What is Equipment Breakdown Coverage?

Most businesses, regardless of what industry they’re in, rely on equipment that’s needed to carry out daily operations. Should this vital equipment break down, it must be repaired as quickly as possible. Any delays in fixing the equipment can directly lead to drops in revenue, as operations must often be slowed or altogether halted. If a delayed repair takes too long, the financial consequences could be devastating. Equipment breakdown coverage helps businesses prepare for covered equipment breakdowns so they don’t cause major financial problems.

Equipment breakdown coverage is a unique type of insurance that’s specifically designed to help businesses cope with unexpected breakdowns of vital equipment. If a covered piece of equipment malfunctions, a policy may help in the several ways. Depending on its terms and conditions, a policy might cover:

  • The cost of replacing or repairing the broken equipment
  • Any surcharges for emergency or off-hours repairs
  • The labor costs of having employees work on repairing the equipment
  • Goods that are lost as a result of the equipment malfunction
  • Revenue that’s lost because operations had to be stopped

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What Businesses is Equipment Breakdown Insurance Right For?

Because many businesses rely on equipment that’s vital to daily operations, lots of businesses can benefit from having equipment breakdown insurance. As long as a business is dependent upon at least one piece of equipment, it may make sense to have this type of insurance. For, the costs of a malfunction can extend well beyond actual repair costs -- which themselves can be expensive. 

A few specific examples of businesses that may want an equipment breakdown policy include:

  • Restaurants and food trucks, which rely on refrigerators, stoves, ovens, and other kitchen equipment to prepare meals
  • Hotels, lodges, and bed and breakfasts, which rely on electric, heat, air conditioning, and plumbing systems to keep rooms comfortable and useable
  • Nightclubs and live performance theaters, which rely on sound systems to put on shows and play music
  • Retail stores, which rely on cash registers and POS systems to process transactions
  • Medical practices and hospitals, which rely on lots of different medical equipment
  • Automotive garages and body shops, which rely on specialized equipment to service and fix vehicles

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What Types of Equipment Does Equipment Breakdown Insurance Protect?

Equipment breakdown insurance is designed so that policies can be adapted to cover a wide variety of different types of equipment. In addition to the above-mentioned items, policies can usually be found to cover many types of equipment that’s vital to business operations.

What Kinds of Malfunctions Do Equipment Breakdown Policies Cover?

Exactly what incidents a specific equipment breakdown policy covers are determined by the policy’s terms, conditions, and exclusions. A policy might cover incidents like the following:

  • Power surges
  • Explosions
  • Operator errors
  • Mechanical failures

Is Equipment Breakdown Policies the Same as Boiler and Machinery Policies?

Equipment breakdown policies are similar to boiler and machinery policies, and some insurance companies are even phasing out their boiler and machinery policies in favor of equipment breakdown ones. There are a couple minor differences between these two types of policies, though.

First, the language found in equipment breakdown policies that determines what equipment is covered tends to be slightly broader than what’s found in boiler and machinery policies. For instance, an equipment breakdown policy purchased by a restaurant might be written to cover refrigerators, freezers, stoves, ovens, and a ventilation system, along with many other items. In contrast, a boiler and machinery policy would probably cover a more limited range of times.

Second, the coverages afforded by equipment breakdown policies are also frequently broader than those offered by boiler and machinery policies. As an equipment breakdown policy’s terms and conditions are adapted to include more equipment, the protections afforded are often expanded a little.

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How Can Businesses Get Quotes for Equipment Breakdown Coverage?

For help finding equipment breakdown coverage, businesses should contact an independent insurance agent who’s familiar with commercial insurance policies. Such an agent will be able to help a business determine what protections it needs in an equipment breakdown policy, and an agent can request quotes for policies that offer the desired protections.

Meet Your Industry Specialist

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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