Tip: Know your Insurance

A couple months ago I had my first serious problem with my laser. One minute it was firing, the next minute it wasn't.
[SIZE=3][See:http://www.sawmillcreek.org/showthread.php?197729]

Attachment 257872

As it turns out, my RF control board failed. For those of you who may not know, the RF control board for this type of laser sits under the panel in the tube to the right in the picture below--the panel is held on by 28 screws.

Attachment 257873

At this point, my laser had just turned 3, and I was a year out of warranty. The laser appeared to still be at full strength, which is why I was surprised when it suddenly failed. After talking to Epilog and ordering a replacement Out of curiosity, I called my insurance agency. The first person I spoke with agreed with me that this would probably not be covered, but she put me through to my agent's voicemail anyway.

A day later I got a call, and was pleasantly surprised to find out the incident may be covered under my Mechanical Breakdown coverage. Mechanical breakdown is a special endorsement, and is not (typically?) part of a standard commercial policy. It reads something like this:

Quote:

---

MECHANICAL BREAKDOWN

1. Under A. COVERAGE, 4. Additional Coverages the following Additional Coverage is added:

Mechanical Breakdown

We shall pay for direct physical loss of or damage to Covered Property described in the Declarations caused by any of the following:

a. Artificially generated electrical current, including arcing, that disturbs electrical devices, appliances or wires; and

b. Mechanical breakdown, including rupture or bursting caused by centrifugal force;

which occurs on or within 1,000 feet of the premises described in the Declarations.

---

By the time I heard back from my agent I had already sent in the laser tube to Epilog, and so all I had was the pictures I took. I sent these, along with a PDF of a "Laser Service Pre-Report", which I asked Epilog to send me (it basically confirms the laser tube was dead), and a copy of the invoice to my agent. Within a week my claim was approved and a check was cut for the cost of a new tube minus my deductible. ($1600 - $250 = $1350).

My chief concern was whether filing this claim would significantly affect my insurance rate. My agent and an underwriter I know have assured me that any increase should be minimal. I've had the policy for 3 years and no other claims. Please keep in mind, your millage will vary, as everyone's policy, insurance company, and business is different! Mine is chiefly a hobby business I run on the side while attending law school. $1600 was a pretty big hit, and it was worth me filing the claim. If you have a more stable business with large cash reserves, you might chose to eat it rather than risk an increase in premiums. Talk to your agent.

One more tidbit of advice I received was that comercial policies are not like auto or homeowners, which are typically computed strictly by formula. Commercial policies are reviewed individually by an underwriter each time they are renewed. Typically 60-90 days before they are set to renew. Taking steps to prevent a reoccurrence can go a long way to keeping your rates down. In my case, I've sense upgraded to 250V power and added a line conditioner [See:http://www.amazon.com/gp/product/B00007FHDI/]. I'll be submitting this information later this year when my policy is up for renewal.

I hope some of you find this post useful!

Stephen

This post is not intended to be, nor should it be interpreted as, legal advice, or as predicting a certain outcome. Again, your results will vary depending on the circumstances of your situation. Talk with your insurance agent or consult with an attorney if you have questions about interpreting the language of your policy.

Good advice, and another good reason to have commercial insurance. It can be expensive but also covers liability if you damage someone's expensive item that you are engraving.

Stephen, you suggest it was covered by the "mechanical breakdown" (clause b) but later imply it was actually covered by the the "artificially generated electric current" (clause a). I really don't know what events clause b would cover; certainly it will not cover normal wear and tear and normal degradation of a machine. Did Epilog confirm that it was a power disturbance that caused the board to blow? RF boards blow all the time but pinpointing the cause of the failure could be difficult.

Sometimes a power utility will take responsibility if there is a power line fluctuation that they admit was caused by their doing (eg bad transformer). They will not normally take responsibility for lightning strikes, weather events etc. But the power utility is another avenue to try if someone suspects that their equipment failed from a power line event.

Of course one should have suitable protection in front of the equipment; the utility will sometimes make recommendations for this as well if asked.

Several years ago we had lightening take down a tree near the house. The electrical surge also took out all telephones and a few other things including the RF control board in the laser. All totaled the amount was $2100 and my homeowners insurance picked up the tab less the deductible but they advised me that none of my business equipment would be covered in the future without a commercial policy. The cost of a commercial policy was such that I chose to be self insured.

Quote:

---

Originally Posted by Richard Rumancik

Stephen, you suggest it was covered by the "mechanical breakdown" (clause b) but later imply it was actually covered by the the "artificially generated electric current" (clause a). I really don't know what events clause b would cover; certainly it will not cover normal wear and tear and normal degradation of a machine. Did Epilog confirm that it was a power disturbance that caused the board to blow? RF boards blow all the time but pinpointing the cause of the failure could be difficult.

---

Sorry for the confusion Richard. I've edited my original post above to include the headings of the policy. The special endorsement is called "mechanical breakdown" coverage, but you're correct, my claim was made under clause a, and not clause b. You're also correct that clause b would not cover normal wear and tear; so, I couldn't make a claim for when the tube went out due to age (fading power). The guys at Epilog hypothesized my board failed due to the fact I had been running my laser on 120v (hence my new 250v outlet) and because of power fluctuations (hence my new line conditioner).

I was expecting a more through inquiry by my insurance company, such as requiring me to prove specifically what failed and why, but they didn’t. The pictures, and Epilog’s report was enough. Again, your millage may vary. My insurance company outsourced the adjusting to a second insurance company which handles nothing but these types of mechanical breakdown provisions. Surprising to me, the agent I spoke to seemed pretty familiar with the components of the laser and why it could fail.

Epilog’s report really didn’t do much more than prove the tube was dead. Epilog was unwilling to investigate further. Had I not smelled the burnt board when removing the tube from my machine, I would have never thought to open it up and look. It’s a good thing I did. In fairness to Epilog, I understand why it would be costly to investigate fully each faulty tube that is returned to them, but it would have been nice to have a more through report to give to my insurance company, even if it took a few weeks.

I’m hoping that running on 250v and my line conditioner increase the lifespan of this tube by a couple of extra years.

If you’re shopping for a commercial policy keep in mind there are huge differences in premiums from company to company. I feel comfortable I have one of the lowest premiums I can possibly get. Many quotes were 2 to 3 times what I am currently paying. So it definitely pays to shop around. Again, commercial polices are not generated solely by a formula. Underwriters have a lot of discretion in deciding your premium, and there can be significant differences.

Thanks for clarifying.

Someone has given you the impression that running on 250V is better than 120VAC . . . (I assume you actually mean 240V if you have a "residential" hookup because as far as I know the USA does not have 250V mains) . . . but anyway, from where did you get this information? The line conditioner will certainly help but I have never heard any claims that 250V (or 240 or 208) was more stable.

Personally I think you lucked out getting a sympathetic adjuster, especially since there was no hard evidence.

I often see the $50,000 "insurance coverage" on the boxes when you buy a UPS but I'd be curious to know if any one of them has ever paid this out. I think that trying to prove liability would be pretty difficult. You need to ship your surge suppressor and broken equipment and they will examine it, and then tell you if the damage was a result of failure of their equipment to suppress a surge.

Each side of my breaker box is just shy of 120v, so I'm actually getting (~239v). Of course this fluctuates throughout the day. The line conditioner holds it steady at 240v +/- 0.3 volts or so. It’s pretty impressive. Normal fluctuation could be +/- 10v or more depending on where you live. If you have a multi-meter you can check this yourself.

(As a general disclaimer, please be careful if you’re sticking probes into an electrical socket! I grew up as the son of an electrician, so I feel pretty comfortable around this sort of thing.)

According to the tech at Epilog, the 65w and 75w lasers are ideally powered by 240v circuits. The manual explains:

Quote:

---

The Helix 60 watt and 75 watt machines draw more current than the lower powered Helix machines. These two systems can operate on 110 volts, but should have their own dedicated circuit. If there is not a dedicated circuit available, or if you experience erratic electrical behavior, the 60 and 75 watt Helix machines should be connected to a standard single phase 220 volt circuit.

---

The power conditioner is listed as a 230v model. As I mentioned above, normal fluctuation can be +/- 10v, and hence, 220v and 240v are interchangeable terms in this context. (208v is what you get from 3 phase industrial power.)

Attachment 257906

As the cartoon suggests, voltage is the force that pushes the current through the line. The more force, the faster the current can feed into our machines. As it has been explained to me by the Epilog tech: our lasers have an insatiable appetite for power, particular when vectoring, and fluctuations in voltage affects the timely delivery of current, which can cause problems. Take a look at Wikipedia’s page on brownouts for a general idea on what can happen. While small power fluctuations are normal, for sensitive electronics, even these fluctuations can cause problems over time, and are essentially micro-brownouts.

I really don’t think it was luck. It’s pretty clear from the pictures that the board failed due to an electrical problem, and fits somewhere in “artificially generated electrical current, including arcing”. My basic commercial policy does not cover power surges but does cover lightning strikes. It’s the “mechanical breakdown” coverage which adds coverage for surges and line drops. There's really nothing else that could have caused it. It's my understanding that if it had been a specific component failure, that would have been covered as well.

I’ve never paid any attention to the surge suppressor protection coverage. I’d be willing to bet it’s chiefly a marketing ploy, and has a lot of hoops to jump through. I could be wrong though. Here’s an example:http://www.tripplite.com/en/support/...nce-policy.cfm

“Power transients include spikes and surges on the AC power, data or telephone lines that the Tripp Lite products have been designed to protect against (as recognized by industry standards).” Sounds a little ambiguous… and probably covers less than most of us think.