What is Equipment Breakdown Coverage?

Most restaurants, bars and nightclubs, as well as most businesses in other industries, need to fix equipment as soon as it breaks down. Delaying repairs can lead to food spoilage, decreased sales and a tarnished reputation. Making emergency repairs, though, can be expensive. They often strain a business’ finances and, in some cases, simply cost too much for a business. Equipment breakdown coverage can help restaurants, bars, nightclubs, and other businesses in New York pay for repairs if their equipment breaks down, so they can resume normal operations as soon as possible. 

Equipment breakdown coverage specifically helps businesses pay for covered repairs that essential broken-down equipment needs. Depending on a policy’s terms and conditions, it may:

  • Cover the cost of fixing or replacing failed equipment
  • Reimburse a business for the labor and time costs associated with fixing the equipment
  • Cover emergency service charges if equipment breaks down at night or on the weekend
  • Reimburse a business for any food or other goods that spoil because of the equipment malfunction

Some policies also compensate businesses for any loss in income caused by an equipment malfunction.

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What Businesses in New York Can Benefit from Equipment Breakdown Insurance?

Almost any business in New York that relies on equipment to perform essential business functions may benefit from the protections that equipment breakdown insurance can provide. This includes everything from retail stores, even if they have a relatively simple point-of-sale system, to hospitals, which rely on many complex systems to provide care for patients. Some other examples of businesses that might want this type of coverage are:

  • Manufacturing companies and wholesale distributors
  • Convenience stores
  • Office buildings
  • Auto repair shops
  • Doctors and dentists’ offices

While almost any kind of business may want this type of coverage, equipment breakdown insurance is especially important for businesses in service industries, such as restaurants, bars, and nightclubs (as well as hotels, inns, bed and breakfasts, and spas). These businesses will not only lose income if vital equipment breaks down, but their reputation can also quickly suffer. Just a few comments from people on social media or review sites could deter others from coming in the future and have a lasting effect on business. To minimize any negative impact, service-oriented businesses should do everything to make customers happy when equipment breaks down -- and get the equipment repaired as quickly as possible. 

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What Kind of Equipment Failures are Covered by Equipment Breakdown Insurance?

Exactly what types of malfunctions are covered by a specific equipment breakdown policy depend on the policy’s terms and conditions. Some causes of breakdowns that a policy might cover include:

  • Operator error
  • Electrical arcing or power surges
  • Mechanical breakdown
  • Explosions

Is Equipment Breakdown Coverage the Same as Boiler and Machinery Insurance?

Equipment breakdown policies are similar to boiler and machinery policies. In fact, some insurers are replacing their boiler and machinery policies with equipment breakdown policies. There are a couple of minor differences between the two kinds of insurance, though.

First, the language used in equipment breakdown policies tend to be more descriptive of the equipment that the policy insures. Restaurants, bars, nightclubs, and many other businesses are purchasing these policies, and they’re using the policies to insure much more than a boiler and machinery. In the hospitality industry, businesses are insuring refrigerators, freezers, stoves, ovens, ventilation systems, cash registers, and similar equipment with these policies (depending on the particular terms and conditions of a business’ policy).

Second, the coverages of equipment breakdown policies tend to be slightly broader than those of boiler and machinery policies. As the language in the policies is updated to reflect the equipment that the policies are insuring, the policies often provide protection for more types of equipment.

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How Can New York Businesses Get Equipment Breakdown Insurance?

Businesses in New York that aren’t already insured against equipment malfunction should talk with an independent insurance agent in the area. An agent will be able to help a business understand its specific risk exposure and explore what insurance options are available. Once a business finds a policy that provides suitable equipment breakdown coverage, the agent can also help the business purchase that policy.


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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