Equipment Breakdown Coverage
Plain English
Equipment breakdown coverage pays when a machine or system suddenly breaks, such as a boiler, a walk-in cooler or an electrical panel shorting out from a power surge. Standard property policies cover equipment damaged by things like fire, but often not a breakdown itself. It can also cover spoiled stock and lost income.
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Definition
Equipment breakdown coverage, historically called boiler and machinery insurance, pays for sudden mechanical or electrical breakdown of equipment such as boilers, refrigeration and HVAC systems, and electrical machines, which standard property policies often exclude.
Why It Matters
For restaurants, shops and offices that depend on refrigeration, HVAC or computers, a breakdown can stop business. Without this coverage, the repair and spoilage are usually the owner's cost.
Real-World Example
Imagine a walk-in freezer's compressor fails on a weekend, and a deli loses $6,000 of stock. The property policy doesn't cover mechanical breakdown, but the deli's equipment breakdown coverage pays for the compressor repair and the spoiled food, less its deductible.
Common Misconceptions
- Assuming property insurance covers mechanical breakdown.
- Confusing it with a manufacturer's warranty.
Key Takeaways
- Triple-I: "Mechanical Breakdown" coverage applies to "boilers, pressure vessels, refrigeration systems, piping, and mechanical and electrical machines."
- Standard property policies often exclude mechanical breakdown.
- It may include spoilage and business income from a breakdown.
- Ask whether power surges are included.
Frequently Asked Questions
Does it cover wear and tear?
Generally no; it covers sudden breakdowns.
What's it commonly confused with?
A warranty, which comes from the manufacturer.
Related Terms
Related Coverages
- Commercial Property Insurance
Related Scenarios
Explore the rest of the Business Insurance category.
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- Insuring your business: property insuranceInsurance Information Institute (Triple-I)
Educational information, not advice: This page is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers.