Equipment Breakdown

What is equipment breakdown insurance?

Equipment breakdown insurance covers the sudden, accidental failure of mechanical, electrical, or pressure equipment, things like HVAC units, refrigeration, electrical panels, computer systems, and manufacturing machinery. It’s sometimes called boiler and machinery insurance, though today it covers far more than boilers.

What it covers

• Repair or replacement costs for equipment that fails suddenly, like a motor burnout or an electrical short circuit
• Power surge and electrical arcing damage to sensitive systems and equipment
• Mechanical breakdown of machinery, compressors, and manufacturing equipment
• HVAC, refrigeration, and building systems, including elevators and water pumps
• Point-of-sale and computer systems, when they fail from an internal electrical or mechanical cause

Some policies can also be extended to cover spoiled inventory or income lost while equipment is down. Worth confirming exactly what’s included, since it varies by policy.

How it’s different from property insurance

Property insurance responds to damage from outside causes: fire, storms, theft. Equipment breakdown responds to failures that start inside the equipment itself, a burned-out motor, a power surge, a mechanical part giving out from normal operation. Most businesses need both, since they cover opposite sides of the same risk.

Who needs it

Any business that depends on machinery or technology to operate day to day. That includes restaurants and food service (ovens, refrigeration, dishwashers), manufacturing and mechanical shops (motors, compressors, diagnostic equipment), retailers (point-of-sale systems), and offices running on HVAC and computer systems, in other words, most businesses.

What it typically doesn’t cover

• Normal wear and tear
• Damage from fire, storms, theft, or vandalism (that’s property insurance)
• Smaller electrical tools or household-style appliances not tied to core operations