What is equipment breakdown insurance and does my business need it?

When you run a business, every day can be an adventure. Which can be exciting…but also stressful. At any rate, your business probably relies on lots of machines and equipment (and, you know, electricity) to keep running. But what would happen if one of those important machines – maybe a piece of equipment like a refrigerator or your air conditioning unit – went kaput and broke? It would probably be the stuff of nightmares.

But not to fear – we have the solution.

Equipment breakdown insurance can help your business survive a mechanical failure. We’ll explain what it is and what it covers – and we’ll even throw in some fun facts on the way.

What is equipment breakdown insurance?

To put it succinctly, equipment breakdown is coverage for an unfortunate situation where you have a covered electrical failure or mechanical breakdown that hurts your business.

There’s one catch:

The equipment in question usually has to suffer some sort of physical damage (such as a piece breaking inside the machine and causing a breakdown) or something causing a (hopefully minor) explosion.

Fun fact: Equipment breakdown insurance used to be known as boiler and machinery insurance because it was developed in the 19th century when steam was a major source of power. Now that electricity is one of the main sources of power, the coverage had to change and grow – and naturally it needed a new name.

What does equipment breakdown insurance cover?

Equipment breakdown coverage will cover the costs of repairing or replacing the equipment that is broken. But that’s not all it can cover.

Check out these other things it can do for your business…

  • Cover the cost of the labor to fix the equipment
  • Repair or replace property of the insured damaged by the breakdown
  • Replace spoiled stock or material

Equipment breakdown insurance can help you if you have a power outage.

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Why does my business need equipment breakdown insurance?

Imagine this:

You have a retail store. It’s the summer and you depend on your air conditioning to keep your customers from melting (and your employees from mutinying.) One day you unlock the store, walk in, and realize that it feels somewhat like a sauna. You poke at the thermostat, yell at the thermostat, and glare at the thermostat, but it only seems to get hotter. You fear the worst – there’s been some sort of sudden accident with the AC and it’s kaput.

No big – property insurance covers you, right?


Property insurance does cover your business equipment…but only if it’s damaged by a loss such as a fire or lightning strike (plus other “outside” forces depending on what your policy covers.) It doesn’t cover “internal” losses such as damage from electrical surges or outages, mechanical breakdowns, or boiler explosions. In fact, it will most likely specifically exclude these things.

So. Without equipment breakdown insurance, you’d be in a little bit of a pickle. That’s why it’s so important to consider equipment breakdown insurance if you rely on your machines, computers, or refrigerators (there’s actually a special type of insurance for restaurants called spoilage coverage.) But it’s very important to understand what kinds of losses are and are not covered by your particular policy.

Equipment breakdown insurance covers a wide variety of machinery, including…

  • Air conditioning
  • Refrigerators
  • Heat pumps
  • Electrical equipment
  • Motors, engines, and pumps
  • Pressure vessels
  • Point of sales systems (POS) for retail
  • Boilers

So, as you can see, equipment breakdown insurance could come in very handy someday. When you’re considering getting insurance for your business, you might want to think about it.

Equipment breakdown insurance can help your business out of a bind. We can’t foresee the future, so we may have very little warning of a spontaneous breakdown. It’s better to head off the chaos and panic of a mechanical failure with equipment breakdown.

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If you’re interested in learning more about equipment breakdown insurance and how it could protect your particular business, we’d be happy to talk with you about it. And we can also help you save money on your business insurance. We’ll help you shop for the best coverage at the best rate. To get quotes for business insurance, you can fill out our quote form, call us, or send us a LiveChat. We’re here to help you with your insurance needs.