What is Equipment Breakdown Insurance? (Boiler & Machinery Insurance)
Equipment Breakdown Insurance, Aka “boiler and machinery” insurance, covers for loss due to the sudden mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Untimely equipment failure can cripple a business. Covering your mechanical and electrical equipment that is typically excluded under most property policies, is a wise choice to keep your business thriving.
Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well. Equipment breakdown insurance is increasingly replacing traditional boiler and machinery (BM) insurance, in part simply because the title is more descriptive and it offers slightly broader coverage.
What Does Equipment Breakdown Cover?
Equipment Breakdown Insurance Can Cover:
- Electrical Systems
- Air conditioning and refrigeration
- Mechanical Equipment
- Modern Office equipment like Photocopiers and Computers
To More Advanced Mechanical Equipment Caused By Sudden And Accidental Breakdown Like:
- Gears broken due to misalignment, vibration or inadequate lubrication
- Rupture or explosion of steam pressure vessels due to corrosion
- Electric motor burnout due to overload or power surge
- Explosion of Boilers due to metal fatigue
- Rupture or bursting of moving or rotating machinery caused by centrifugal force or mechanical breakdown
- Electrical arcing of motors, generators, circuit breakers, electrical distribution boards, cables and transformers
- Short circuits and line surges resulting in physical damage.
- Explosion of steam boilers, pipes, turbines, engines and gas turbines
In addition to direct damage exposures, equipment failures can result in substantial business interruption, extra expense or spoilage losses. Coverage for such losses can be added to a policy.
How Is This Different from Warranties or Service Contracts?
Warranties and service contracts are important but they don’t cover many of the common causes of equipment breakdowns. Maintenance contracts cover routine service such as cleaning or adjustment. But they don’t pay for damage due to operator error, the cause of over 35% of equipment breakdowns. Equipment breakdown insurance does. Warranties and maintenance contracts also don’t pay for business interruption or income loss resulting from breakdown. Nor do they pay for spoilage, damage to surrounding property or extra expenses to restore operations. Equipment breakdown insurance can cover all these risks.
Doesn’t Business Property Insurance Already Cover This?
Property insurance covers many standard perils, such as fire. But even “all risk” property coverage wasn’t designed to pay for equipment accidents from the unique causes of equipment failure such as short circuits, centrifugal force or mechanical breakdown. Equipment breakdown coverage is specially designed to pay for damage caused by these risks. Because standard property policies don’t cover equipment breakdown you need to ask to make sure it is included.
If your business owns, operates or depends upon some type of equipment to generate revenue, Equipment Breakdown Insurance is something you should strongly consider.
Still have questions about Equipment Breakdown Insurance? Talk to a Builders' Choice agent today!