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Business Insurance · Property Endorsements
Equipment breakdown coverage, explained clearly.
Your commercial property policy covers fire, wind, and theft — but it specifically excludes the sudden mechanical or electrical breakdown of your own equipment. Equipment breakdown coverage (formerly called boiler and machinery) fills that gap for HVAC, refrigeration, electrical systems, and production machinery. Here is exactly what triggers it, what it pays, and why it is not the same as a warranty.
At a Glance
- Also called
- Boiler & Machinery
- Trigger
- An 'accident'
- Covers
- Repair + damaged property
- Often adds
- Business income + spoilage
Quick answer
Equipment breakdown insurance — the modern name for boiler and machinery coverage — pays for loss when equipment suffers a sudden mechanical or electrical breakdown, such as a motor burnout, electrical arcing, or a compressor failure. It covers the cost to repair or replace the equipment plus other property the breakdown damages, and it usually extends to the business income, extra expense, and spoilage the breakdown causes. It fills a real gap: standard commercial property policies exclude mechanical and electrical breakdown, and a manufacturer's warranty is not insurance. Ellie Insurance Group is an independent agency (founded 2014, Tampa, Florida) that shops 100+ carrier markets to add equipment breakdown to a property policy or BOP, sized to your HVAC, refrigeration, electrical, and production equipment.
Who needs this
Who most needs equipment breakdown coverage
Restaurants & food service
Refrigeration, walk-in coolers, and cooking equipment are single points of failure — and spoilage adds up fast.
Any business with heavy HVAC load
In Florida, an HVAC or chiller failure can close a business until it is repaired, especially in summer.
Manufacturers & fabricators
Production machinery breakdown stops revenue and can damage work in process and adjacent equipment.
Data-dependent & tech-heavy businesses
Servers, network gear, and electrical systems are covered equipment; a power event can take them all out.
Grocers & convenience stores
Large refrigeration and freezer loads mean a single compressor failure can wipe out inventory.
Property owners & landlords
Building systems — elevators, boilers, electrical service — are expensive to repair and disrupt every tenant.
What it covers
What equipment breakdown actually pays
The coverage is built around the consequences of a breakdown, not just the broken part — which is what separates it from a warranty.
- Repair or replacement of the failed equipment
The direct cost to fix or replace the equipment that suffered the covered breakdown.
- Damage to other property
Property damaged by the breakdown — for example, when a failing transformer damages connected equipment.
- Business income & extra expense
The income lost and the added costs incurred while the operation is down because of the breakdown (when this extension is on the policy).
- Spoilage
Perishable stock lost when a covered refrigeration or climate-control breakdown occurs — critical for food service and grocery.
- Expediting expenses
The reasonable extra cost to speed up repairs or temporary replacement to get the operation running again sooner.
- Hazardous substance / code cleanup (by extension)
Some forms add the extra cost to clean up or dispose of a hazardous substance released by the breakdown, or to meet current code.
What it doesn't cover
Where equipment breakdown does NOT respond
Equipment breakdown covers sudden accidental failure — not maintenance items or perils that belong to other policies.
- Ordinary wear and tear, gradual deterioration, and corrosion
- Simple aging or failure to maintain the equipment
- Fire, wind, theft, and other external perils (covered by the property policy)
- Damage that is really a manufacturing defect claim against the maker's warranty
- Losses below the deductible you select
- Testing failures or intentional damage
Cost drivers
What drives equipment breakdown limits and premium
Value and type of equipment
The replacement cost and complexity of your critical equipment set the base exposure.
Business income exposure
How much revenue you lose per day of downtime drives the time-element portion of the coverage.
Spoilage exposure
The value of perishable inventory at risk from a refrigeration failure — a major factor for food businesses.
Redundancy
Backup systems and multiple units reduce the severity of any single breakdown.
Maintenance program
Documented preventive maintenance improves both loss experience and carrier appetite.
Deductible selected
Higher deductibles lower premium but raise your out-of-pocket cost per breakdown.
Quote checklist
What we'll need to quote equipment breakdown
- A list of critical equipment and approximate replacement values
- HVAC / refrigeration capacity and age
- Approximate revenue lost per day of downtime
- Value of perishable inventory at risk (if any)
- Any preventive-maintenance program on file
- Current property declarations page
- Prior equipment breakdown or mechanical losses
A worked example
How an equipment breakdown claim actually pays
Here is a simplified example for a Tampa restaurant when a refrigeration compressor suffers a covered breakdown in July.
A restaurant's walk-in refrigeration compressor burns out — a sudden electrical breakdown, not wear and tear. The property policy will not respond, because mechanical and electrical breakdown is excluded there. Equipment breakdown does.
The coverage pays roughly $8,000 to replace the compressor. It also pays the spoilage — about $6,000 of perishable inventory lost while the walk-in was down. Because the kitchen could not operate safely, the business income extension covers the lost profit and continuing expenses for the three days it took to source and install the replacement, plus expediting expense to get the unit installed over a weekend.
Without equipment breakdown, none of that — the compressor, the spoiled food, or the lost income — would have been covered. A warranty, if it applied, would have covered only the defective part, not the spoilage or the downtime.
Property vs. equipment breakdown
Which policy responds to which failure
The two coverages are complementary. This is the line we walk clients through so there is no assumption gap.
- Fire, wind, hail, theft
Commercial property policy responds — these are external perils.
- Motor burnout, electrical arcing, compressor failure
Equipment breakdown responds — the property policy excludes mechanical and electrical breakdown.
- Power surge that fries connected equipment
Equipment breakdown responds, including damage to the other property the surge reached.
- Spoilage after a covered refrigeration breakdown
Equipment breakdown (spoilage extension) responds — a critical difference for food businesses.
- Wear, aging, and lack of maintenance
Neither responds — these are maintenance, not a covered accident.
Refrigeration or HVAC failure would stop your operation?
FAQ
Frequently Asked Questions
- It is property coverage for loss due to the sudden mechanical or electrical breakdown of nearly any type of equipment — from boilers and chillers to compressors, transformers, motors, computers, and photocopiers. IRMI notes it covers the cost to repair or replace the equipment and any other property the breakdown damages, and that resulting business income and extra expense loss is often covered as well. It is increasingly replacing traditional 'boiler and machinery' insurance because the name better describes what it does.
- Standard property forms cover external causes like fire, wind, and theft, but they specifically exclude the mechanical breakdown, electrical breakdown, and internal failure of your own equipment. Equipment breakdown coverage is designed to fill exactly that exclusion. The two are complementary — property covers the external peril, equipment breakdown covers the internal failure.
- Equipment breakdown responds to an 'accident,' which the coverage defines as a sudden and accidental physical breakdown of covered equipment that requires its repair or replacement — such as a motor burning out, a short circuit or electrical arcing, a pressure-system rupture, or a mechanical seizure. It does not respond to gradual wear, corrosion, or simple aging; those are maintenance, not an accident.
- No. A warranty is a promise from the manufacturer to fix defects in the equipment itself, and it typically excludes consequential losses. Equipment breakdown is insurance: it pays not only to repair or replace the failed equipment but also for the other property the failure damages and the business income and spoilage losses that follow — none of which a warranty covers.
- Frequently, yes — when the spoilage results from a covered equipment breakdown. If a refrigeration compressor suffers a covered breakdown and the perishable inventory is lost, the spoilage extension can pay for it. Limits and conditions vary by policy, so this is one of the specific extensions we confirm at bind time for restaurants, grocers, and food service.
- Modern equipment breakdown forms are broad: HVAC and refrigeration systems, electrical panels and transformers, boilers and pressure vessels, pumps and motors, elevators and escalators, production and manufacturing machinery, and even computer and communications equipment. The coverage moved well beyond its old 'boiler' roots.
- New equipment still fails — often from power surges, electrical faults, or manufacturing defects that surface early. And a warranty, as noted, does not pay for the business income, spoilage, or damage to other property that a breakdown causes. For equipment-dependent operations, the exposure is about the downtime and consequential loss, not just the age of the machine.
Keep reading
Explore related coverage
Commercial Property
Equipment breakdown fills the mechanical/electrical gap in the property policy.
Business Income
A breakdown that halts operations can trigger business income.
Business Owners Policy
Many BOPs can add equipment breakdown by endorsement.
Ordinance or Law
Another property endorsement worth understanding.
Restaurants Industry
Refrigeration and cooking equipment make this critical.
Commercial Property Cost Guide
How endorsements affect property premium.
Sources
Authoritative references
Coverage descriptions and regulatory figures on this page are general summaries reviewed against the references above and are not a statement of coverage, legal advice, or a guarantee of eligibility or price. Last reviewed . Requirements and policy terms change — always confirm current rules with the relevant agency and verify coverage against the actual policy and a licensed agent.
Carrier access
Access to 100+ A-rated commercial markets
As an independent agency we shop 100+ admitted and surplus-lines carrier markets — so the carrier competes for your business, not the other way around.
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Next step
Get equipment breakdown coverage sized correctly
Tell us what critical equipment your operation depends on — HVAC, refrigeration, electrical, production machinery — and roughly what a multi-day outage would cost you. An Ellie agent can add equipment breakdown to your property policy or BOP and shop it across carriers.