Equipment Breakdown Insurance
Equipment breakdown insurance — historically known as boiler and machinery insurance — covers the sudden and accidental mechanical or electrical failure of equipment that your business depends on. Standard commercial property insurance covers equipment damaged by external causes like fire, wind, and theft, but it typically excludes losses caused by internal mechanical failure, electrical arcing, motor burnout, operator error, and pressure vessel rupture. Equipment breakdown fills this critical gap in a commercial insurance program.
What Equipment Breakdown Covers
Equipment breakdown policies cover the cost to repair or replace covered equipment after a sudden and accidental breakdown, along with several categories of related loss:
- Mechanical and electrical equipment — including HVAC systems, compressors, pumps, motors, electrical panels, switchgear, and transformers
- Boilers and pressure vessels — steam boilers, hot water heaters, and pressure vessels used in manufacturing and processing operations
- Production machinery — manufacturing equipment, processing lines, and industrial machinery
- Refrigeration and cooling systems — commercial refrigeration units, walk-in coolers, and chillers
- Computer and communications systems — servers, telephone systems, and other electronic equipment
- Business income loss — revenue lost while equipment is being repaired or replaced
- Spoilage — loss of perishable inventory caused by a refrigeration breakdown
- Expediting expenses — premium costs to speed up repair or replacement when downtime is costly
Why Standard Property Insurance Is Not Enough
Many business owners assume that their commercial property policy covers all physical damage to equipment they own. In practice, property policies are designed to cover losses from external perils — fire, lightning, windstorm, theft — and most explicitly exclude mechanical breakdown, electrical failure, and operator error. If a motor burns out, a compressor seizes, or a boiler ruptures from internal pressure, the resulting damage and downtime is typically not covered without a separate equipment breakdown policy.
Industry Considerations
The need for equipment breakdown coverage and the specific equipment that requires protection varies significantly by industry. A restaurant depends on refrigeration and cooking equipment. A manufacturer relies on production machinery and compressed air systems. A medical practice cannot operate without diagnostic and imaging equipment. A data center requires uninterrupted power and cooling. An office building owner is responsible for elevators, HVAC systems, and electrical infrastructure. Because the right coverage depends entirely on what equipment your business relies on and what a failure would cost, a consultation with Etowah Insurance Group is the best starting point for understanding your exposure and building an appropriate program.
