Boiler and machinery insurance
Also known as: equipment breakdown insurance, equipment breakdown coverage
Boiler and machinery insurance, now commonly called equipment breakdown coverage, protects businesses against loss from the sudden and accidental breakdown of equipment like boilers, pressure vessels, electrical systems, and machinery.
Boiler and machinery insurance covers loss caused by the sudden and accidental breakdown of covered equipment — steam boilers, pressure vessels, refrigeration and air conditioning systems, electrical apparatus, and production machinery. It exists because standard commercial property policies specifically exclude these perils: steam boiler explosion, electrical arcing, and mechanical breakdown are all carved out of ordinary property forms.
Coverage responds to several kinds of loss flowing from one breakdown event: direct damage to the equipment itself, damage to other property of the insured, expediting expenses to speed temporary repairs, and, when added, business income and extra expense losses while equipment is out of service. The breakdown must be sudden and accidental — gradual wear and tear, corrosion, and deterioration are not covered.
A distinctive feature of this line is inspection and loss prevention. Insurers employ specialized engineers who inspect boilers and pressure vessels, and these inspections often satisfy state and municipal inspection requirements. The insurer typically reserves the right to immediately suspend coverage on any object found in a dangerous condition. Because prevention is central, a large share of premium dollars in this line funds inspection services rather than claim payments.
Property insurance licensing exams test boiler and machinery (equipment breakdown) coverage as a companion to commercial property: know why it's needed (the property form's exclusions), what perils it covers, and the insurer's inspection and suspension rights.
Key takeaways
- Boiler and machinery insurance covers sudden and accidental breakdown of boilers, pressure vessels, electrical systems, and machinery.
- It fills gaps in commercial property policies, which exclude steam boiler explosion and mechanical or electrical breakdown.
- Coverage can extend to damage to other property, expediting expenses, and business income losses from downtime.
- Insurer inspections are a core feature, and coverage can be suspended immediately when equipment is found in a dangerous condition.