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  • Writer's pictureSusanne Nordman

Equipment Breakdown Insurance

The importance of insuring your heavy machinery.


The recent pandemic that shook the whole world was especially frightening for small business owners. From the rise of industrial material prices to even permanently shutting production down, small business owners had to face these challenges head on and quickly find solutions.

Fast forward to 2023, the feeling of “normal” is slowly returning, and we are positive that no business owner wants to face any extreme financial challenges ever again. As a small manufacturing business, we at Obsidian Manufacturing Industries, Inc. highly encourage small business owners to create a plan to ensure that all equipment is financially insured to avoid a pause in production and any future stress. No business owner plans for equipment to break down, but why not be prepared if it does?


What is Equipment Breakdown Insurance?


Designed to reduce revenue losses and keep business afloat, Equipment Breakdown Insurance, also known as ‘Boiler and Machinery’ insurance is coverage that all small business owners should take advantage of, especially in the manufacturing industry. overage applies to the cost to repair or replace the equipment and any other property damaged by the breakdown.

A Mattison surface grinder in our shop recently experienced a problem with its electromagnetic chuck. Unfortunately, this breakdown forced us to turn away several grind jobs and ultimately lose revenue.

Experiencing this malfunction has given us the experience to advise other businesses to protect their equipment. We hope the information provided in this case study will help prepare your small business to recover from any unexpected equipment malfunctions in the future.

It is important to note that normal wear and tear, damage from neglect or poor maintenance of your equipment is excluded when filing this type of claim.


The process of filing a claim

The process of filing an insurance claim can be extremely overwhelming for anyone, especially if it is your first time doing so. The paperwork and many questions asked can often deter a client from ever filing.

We recently quoted an electromagnetic chuck repair for one of our Magna-Lock USA customers; as previously stated, we were in a similar situation with our 84” electromagnetic chuck on our Mattison surface grinder a few months prior. With the recent circumstances of insurance saving our business large amounts of money, we were overjoyed to be able to provide guidance to this customer, which led to a successfully filed claim for his damaged electromagnetic chuck. This case study will provide you with two possible claim questions that your business may be asked by insurance representatives when filing an equipment breakdown claim.


Please note that these examples are unique claims and may not pertain to your specific equipment; these are only examples of what to possibly expect during the process. Not all insurance policies are written the same and it is not a guarantee that all breakdown equipment insurance will provide full coverage to a claim like ours. It is important to discuss these matters with your insurance representative prior to an equipment breakdown to insure full coverage when needed.


Describe the equipment involved and what caused the damage, including contributing causes, if known. If the equipment is not repairable, please explain why.


Example: 84" electromagnetic chuck on Mattison Rotary Surface Grinder, (include serial number of machine and date of manufacture, if known). When grinding the customer's part, the chuck failed to energize and a fuse was blown on the chuck controller. Upon further evaluation, it was determined that an internal wire has shorted out inside the electromagnetic chuck. Inspection report is attached indicating that the magnet shorts out to ground. The electromagnetic chuck is repairable by removing it from the grinder and opening the chuck and replacing the coils and wiring inside. During the evaluation it was determined that the chuck controller for this magnet was not damaged by the short out. The collector ring and brushholder assembly in the center of the chuck will need replacement also because they have been burnt by the electrical short. Evaluation showed that electrical wires inside the chuck have broken down due to heating and cooling caused using the machine. (attach a quote for the chuck repair)


Please describe the original equipment’s function and provide the industry standard name of the equipment.” (i.e., MRI, Air Compressor, Point of Sale System, etc.).


The purpose of an electromagnetic chuck or table is to hold the part or material that is being machined, in this case, surface ground. The electromagnetism holds ferrous parts and materials. All electromagnetic chucks are for operation from a direct current source. Most factories have alternating current (AC) readily available, so a rectifier system is used to convert the alternating current electricity to direct current. Many times, a rectifier used to control the electricity running to an electromagnetic chuck is referred to as a chuck controller or chuck control. A switch of ample capacity is also required to permit turning the chuck on and off. To minimize residual magnetism, the chuck control switch must also be capable of reversing the DC input to the chuck. Many people confuse the releasing of the part or material as a function of the magnet not the controller when it is the rectifier that controls that function.


Information needed will vary depending on your equipment and insurance company, but it is important to be as detailed as possible when filing a claim to receive the quickest turnaround time.

Overall impact

At Obsidian Manufacturing Industries, Inc., we understand the impact that broken machine equipment can cause to a production schedule, especially in a small business environment. If your business relies on the production made by heavy machine equipment, we encourage you to invest in Equipment Breakdown Insurance to better prepare for any unexpected malfunctions that your machines may experience.






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