Better Safe than Sorry

All it takes is a tiny screw that has fallen into the printing unit to tie up a printing press for days and not only cause property damage but also a loss of revenue. A print shop should therefore insure itself against such an event.

When something unexpected happens, for example, when a loose screw or torn belt causes a machine to break down, the damage is usually extensive. The resulting loss of revenue on top of fixed costs, such as salaries or wages, quickly leaves a big dent in the budget. Fortunately, businesses can insure themselves against damage or additional expenses caused by a machine breakdown or downtime. Unfortunately, however, most print shops aren't insured for such situations.

Machine breakdowns are often not insured
"Both print shops and insurance companies usually focus on classical dangers like fire, storms or water damage and less on the risks that occur during operations," explains Gerhard Bugla, the lawyer in charge of the insurance department at Heidelberg, also responsible for insurance coverage of the company's own machinery. According to Bugla, businesses often try to save money in the wrong places. "In the event of damage, large sums quickly accrue and the harmful effect on the business' image with customers should also not be underestimated. Insurance, however, can pay for the property damage and the losses that result from it, even when it was caused by one's own operating mistake."

Recommended insurance policies
Small businesses, in particular those with up to five employees, are often underinsured and tend to think that they'll somehow manage if something happens. Although many small companies do not hold these types of policies, insurance companies offer coverage for almost all operational risks. These include policies that cover property and technological risks (i.e. when measurement and control systems fail), material defects and excess voltage, as well as liability and third-party maliciousness. Explicitly listed situations and gross negligence are not included. "These kinds of all-risk policies are specially suited to small and medium-sized businesses. They are uncomplicated and relatively inexpensive with premiums that are a thousandth of the insured value or damage sums," Bugla says.

Assessing your risk
Bugla suggests reading through the insurance policies carefully and using the listed risks as a kind of checklist to avoid over-insuring your print shop. "Before meeting with a broker, businesses should list the possible effects of damage and ideally weigh them up according to individual risk categories. Consider which costs could be covered by the business itself in the event of damage and which risks should be covered by the insurance," he said. Factors like capacity buffers, the possibility of getting round the problem with the help of a business partner or the urgency of deadlines all play a vital role. You should also be prepared to answer the question of how high a contribution you could pay.

Finding the right insurance company
It is difficult to get an overview of the policies on the market because insurance markets are often fragmented. Bugla therefore recommends that print shops approach an experienced broker specialized in machine breakdown and business interruption insurance. The type of insurance available varies, however. Often in state-regulated markets, like Brazil or China, fewer risks can be insured than in Europe, where open markets have led to coverage and policies for a broad range of scenarios. "Insurance coverage should begin at the very latest immediately after the manufacturer's warranty has run out or, ideally, as soon as a machine is put into operation," explains Bugla. The policy should be reevaluated at least every two years. The primary reason for this is because price changes are frequent: a company that used to be cheap may now rank among the most expensive. Second, constant re-evaluation is necessary because operational processes change in ever shorter cycles.

First prevent, then insure
An insurance policy should still be the last step in a company's security plan. Structural or organizational measures, such as a fire alarm, sprinkler system or partner contracts with other print shops for emergency situations, minimize the risks in advance. "Businesses can reduce their downtimes and risks significantly by having maintenance work done as specified by the manufacturer's guidelines, for example contracts with the Heidelberg systemservice. Insurance companies may be willing to negotiate on premium costs if you have solid risk-management systems in place," added Bugla.