Equipment Breakdown Insurance covers repair or replacement of essential equipment after a mechanical or electrical failure. It’s a smart add-on for manufacturing, food service, and tech-heavy businesses.
Equipment Breakdown Insurance
What Is Equipment Breakdown Insurance?
Equipment Breakdown Insurance (sometimes called Boiler and Machinery Insurance) covers the repair or replacement costs—and lost income—when essential business equipment fails due to mechanical breakdown, electrical issues, or pressure systems malfunction. Unlike property insurance, which only covers physical damage from external perils, this policy covers internal failures caused by things like power surges or motor burnout.
Who Needs Equipment Breakdown Insurance?
Any business that relies on machinery, electronics, or HVAC systems should consider Equipment Breakdown Insurance.
Common industries that often require Equipment Breakdown Insurance include:
- Manufacturers
- Processing Plants
- Restaurants, Bakeries, and Commercial kitchens
- Hospitals, Clinics, and Labs
- Real estate operators
- Commercial Buildings
- Data centers
- Financial institutions
- Tech companies
What Does Equipment Breakdown Insurance Cover?
Equipment Breakdown Insurance typically covers:
- Mechanical Breakdown: Coverage for repair/replacement of machinery due to sudden and accidental failure.
- Electrical Failure: Damage from electrical arcing, short-circuits, or power surges.
- Boiler Explosion or Pressure System Damage: Covers explosion or overheating damage to pressure vessels.
- Business Income Loss: Lost income from a shutdown due to equipment failure.
- Spoilage: Reimbursement for perishable goods ruined by refrigeration or HVAC failure.
What Doesn't Equipment Breakdown Insurance Cover?
While Equipment Breakdown Insurance offers broad protection, it doesn’t cover:
- Routine wear and tear or preventative maintenance
- Software failures or data loss
- Equipment failure due to flooding, fire, or other external events (covered under Property Insurance)
- Cosmetic damage that doesn’t impair functionality
- Operator error unless it directly causes a covered event
How Much Does Equipment Breakdown Insurance Cost?
The cost of Equipment Breakdown Insurance varies based on factors like type of equipment, value, business operations, location, and claims history.
Key Cost Factors:
- Type, quantity, and age of machinery
- Industry and operational exposure
- Claim history and maintenance practices
- Extent of income loss exposure
- Coverage limits and deductible
- Dependence on refrigeration or specialized systems
Typical Cost Range:
- Small Businesses: $300–$2,500 annually
- Medium Businesses: $2,500–$5000 annually
- Larger or Industrial Businesses: $5,000–$20,000+, especially with high-value or custom equipment
- Bundled Coverage: Often included in a Property or BOP policy for a small additional premium
Risk Management Tips
To minimize potential claims and prevent or reduce the impact of equipment failure:
- Schedule regular inspections and preventive maintenance
- Install surge protectors and backup power systems
- Train staff on equipment handling and shutdown procedures
- Maintain service logs and repair records
- Evaluate mission-critical equipment for redundancy or backup options
Talk to An Expert
Our dedicated experts are ready to provide tailored insurance solutions to clients across a wide range of industries and specialized services.
Schedule a consultation to see how Alliance Risk can reduce your insurance risk.
– We look forward to partnering with you.