Equipment Breakdown Insurance for Businesses That Can't Afford Unexpected Downtime.

What Is Equipment Breakdown Insurance?

Equipment breakdown insurance — sometimes called boiler and machinery insurance — covers the cost to repair or replace mechanical, electrical, and pressure equipment that breaks down due to internal causes such as electrical arcing, mechanical breakdown, or pressure vessel explosion. This is a critical distinction from commercial property insurance, which covers damage caused by external events like fire, wind, or theft but generally excludes losses caused by equipment failure itself.

A typical equipment breakdown policy covers the cost to repair or replace damaged equipment, lost business income during the period of restoration, spoilage of perishable goods due to temperature changes (for food businesses), and extra expenses incurred to minimize the loss. Covered equipment typically includes HVAC systems, boilers and pressure vessels, electrical panels, refrigeration systems, production machinery, and increasingly, computer systems and data processing equipment.

Equipment breakdown insurance is especially important for manufacturers, food processors, restaurants, medical facilities, hotels, office buildings, and any business whose operations depend on functioning mechanical or electrical systems. Many businesses assume their commercial property policy covers equipment failure — it typically does not. Equipment breakdown coverage is often added as an endorsement to a BOP or commercial property policy, making it cost-effective for businesses of all sizes.