EQUIPMENT BREAKDOWN INSURANCE Louis Vatrt & Tim Skelton LOUIS - - PowerPoint PPT Presentation
Proudly presents MYTHS & UNKNOWNS OF EQUIPMENT BREAKDOWN INSURANCE Louis Vatrt & Tim Skelton LOUIS VATRT AVP CONSTRUCTION & ENGINEERING 32 years experience in Boiler, Pressure Vessel & Machinery Industry 18 of
Louis Vatrt & Tim Skelton
Pressure Vessel & Machinery Industry
underwriting, claims, engineering and multinational insurance business
the Equipment Breakdown Insurance industry
experience on all segments of EBI both domestic & multinational
education with AIIC, FIIC & CRM designations
1. I don’t have a boiler so I don’t need boiler & machinery insurance 2. Boiler Insurance coverage is solely for the explosion of a boiler or pressure vessel 3. Machinery is protected by Property Insurance for any type of loss 4. Complex Coverage - Have to be a rocket surgeon to understand it 5. The equipment manufacturer’s warranty will cover anything that goes wrong
6. Boiler Insurance only covers the equipment itself, not damage to other property that is damaged as a result of an equipment breakdown 7. I don’t own the building so I don’t need equipment breakdown insurance 8. My production equipment is covered by service contracts so I don’t need boiler and machinery coverage 9. I don’t manufacture anything so I don’t need mechanical breakdown insurance 10. You have to be Scottish in order to inspect a boiler
Boiler and Machinery Mechanical Breakdown Insurance Machinery Solutions Equipment Breakdown Insurance Machinery Insurance Engineering Insurance
– History – What is EBI – Why is it needed
– Monoline vs Combined – Benefits of each policy type – Pitfalls to avoid
– Partnership – Claims expectations – Successful placement of a Risk
catastrophically fail
causing the US government to regulate pressure vessels and to mandate Inspections of pressure vessels
name Boiler and Machinery Insurance
Insurance now referred to as Machinery Insurance or Equipment Breakdown Insurance (EBI)
property damage, business interruption, and spoilage losses that result from accidental breakdown of pressure vessels, mechanical or electrical equipment
Accident as defined, to an Object as defined, subject to the Exclusions and Terms and Conditions in the Policy
The Insurer is then liable for the cost to repair or replace (whichever is the lesser), with like kind, capacity, size and quality
– Depletion, deterioration, corrosion or erosion of material – Wear and tear – The cracking of any part of any gas turbine exposed to the products of combustion – Leakage at any valve, fitting, shaft seal, gland packing, joint or connection – The breakdown of any structure or foundation supporting the Object – The functioning of any safety device or protective device – The sudden and accidental explosion of gas or unconsumed fuel within the furnace
generation, transmission or utilization of mechanical or electrical power”
more objects”
machines, printing presses, ice-making machinery, processing equipment, milling
electrical equipment attached to the equipment)
Property Exclusions
and equipment connected thereto, which contains steam or water under steam pressure…”
normal internal working pressure greater than 103 kilopascals (15 pounds per square inch) above atmospheric pressure”
EBI Policy Coverage
boiler, any fired or unfired pressure vessel” … “or any other piping and its accessory equipment all subject to vacuum or internal pressure…”
Peril Exclusions
force, mechanical or electrical breakdown or derangement…”
generated electrical currents, including arcing…”
EBI Policy Coverage
“any mechanical machine, electrical machine or electrical apparatus used for the generation, transmission or utilization of mechanical or electrical power.…”
vessel at a food processing facility
$500,000 of salami
– History – What is EBI – Why is it needed
– Monoline vs Combined – Benefits of each policy type – Pitfalls to avoid
– Partnership – Claims expectations – Successful placement of a Risk
.
Monoline Combined
exclusions in a property policy
1. Monoline policies – Property and Equipment Breakdown 2. Combined within a Property policy; embedded or sectional or endorsed to the overall Policy
gaps and duplication of coverage while providing complete coverage
removed can be problematic
May 2007 - DOL
Risk control expertise Claims specialists Underwriting expertise; tailored solutions Jurisdictional inspections Increased market capacity Marketplace: stable, very competitive Property exclusions do not come into play Fewer potential gaps or overlaps in coverage Potentially simplified loss adjustment for “joint/combined losses” Same Insurer(s) – One Stop Shopping One Policy vs Two
Total: 44 Markets - $396,664,000
manufacturing facility - May 1993
destruction of the facility
fatigue until it failed in a rapid manner at normal operating pressure
its original position
– History – What is EBI – Why is it needed
– Monoline vs Combined – Benefits of each policy type – Pitfalls to avoid
– Partnership – Claims expectations – Successful placement of a Risk
Risk Managers play a vital role – they are ultimately responsible for the risk management strategy for the organization, which includes determining which exposures to transfer to insurance markets Supplying Underwriting information – updated values; new projects / changes to operations; coverage or changes to terms and conditions Co-ordinate and promote Loss Control Activities – including site visits, and timely feedback to Loss Control Recommendations Manage Claims – prompt notification of potential claims and work with Insurers to return to full operations Desire to collaborate with Broker and Insurer
Knowledgeable & experienced in the segment “Match-maker” – finding the right “fit” Alignment with knowledgeable & experienced Insurer Minimizing the “noise” – finding solutions Advocacy
Strategy - Appetite Underwriting Risk Assessment
Claims
Relationship / Collaboration
3 key steps to assist brokers and insurers in maintaining a powerful 3-way partnership with their risk partners
equipment continues to evolve and enhance so too will the EBI Product
in some ways it will remain the same
people and businesses become increasingly more reliant on technology, yet what is needed from an EBI carrier stays the same: a company that is knowledgeable, adaptable, and that understands the needs of the client.
1. I don’t have a boiler so I don’t need boiler & machinery insurance 2. Boiler Insurance coverage is solely for the explosion of a boiler or pressure vessel 3. Machinery is protected by Property Insurance for any type of loss 4. Complex Coverage - Have to be a rocket surgeon to understand it 5. The equipment manufacturer’s warranty will cover anything that goes wrong
6. Boiler Insurance only covers the equipment itself, not damage to
breakdown 7. I don’t own the building so I don’t need Boiler Insurance 8. My production equipment is covered by service contracts so I don’t need Boiler & Machinery insurance 9. I don’t manufacture anything so I don’t need Boiler & Machinery insurance