Mechanical breakdown is not a peril most shopkeepers fully consider when arranging their shop insurance. Fire, theft and flood are the obvious disasters that immediately spring to mind when foreseeing the worst scenarios that could wreck a business. Certainly, these incidents are high severity when they occur, but the reality is they are on average a rare occurrence.

Risk advice:

Your store depends on machinery and equipment so ensure your insurance includes breakdown Evaluate your equipment can repairs be affected quickly and if not is standby or hired equipment available? Are the shop’s electrical distribution system, wiring and lighting circuits, inspected every five years? This not only ensures your business complies to the electricity at work regulations, but is good risk management practice in relation to electrical safety for employees. As well as this, regular maintenance can highlight any potential equipment breakdown hot spots

Breakdown of key machinery may not have quite the same long-term effects on a business, but its likelihood of happening is far greater and it can certainly put a dent in your earnings.

The shops of today are more dependent on electrical machinery than ever before. In fact, it’s nigh on impossible to run your store without it.

Breakdown of fridges and freezers in the hot summer months was traditionally the event retailers insured against and the subsequent deterioration of foodstuffs is now a standard part of most shop insurance policies.

Sukhjinder Gill, who owns a Nisa store in Burton-on-Trent, has had his fair share of equipment failures. “Every so often one of our refrigerators goes down, but it’s not too problematic as we just move everything to another chiller and get a callout from an engineer within half a day. However, the other day my freezer broke down and we lost all the stock in it because the freezer out back was full and I didn’t have anywhere else to transfer the stock to. By the time the repair man came and fixed the freezer, four hours had passed.”

Thankfully, Sukhjinder is insured, so the damage done from the breakdown was minimal.

However, the modern shop now has breakdown exposures to an even wider variety of equipment, such as air-conditioning systems, computers, epos equipment, ovens and microwaves and electronic shutters, to name but a few.

Much of this equipment is not only expensive to repair, both in terms of parts and labour, but the effects of it being out of action can impact heavily on the shop’s takings.

Power interruption can shut a shop down and cause major disruption to sophisticated electronic equipment, which operates phones, cash registers, fire detection and security systems. This equipment is vital and fragile. The sensitive electronics are vulnerable to severe damage from electrical surges and spikes.

Typical equipment breakdown costs

- Freezer breakdown causing deterioration of stock 
Repair cost: £10,540 

- Roller shutter doors fail Repair cost: £1,250 

- Electrical failure causing breakdown in cash tills Repair cost: £5,614 

- Breakdown of ice-making machine 
Repair cost: £1,000 

- Gearbox failure on mincing machine 
Repair cost: £2,750 

- Breakdown of CCTV equipment 
Repair cost: £1,750
- Breakdown of soft ice cream-maker and loss of profit 
Repair cost: £6,000

London-based Londis retailer Dilip Patel, who owns a store in Clapham Park, claims that prevention is the key. “With our epos system, it used to be the case that if the electricity fluctuated the machines didn’t like it and they’d start playing up.” He claims that before he took precautionary measures the epos could be down for up to 24 hours before engineers were able to come, which meant either manually writing down transactions, or if only one till was down, then trying to run everything through the remaining till, which meant extra queuing for customers and putting staff under unnecessary pressure.

“We decided to invest in battery back-up, and it really made a difference in helping to reduce breakdowns. It cost £150 but it was worth it. Now we can have maintenance done on our electricity supply and still operate the tills, whereas normally they’d have failed.”

But even with back-up plans in place, it is still worth making sure that your insurance policy includes equipment breakdowns. “We have equipment breakdown covered under our shop insurance,” says Dilip. “Even with all the precautions we’ve taken, it’s definitely worth still having insurance you never know what’s around the corner. Retailing is our livelihood, so insurance just gives you peace of mind that you’ve done everything you can.”

Sukhjinder agrees that ensuring equipment failures are included in your insurance policy is important. “We have insurance on all our equipment. If your business is reasonably big and something like your credit card machine or broadband goes down then it’s worthwhile making sure you’re covered,” he says. “We could have lost thousands of pounds by now if we weren’t insured.” 

Breakdown cover 

Convenience Store Insurance, which is provided by SME Insurance Services, has been extended to give full protection against breakdown. It automatically provides breakdown insurance as standard so expensive repairs can be recovered as an insurance claim. 

The policy also caters for loss of profit so breakdowns that interrupt or affect the turnover of the business are also insured. Within breakdown cover, Convenience Store Insurance includes: 

- Explosion, collapse, cracking, overheating and joint leakage of boilers and pressure vessels 
- Breakdown caused by power surges 
- Damage caused by materials being processed or operator error.