When the machine breaks itself, property insurance does not pay.
Commercial property covers damage from outside causes — fire, wind, water, impact. It specifically excludes the machine failing on its own: electrical arcing, motor burnout, mechanical breakdown, a pressure vessel rupturing. Equipment breakdown fills that hole, along with the lost income and spoiled product that follow.
The exclusion is already in your policy. Most owners have never read it.
Commercial property forms exclude loss caused by mechanical breakdown and by artificially generated electrical current. That single sentence is why a fire started by an equipment failure is usually covered, while the equipment that failed is not.
A motor burns out and takes the line down for six weeks
$80,000 of in-process material spoils in the meantime
The property policy pays for none of the three
Equipment breakdown pays for all of them
Equipment breakdown was called boiler and machinery for most of its history, and the name still convinces business owners it does not apply to them. Modern forms cover far more than boilers.
What it covers today
✓ Production equipment and CNC machinery ✓ HVAC, refrigeration, and building systems ✓ Electrical panels, switchgear, and transformers ✓ Computers and networked production controls ✓ Elevators, compressors, and solar arrays
Covered Causes
What equipment breakdown actually responds to
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Electrical Arcing & Short Circuit
Damage from artificially generated current — the exact exclusion sitting in your commercial property policy. Panels, switchgear, transformers, motors, and control systems.
Aging electrical infrastructure is the most common finding on Minnesota manufacturing and commercial property inspections.
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Mechanical Breakdown
Bearings, gears, drive systems, and the machine failing under its own operation. The category that most often takes a production line down and is most often assumed to be covered elsewhere.
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Boiler & Pressure Vessel
Explosion, rupture, cracking, bulging, and overheating of fired and unfired pressure vessels. The original coverage, still relevant to any operation running steam, compressed air, or process heat.
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Motor Burnout
One of the most frequent equipment breakdown claims and one of the least anticipated. A single motor failure can idle an entire process line for weeks depending on availability.
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Centrifugal Force
Rotating equipment flying apart — fans, turbines, compressors, and centrifuges. Damage is rarely confined to the failed unit.
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Computer & Control Systems
PLCs, networked production controls, and the systems that increasingly run the floor. Includes restoration of data and programming lost in a control system failure.
What It Pays
Beyond the repair bill
Repair or Replacement
The damaged equipment itself, generally on a replacement cost basis when written that way. On older equipment, confirm the valuation basis before you need it.
Business Income & Extra Expense
Lost income during the downtime and the cost of working around it. On a production line this is usually a larger number than the equipment itself, and it is the piece most often missing or underlimited.
Spoilage
Perishable stock, refrigerated product, and in-process material lost when the system goes down, including contamination from a refrigerant release. Often the largest part of a food or cold storage claim.
Expediting Expense
The premium you pay to get a replacement part quickly — air freight, overtime, rush fabrication. Frequently the difference between six weeks down and six days.
Hazardous Substance Cleanup
Cleanup and disposal when a covered failure releases a regulated substance, including ammonia, refrigerants, and contaminated materials.
Data & Program Restoration
Rebuilding the programming and data in control systems, machine controllers, and building automation after an electrical failure.
Who Needs It
Where the exposure concentrates
Manufacturers
Production lines, CNC machinery, compressors, electrical service, and process controls. The question worth asking is which single machine, if it failed tomorrow, would stop the line — and what the lead time is on replacing it.
Funeral Homes
Cremation retorts, HVAC, refrigeration, and backup power. A retort out of service is not a repair problem, it is an operations problem, and the business income piece matters as much as the equipment.
Restaurants & Food Service
Walk-in refrigeration, freezers, cooking equipment, and HVAC. Spoilage coverage frequently exceeds the value of the failed unit.
Medical & Dental Offices
Imaging equipment, autoclaves, and lab refrigeration. High replacement values concentrated in a handful of units.
Apartment & Commercial Property Owners
Boilers, elevators, electrical service, and HVAC. In Minnesota, a boiler failure in January is an occupancy problem within hours, not days.
Car Washes & Refrigerated Warehousing
Pumps, motors, conveyors, water reclamation, and refrigeration plant. Operations where a single system failure closes the business entirely.
Two problems we find repeatedly. First, equipment breakdown endorsed onto a BOP at a sublimit sized for an HVAC unit rather than a production line. Second, the business income piece either missing or carried at a limit far below what the downtime would actually cost. Both are inexpensive to fix and expensive to discover during a claim.
Quick Exposure Check
What equipment breakdown limit does your operation need?
Four questions on what you run and how long you could be without it.
Our Process
Three steps to equipment breakdown coverage
1
Schedule the Equipment
We inventory what you actually run and what it would cost to replace today, with attention to the units the business cannot operate without.
2
Size the Income Component
Downtime cost and replacement lead time drive the business income limit. For most operations this is the larger of the two numbers and the one that gets overlooked.
3
Coordinate with Property and BI
Equipment breakdown, commercial property, and business interruption need to work together without gaps or duplicate deductibles. We read all three against each other.
Frequently Asked Questions
What business owners ask us about equipment breakdown
No. Commercial property forms exclude loss caused by mechanical breakdown and by artificially generated electrical current — meaning current from inside your own system rather than a lightning strike. Equipment breakdown is a separate coverage, either endorsed onto your package policy or written standalone.
Almost certainly. The old name, boiler and machinery, has done real damage to how business owners think about this coverage. Modern forms cover production equipment, CNC machinery, compressors, HVAC and refrigeration, electrical panels and switchgear, transformers, elevators, computers and networked control systems, and solar arrays. If your business depends on something that plugs in or spins, the exposure exists.
No. The coverage responds to sudden, accidental failure. Gradual deterioration, corrosion, rust, and normal wear are excluded, as is failure resulting from a lack of maintenance. Maintaining the equipment remains your responsibility, and carriers do look at maintenance records on larger claims.
It should. Business income and extra expense arising from a breakdown are core to the coverage, but the limit is frequently separate from your main business interruption limit and considerably smaller. Check both numbers, because on a production line the downtime cost usually exceeds the repair cost.
Several ways. A flat dollar deductible, a per-unit deductible that varies by equipment type, a multiple-of-daily-value deductible for the income portion, or a time deductible expressed in hours. Larger production equipment often carries a different deductible than building systems, which is worth knowing before a claim rather than during one.
Yes, when the spoilage results from a covered breakdown — refrigeration failure, power system failure, or contamination from a refrigerant release. For food manufacturers, restaurants, and refrigerated storage this is frequently the largest single component of the claim.
Covered under a properly written equipment breakdown form, along with the business interruption that follows if the unit is out of service. Specialty equipment that a business cannot operate without deserves particular attention on the schedule, because the replacement lead time drives both the limit and the restoration period.
Equipment breakdown carriers employ inspectors and generally perform jurisdictional inspections as part of the coverage, filing the required documentation. For many operations that alone is worth a meaningful share of the premium, and it puts qualified eyes on your equipment annually.
Related Coverage & Industries
Equipment breakdown sits alongside your property and income coverage. These pages explain how they fit together:
Find out what your property policy is leaving out.
Send us your declarations pages and we will tell you whether equipment breakdown is there, what it is limited to, and whether the income piece would hold up.
Equipment schedule reviewed against actual values
Business income from breakdown sized properly
Spoilage and expediting expense included
Jurisdictional inspections handled by the carrier
50+ carriers compared
Deductible structure explained before you need it
Start your free quote
Fill out the form and an agent will be in touch within one business day.
The limit should reflect the downtime, not just the machine.
Equipment values are the easy part. What matters more is which unit stops the business and how long the replacement takes to arrive — and that is not something you can get off an application.
Featured Agent
Dane Roti, CPIA
Commercial Lines Agent
When I walk a plant floor, the question I am asking is which machine, if it failed tomorrow, would stop the line, and what the lead time is on replacing it. That one answer drives the equipment breakdown limit and the business interruption period of restoration at the same time. It is also the reason I would rather come see the operation than quote it from a form. If you want a second set of eyes on your equipment schedule, that is a conversation I am glad to have whether or not you ever move the business.
