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Equipment breakdown coverage (or mechanical breakdown insurance) is coverage of a loss due to mechanical or electrical breakdown of equipment. It used to be referred to as ‘Boiler and Machinery Insurance’ but is now generally categorized as equipment breakdown coverage or equipment breakdown insurance.
This policy covers equipment including:
Equipment breakdown insurance usually covers the cost to repair or replace the above items, including time and labor associated. If there was food spoilage, that will be considered as well. Lost income is also covered under these policies.
In this day and age, almost every business relies on computers and phone systems for the daily operation of the business. If power surges shut down or wipes out these systems —will you be prepared?
Equipment breakdown insurance comes in handy in these scenarios:
Just like any other insurance policy, there is a limit—or maximum amount—that an insurance company will cover per claim submitted. If there are costs that exceed this maximum, you will be responsible for the coverage. The amount of coverage that is necessary varies from business-to-business but is typically affordable in comparison to the coverage you receive.
It’s important to understand this coverage is ‘hardware’ and not software coverage for your computers, phone systems, etc. For example—a virus or bug which causes computer failure is not covered, but a power surge that damages a motherboard would be. What else is excluded from coverage?
Many business owners believe their commercial property insurance would cover these claims—only to find out it’s not covered. Property insurance covers damages from sudden external causes such as fire, flooding, or a tree falling into your building. These policies don’t cover internal causes like an electrical or mechanical failure. This is where equipment breakdown insurance becomes necessary. Equipment breakdown coverage is often purchased in conjunction with property insurance. Some business income—or business interruption insurance—policies include breakdown coverage.
Generally speaking, insuring equipment that is expensive to repair or replace should be a small business owners first priority. Here are just a few examples of businesses that should purchase equipment breakdown coverage:
If you think your small business may benefit from this type of insurance, be sure to connect with an agent for more information.
Insurance for equipment that is expensive to repair or replace may save your business. Equipment insurance can be as little as $25–$50 annually for $50,000 in coverage—well worth the minute expense. We recommend connecting with your commercial insurance agent or speaking to one of our qualified agents about the coverage minimums necessary, the cost of the policy, and whether or not you can add it as an endorsement to your business income insurance or purchase the policy from your insurance company separately.
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