New developments in technology have created loss exposures to businesses not addressed by the original boiler and machinery policy. This includes breakdown of a wide range of energy-related equipment such as computers, machinery using computer technology, and other equipment not previously covered under boiler and machinery policies, such as ovens, stoves, furnaces, elevators, hoists and cranes. Medical diagnostic equipment such as MRIs, advanced heart monitors and other scientific equipment in hospitals, medical laboratories and universities also needs this coverage. Coverage also applies to boilers, air conditioning systems and machinery. Covered perils or causes of loss include breakdown, burst pipes, electrical arcing, explosions of boilers for direct damage loss and extra expense and loss of business income. High limits can be arranged for large risks.
What is Equipment (Mechanical) Breakdown ?
Equipment (mechanical) breakdown coverage—often called equipment breakdown or boiler and machinery insurance—protects businesses from sudden and accidental physical damage to mechanical and electrical equipment. Unlike standard property policies, this coverage is designed to address failures caused by mechanical breakdown, electrical arcing, pressure rupture, and similar causes that result in property damage, business interruption, and extra expense.
Who needs it
Owners and operators of commercial facilities commonly purchase this coverage: manufacturers, hospitals and clinics, universities, hotels, restaurants, retail stores, and property managers. Smaller residential real estate risks with building mechanical systems may also need tailored protection—see the Residential Real Estate — Boiler and Machinery (Equipment Breakdown) page for more context. Common buyers include those with high-value HVAC, refrigeration, medical diagnostic equipment, or production machinery that could cause significant business interruption if it fails.
What it typically covers
Typical coverages include:
- Direct physical damage to covered equipment (boilers, chillers, motors, control systems, elevators, cooking equipment)
- Business income and extra expense when a breakdown interrupts operations
- Expedited or temporary repair costs and spoilage of perishable goods
- Testing, diagnostic, and replacement expenses for electronic controls and computer components
For hospitality operators there are program options specific to properties—learn more on the Hotel/Motel Boiler and Machinery Insurance page.
Common exclusions or limitations
Policies commonly exclude wear and tear, lack of maintenance, rust, corrosion, and pre-existing conditions. Damage resulting from ordinance or law, cyber incidents, or intentional acts is often excluded or limited. Policies may also have sublimits for data and software, and specific requirements for refrigeration or medical equipment to qualify for spoilage coverage.
Factors that influence cost
Underwriting factors include the age and maintenance history of equipment, presence of redundant systems, inspection and testing programs, location and exposure to fire or flooding, and the size of business interruption limits requested. Installing safety controls, regular predictive maintenance, and documented inspection logs can lower premiums. Insurers will also consider whether the operation creates higher operational hazards such as pressure vessels or combustible processes.
Proof of insurance & compliance
Businesses may need certificates of insurance or evidence of limits for lease agreements, lenders, or regulatory compliance. Policies can be tailored to include higher limits, additional insureds, or loss payee clauses to meet contract requirements. Keep maintenance and inspection records available—insurers often request these after a claim.
How to get a quote
To get a tailored quote, gather an equipment schedule (age, model, serial numbers), recent maintenance records, and loss history. Discuss coverage needs and limits with an agent—if you prefer immediate assistance, talk to your agent for a formal proposal. You can also compare program options for construction sites or planned developments on the Equipment Breakdown program pages and other storefront materials at Equipment Breakdown Insurance, Off-Premises Risk, Equipment Purchasing, and Cold-Related Illnesses.
Risk scenario: a failed compressor at a food-processing plant can lead to product spoilage, expedited shipping costs, and lost sales—equipment breakdown coverage helps address those combined losses. Typical purchasers include property owners, manufacturers, healthcare facilities, and hospitality operators who want to manage interruption and equipment replacement exposures.
Frequently Asked Questions
How is equipment breakdown different from standard property insurance?
Equipment breakdown policies focus on mechanical and electrical failures and include coverage elements like spoilage, expedited replacement, and equipment testing that standard property policies may exclude or limit.
Will an older machine be covered?
Older equipment can be covered, but insurers consider age, maintenance, and condition during underwriting; higher deductibles or limitations may apply if equipment is not well maintained.
Does this coverage include business income?
Yes—many equipment breakdown policies offer business income and extra expense coverage to reimburse lost earnings and necessary expenses while repairs are made.
Still have questions? Talk to a local insurance expert.