The Gap in Standard Coverage
Many business owners are surprised to learn that standard commercial property insurance doesn't cover equipment failure due to mechanical or electrical breakdown. Equipment breakdown insurance (also called boiler and machinery insurance) fills this critical gap.
What Equipment Breakdown Insurance Covers
This coverage protects against sudden and accidental breakdown of:
- Production machinery and manufacturing equipment
- Heating, ventilation, and air conditioning systems
- Electrical systems and distribution equipment
- Boilers and pressure vessels
- Refrigeration and cooling systems
- Computer and telecommunications equipment
- Pumps, compressors, and motors
Covered Causes of Loss
- Mechanical breakdown
- Electrical arcing or short circuits
- Power surge damage
- Motor burnout
- Operator error
- Centrifugal force damage
- Pressure vessel rupture
What's Typically Included
Property Damage
- Repair or replacement of damaged equipment
- Damage to surrounding property
- Expediting costs for faster repairs
Business Interruption
- Lost income during equipment downtime
- Extra expenses to maintain operations
- Spoilage of inventory (e.g., refrigeration failure)
Additional Coverages
- Service interruption from off-premises power failure
- Hazardous substances cleanup
- Ammonia contamination
- Water damage from equipment failure
Why You Need This Coverage
Consider the impact of equipment failure:
- Average equipment breakdown claim: $20,000-$50,000
- Major failures can exceed $1 million
- Downtime costs often exceed repair costs
- Older equipment is more failure-prone
Industries That Benefit Most
- Manufacturing
- Food service and restaurants
- Healthcare facilities
- Data centers
- Cold storage and distribution
- Hotels and hospitality
- Any business dependent on HVAC or refrigeration
Loss Prevention Services
Many equipment breakdown policies include:
- Inspection of boilers and pressure vessels
- Infrared scanning for electrical issues
- Risk assessment and recommendations
- Compliance with jurisdictional requirements
Making a Claim
- Notify your insurer immediately
- Don't dispose of damaged equipment
- Document the failure and damage
- Get repair estimates
- Track all associated costs