What Is Equipment Breakdown Insurance?

What Does Equipment Breakdown Insurance Cover?

A failed refrigeration unit, electrical panel or production machine can leave you facing a repair bill and a business interruption. ^3,2

Equipment breakdown coverage can help your business recover from covered mechanical or electrical failures affecting its equipment. ^1,2

Equipment That Keeps the Business Running

Check your heating and cooling, refrigeration, electrical, communications and production equipment when deciding what the quote should include. ^3,2 Do not assume your property limit covers equipment failure. Compare the property causes of loss with the separate breakdown protection in the quote. ²

Who Needs Equipment Breakdown Insurance?

Consider this if a failed machine or building system would disrupt your business, whether that's a production line, refrigeration or office equipment. ^5 5

Equipment Breakdown Insurance Coverage Examples

What happened

Your Refrigeration System Fails

A refrigeration system breaks down, putting your stock at risk of spoilage.

How coverage may help

Equipment breakdown may pay for repairs to the system. Spoilage protection must also be included if you want coverage for the stock, and may have its own limit or waiting period. ^1,2,4

What happened

A Machine Takes Weeks to Repair

A production machine breaks, and the replacement part won't arrive for several weeks.

How coverage may help

The repair bill is only part of the loss. Included interruption or extra-expense coverage may help with lost income or temporary operating costs, subject to its limits and deductible. ^1,2,4

What Losses Should the Quote Address?

Repair Costs and Downtime

A broken production machine can leave you paying for repairs, renting a replacement and losing sales while output is reduced. Equipment damage, extra expenses and lost income need the relevant protection and limits. A quote covering the machine's value alone may not address the rest of the loss. ⁴

Repairing equipment and replacing income during downtime address different losses. Discuss both if a failed machine would stop your operations. ^2,5

Spoilage and Utility Dependence

Ask whether spoilage and utility interruptions are included, with what triggers, limits and waiting periods. ⁴

How Do You Compare Equipment Breakdown Insurance Coverage and Costs?

Breakdown, Wear and Maintenance

Ask what counts as a breakdown and how the policy treats wear, deterioration and maintenance-related conditions. ⁴

Limits, Valuation and Location

Compare each limit and deductible, including any time-based deductible for interruption losses. ⁴ Ask how repair versus replacement costs are valued and what spending or replacement conditions apply. ⁴ Check who owns the equipment, which locations are scheduled and whether equipment used away from your premises is addressed. ^{4 4 4 4 4}

Equipment That Travels

For tools or machinery that travel between jobs, compare inland-marine protection with the breakdown terms; location and cause of damage are separate questions. ²

What Do You Need for Equipment Breakdown Insurance Quotes?

Inventory and Recovery Options

Prepare an equipment inventory by location, highlighting high-value machines, critical systems and items that would be hard to repair or replace. ⁵ Describe maintenance history, spare parts, backup equipment, repair lead times and ways you could keep operations running. ^{5 5 5}

Stock and Essential Services

Identify stock vulnerable to spoilage and the utility services your operation depends on, so those losses enter the quote discussion. ⁵

Equipment Breakdown Insurance: Key Terms in Plain English

Covered Breakdown

The type of mechanical or electrical failure the policy addresses. Wear and maintenance-related conditions need a separate check. ^1,2 4

Time-Based Deductible

A deductible measured in time for an interruption loss, rather than a fixed dollar amount. ⁴

Frequently Asked Questions About Equipment Breakdown Insurance