Equipment Breakdown Insurance

Equipment breakdown insurance (also known as boiler and machinery insurance) provides protection for costly equipment failures—covering repair or replacement of machinery, systems, and electronics damaged by mechanical or electrical breakdown.

1. What Does Equipment Breakdown Insurance Cover?

This specialized policy typically covers:

• HVAC systems, boilers, and water heaters

• Commercial kitchen equipment—ovens, refrigeration, dishwashers

• Home appliances—like built‑in ovens or central air units

• Office electronics and servers, business machinery

• Mechanical and electrical failures due to breakdown—not standard wear and tear

Standard homeowners or commercial policies often exclude these causes—equipment breakdown is usually a separate cover.

2. Covered Perils: Mechanical or Electrical Failure

Covered failures typically include:

• Short circuits, mechanical breakdown, or system overload

• Electrical arcing or power surges

• Mechanical damage from boilers, compressors, or motors breaking down

• Failure due to latent defects, pressure breakdowns, or product defects

Equipment breakdown coverage steps in where warranties or standard insurance fall short.

3. What Isn’t Covered by This Policy?

Despite strong protection, exclusions often include:

• Damage from routine maintenance neglect or corrosion

• Wear and tear or aging components

• Damage caused by flooding, fire, wind, or other standard perils (unless endorsed)

• Damage from improper installation or design flaws

Equipment breakdown insurance does not replace standard property or liability coverage—it fills in gaps where equipment fails unexpectedly.

4. Claims & Payout Structure

When you file a claim:

• A professional adjuster assesses the cause to confirm breakdown, not excluded maintenance issues

• The payout may be replacement cost or actual cash value, depending on your policy

• Some plans include business interruption coverage to reimburse lost income during system downtime

• Deductibles apply, often ranging from $250 to $1,000 per breakdown

5. Who Should Get This Coverage?

Equipment breakdown insurance is valuable for:

• Homeowners with expensive built-in systems, appliances, or central HVAC

• Small businesses relying on servers, refrigeration, or machinery

• Properties with high repair costs or aging systems

• Anyone needing business income protection for downtime caused by equipment failure

Summary Table

Final Takeaway

Equipment breakdown insurance covers sudden mechanical or electrical failures of vital systems and equipment—offering protection beyond your standard homeowners or business policy. It’s ideal if you rely on expensive appliances, HVAC systems, servers, or machinery at home or work.

Need help figuring out if this coverage fits your needs or comparing plans across 100+ carriers?
With over 30 years in insurance expertise, THAgency helps you find tailored equipment breakdown policies and bundle options—fast, precise, and commitment‑free. Send your request now.