What is Equipment Breakdown Insurance?

Equipment breakdown insurance is one of the primary components of a business owner's policy (BOP), and it protects your company's mechanical, electrical, and computer equipment from unexpected malfunctions.

What Exactly Does Equipment Breakdown Insurance Cover?

Equipment breakdown insurance, often known as boiler and machinery insurance or mechanical breakdown insurance, provides coverage for the following:

  • The price of repairing or replacing damaged equipment, including both time and labor
  • Income squandered
  • Inventory that has been spoiled
  • Expenses incurred throughout the repair process that was necessary.

    • Equipment Breakdown Insurance Generally Covers Five Types Of Equipment:

  • Motors, engines, generators, elevators, water pumps, and specialized production and manufacturing equipment are all included in the mechanical category
  • Transformers, electrical panels, and cables are all examples of electrical equipment
  • Computer systems, fire alarm systems, phone systems, security systems, and voice mail systems, are all examples of computers and communications
  • Refrigeration and air conditioning systems
  • Boilers and pressure equipment are two types of boilers

    • Examples of equipment breakdown coverage

    Even if you don't own your own building, it's a good idea to have equipment breakdown insurance, especially if your firm relies on properly-functioning equipment owned and maintained by a crucial provider, such as a local power company.

    If your pizza shop, for example, relies on both online and walk-in clients, your business will suffer if the power goes out due to a power surge. A power outage could result in a loss of heat or air, as well as the inability to process online orders, prepare, cook, serve, and sell meals. Furthermore, if the electricity is off for an extended period of time, your food stockpile may rot.

    The following is an example of what equipment breakdown insurance might cover:

  • ≫ The revenue you lost from your business while the electricity was out
  • ≫ The cost of repairing your walk-in refrigerator and replacing a computer that was damaged by a power surge after the power had been restored
  • ≫ Time and labor costs are connected with repairing and replacing your damaged equipment
  • ≫ The cost of replacing any food that has gone bad.

    • Isn't Equipment Covered By My Commercial Property Insurance?

    Damages caused by an external cause, such as a fire, are covered by your commercial property insurance. Damages caused by covered internal forces, such as electrical shorts, mechanical failures, motor burnout, power surges, or operator error, are covered by equipment breakdown insurance.

    It's important to note that, while equipment breakdown insurance covers computers, it doesn't cover software. You'll need cyber liability insurance to effectively protect your computer systems, such as software.