
A new building’s
applies for 30 days to attain specificaasking if they are adequately covered.”
electrical system,
tion requirements and for the training of
Rivard says a lack of coverage can reheating and air
operations personnel.
sult in a lot of extra expenses. Acquiring
conditioning
Rivard cites the example of a newly
equipment breakdown insurance is esand other major
constructed residential condo building.
sential to protect against potential losses
equipment may
“Heating and air conditioning are
Rivard
and gaps in coverage. It is important
be operating for
tested, commissioned and put to use far
clients understand the options and value
months during construction.”
in advance of turnover. This is necessary
available so they may make informed
To avoid a serious lack of protection,
to provide contractors and subcontracdecisions.
Rivard says it’s important to make sure
tors with an environment in which other
For more information, visit
coverage is complete.
interior components, finishing and
sovereigngeneral.com. IP
From the March 2016 edition of InsurancePeople