Why does a business need elevator insurance?

Businesses need all kinds of insurance. Basically, insurance policies protect against damage, fire, vandalism, liability and loss of income. Insurance is purchased for equipment, vehicles, watercraft, buildings, and people, such as partners in a firm. In today's litigious society, a business can never have enough insurance. Plus, nowadays the replacement value on any asset can be astronomical, placing the company's daily cash flow and bank reserves in serious jeopardy. Monies that were allocated to payroll and other weekly expenses are at risk because the company owners must to decide what is more important. Consequently, insurance policies ease this burden. But, why does a business need elevator insurance?

Certainly, one asset of the business, that seems obscure in terms of insurance, but taken for granted on a daily basis is the elevator. Because of the fact that elevator insurance is a specialty service and expensive compared to other types of insurance, owners often wonder why they even need elevator insurance. Before directly answering the question, though, it would be wise to examine the types of businesses or companies that require elevators. Apartment complexes and office buildings use elevators to carry residents and staff. They also have at least one elevator dedicated to cargo, normally called a freight elevator. Retail locations, factories, manufacturing companies, and warehouses all have elevators to move their inventories. Hospitals have larger elevators that transport visitors, doctors, staff and patients attached to medical equipment on gurneys.

Elevator

In addition to up-and-down shaft-style elevators, escalators used in malls and department stores, moving walkways like the airports use, dumbwaiters found in restaurants and hotels, and any other kind of specialty lifting or transporting device can be classified in the same insurance category as elevators. Furthermore, one common thread of all elevators and automated movers is that people ride them or operate them. And when individuals are involved, there is a higher propensity for injury. And injuries mean lawsuits. Thus, the first reason why a business needs elevator insurance is to protect itself against liability claims.

The second reason business owners require elevator insurance is to protect themselves against problems when staff are working on the equipment. This area of the insurance involves various components. The company may have its own employees who conduct minor maintenance or surface cleaning. If something happens to them while at work, The Department of Labor Workers' Compensation is going to be involved. That is the law. The other side of the problem exists when outside workers come in to complete repairs and regular maintenance. Yes, they are employees of the contractor, but the elevator is the property of the business. And, the accident will have occurred on business property. The company that holds the service contract on the elevator will want to know that it is insured should something happen to one of their employees.

A third reason for businesses to obtain elevator insurance is for protection before the elevator is even ready for public use. Whether the building is new and the elevator is being installed for the first time, or the building is being renovated and upgraded, and a new elevator is installed, insurance is needed while the work is being completed. There is some risk involved for the builder, and insurance is going to alleviate the fears which not only include the possibility of an accident, but also, the loss of income, the payment of medical bills, and maybe even a death benefit for the family.

The fourth reason for businesses to have elevator insurance is to guard against loss of inventory or other assets. If the elevator malfunctions, and thousands of dollars of product is damaged, rendering the inventory useless for sale, the company could be bankrupted because of that accident. Fifth, the elevator may not be covered under any service maintenance contract which means if anything happens, the owner of the elevator is the first to blame. That is not to say, however, that the service provider will not have to defend himself as well.

Elevator

To expand the notion that the company servicing the elevator is responsible for accidents, it is generally assumed that both the owner of the property, and the owner of the maintenance company are equally responsible for the harm created due to a malfunctioning elevator. Obviously, the public at large, or specifically the persons who were hurt, want someone to pay and it is logical to them that only those two parties can be responsible. But, when and if the suit goes to court, it may be determined that only one was guilty for any number of reasons. Where business owners and managers become confused is with full service maintenance contracts.

Frequently service providers promote their services as insurance against liability and costly repairs. They go as far as to say the maintenance contract is an insurance policy. In fact, this is not always the case. Farther down in the contract, there is also a clause that stipulates that the owner cannot hold the service provider responsible for any accidents or subsequent harm. Basically, the bottom line here is that owners and/or managers really need to let their company's insurance provider read the document to determine whether the business is really insured. In most cases, it may very well be that the wording is confusing and possibly misleading. By verifying the terms of the maintenance contract, owners will find out immediately that they need elevator insurance.

Further, the insurance company that provides the policy on the elevator may not accept the same risk as the owner of the elevator does. For example, if the owner chooses the cheapest maintenance contract, thereby skirting regular inspections, the insurance company may decide that the risk is too high to insure this location. So again, the owner needs to discuss any maintenance contracts with the insurer to determine whether or not the contract abides by their rules and regulations, and whether or not the contract terms are sufficient enough to comply with the insurer's level of risk.

In conclusion, individuals encounter elevators in every aspect of their lives. They ride them as second nature, and most do not even think about the consequences of an accident. But, the owners have a legal and moral obligation to ensure the safe operation of their elevators. Admittedly, elevators and other people movers in the same class are much safer today, yet insurance companies, building code laws, and labor laws dictate how much insurance is needed and why a business needs elevator insurance.

To find out more about specific laws, rules and elevator companies you should check the links.