Complete Guide — Updated August 2026
Complete Guide to Equipment Breakdown Insurance: Coverage, Costs & Who Needs It — 2026
Equipment breakdown insurance (also called boiler and machinery insurance) covers the cost to repair or replace mechanical, electrical, or pressure equipment that fails due to internal causes — motor burnout, electrical shorts, mechanical failure. Standard property policies only cover external perils (fire, theft) and explicitly exclude mechanical breakdown.
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Equipment breakdown insurance (also called boiler and machinery insurance) covers the cost to repair or replace mechanical, electrical, or pressure equipment that fails due to internal causes — motor burnout, electrical shorts, mechanical failure. Standard property policies only cover external perils (fire, theft) and explicitly exclude mechanical breakdown.
What It Covers ✓
- ✓Mechanical breakdown of boilers, pressure vessels, HVAC systems
- ✓Electrical equipment failures — motors, generators, transformers
- ✓Electronic equipment — computers, POS systems, medical equipment
- ✓Damage to other property caused by a covered breakdown
- ✓Business interruption losses from equipment failure
- ✓Spoilage of refrigerated products when refrigeration breaks down
What It Does NOT Cover ✗
- ✗Normal wear and tear
- ✗Gradual deterioration (not sudden breakdown)
- ✗User error causing intentional damage
- ✗External causes (fire, theft — covered by property policy)
- ✗Vehicles (commercial auto)
Who Needs Equipment Breakdown Insurance?
- →Restaurants with commercial kitchen equipment
- →Healthcare practices with medical equipment
- →Manufacturers with production machinery
- →Hotels and hospitality with HVAC and laundry systems
- →Data centers with servers and UPS systems
- →Any business with costly mechanical, electrical, or pressure equipment
How Much Does It Cost?
Restaurant / food service
$300–$800/year
Healthcare practice
$500–$1,500/year
Manufacturing facility
$800–$3,000/year
Available as BOP endorsement
$100–$300/year add-on
Key Terms to Know
Mechanical Breakdown
Failure of equipment due to internal causes — faulty components, motor failure, short circuits, excessive pressure. Not covered by standard property policies.
Boiler & Machinery
The historical name for equipment breakdown insurance, derived from steam boiler explosions that were the original coverage focus.
Spoilage Coverage
When refrigeration breaks down and perishable products (food, medicine, temperature-sensitive inventory) are lost, spoilage coverage reimburses the product value.
Business Interruption
Equipment breakdown policies include BI that pays for lost income when a key piece of equipment fails and cannot be repaired immediately.
How to Get Equipment Breakdown Insurance
List all critical equipment by replacement value — HVAC, kitchen equipment, medical devices, production machinery
Check your property policy's equipment breakdown sub-limit — most have $0 for mechanical breakdown
Add equipment breakdown as a BOP endorsement or standalone policy based on total equipment value
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