Equipment Breakdown Insurance
Also known as Boiler & Machinery insurance
Your property policy covers the fire. It does NOT cover the compressor that quietly dies and takes the walk-in with it.
Equipment breakdown — old-timers call it boiler & machinery — covers the sudden, internal failure of the systems your business leans on: HVAC, refrigeration, electrical panels, boilers, elevators, kitchen equipment. These breakdowns are specifically excluded by your commercial property policy, which is a nasty thing to learn at claim time. This pays to fix or replace the equipment, and it can also reimburse the food that spoils when the cooler quits and the income you lose while you’re down. It’s one of the most affordable lines out there, often tucked into a BOP for a few dollars more. It’s not for external perils like fire (that’s property) or ordinary wear-and-tear — and knowing exactly where that “sudden breakdown” line sits is our job.
Reviewed for accuracy by Mark Hutchings, Licensed Insurance Producer (NV #3600994).
Who needs Equipment Breakdown?
- You own or manage commercial real estate and are responsible for building systems — HVAC, elevators, electrical panels, and boilers — where one failure disrupts every tenant.
- You run a restaurant, bar, grocery, or food-processing operation, where failed refrigeration or cooking equipment means both repair bills and spoiled inventory.
- Your business cannot operate when a key piece of equipment goes down — and you would lose revenue during the repair.
- You own a building with aging mechanical systems, where age and wear make a sudden failure more likely.
- Your operation depends on specialized motors, compressors, pumps, or electronic control systems that are expensive and slow to replace.
What it covers
- Sudden, accidental mechanical breakdown — the motors, compressors, pumps, and engines that fail internally.
- Electrical breakdown — short circuits, arcing, and power surges that damage your panels, transformers, and wiring systems.
- Pressure-system failure — the bursting, cracking, or rupture of boilers, water heaters, and other pressure vessels.
- Spoilage of your perishable stock when refrigeration or climate-control equipment breaks down (a big one for food & beverage; coverage limits and conditions vary).
- Business interruption — the income you lose and the extra expense you take on while covered equipment is being repaired or replaced.
- HVAC, refrigeration, elevators, commercial kitchen equipment, and increasingly the computers and electronic controls that run modern building and production systems.
What it doesn’t cover
- Damage from external perils like fire, wind, hail, lightning, or vandalism — those belong on your commercial property policy.
- Ordinary wear, gradual deterioration, rust, or corrosion — those maintenance issues are generally excluded, because this covers sudden failure, not age.
- Theft of equipment or tools, and damage to mobile contractor gear — that is handled by contractors equipment / inland marine coverage.
- Third-party bodily injury or property damage liability arising from your operations — that is general liability.
- Flood and earthquake damage to your equipment — those typically need separate flood or earthquake policies (worth noting for CA seismic exposure).
- Routine maintenance, testing, and the cost of upgrades or improvements made while equipment is repaired — generally on you as the owner, not a covered loss.
Real claim scenarios
Reno restaurant walk-in cooler fails overnight
The compressor on a restaurant walk-in refrigeration unit burns out after closing. By morning, thousands of dollars of meat, dairy, and produce have spoiled. Equipment breakdown coverage can pay to repair the compressor and reimburse the lost food inventory, while the property policy would have denied both — there was no fire, water, or storm involved.
Office building electrical panel arcs
A power surge causes a main electrical panel in a multi-tenant office building to arc and short out, knocking out power to several floors. The breakdown coverage responds to the damaged panel and the lost rental income while repairs are made and tenants cannot occupy their space.
Boiler rupture in a Sacramento apartment complex
An aging boiler that supplies heat and hot water to an apartment building cracks and ruptures. Equipment breakdown insurance can cover replacing the boiler and the resulting damage, plus extra expense for temporary heating — where the property policy boiler exclusion would have left the owner paying out of pocket.
Scenarios are illustrative; actual coverage depends on your policy terms.
How it’s priced
Equipment breakdown is often one of the most affordable lines you can carry, and in many cases it is bundled into a businessowners policy (BOP) for a modest additional premium rather than sold standalone. Pricing generally reflects the value and age of the equipment you are insuring and how much a failure would cost you in downtime and spoilage. Carriers in Nevada and California look at the following factors:
- The type, age, and condition of your equipment — older systems and higher-pressure vessels generally cost more to insure.
- The total insured value of the equipment and building systems you are covering.
- Your industry and how dependent your operations are on that equipment.
- Your spoilage exposure — the value of perishable stock at risk if refrigeration fails.
- Your business-interruption limits and how long it would realistically take to get back up and running.
- Your deductibles and whether the coverage is standalone or endorsed onto a property policy or BOP.
What to watch out for
- Spoilage coverage often carries its own sub-limit — confirm it is high enough to cover a full freezer or walk-in loss, not just a fraction of it.
- "Sudden and accidental" is the key phrase: damage a carrier attributes to neglected maintenance, wear, or corrosion is typically denied, so keep your service records.
- Set your business-interruption limits to reflect how long equipment is actually unavailable — specialized parts can take weeks to source.
- Check whether computers, electronic controls, and "smart" building systems are included; older policy forms may treat them narrowly.
- Make sure your property policy and your breakdown coverage line up, with no gap between "external peril" and "internal breakdown" causes of loss.
Equipment Breakdown FAQs
Related coverages
Related reading
We tailor Equipment Breakdown for: Commercial Real Estate, Food & Beverage.
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We’ll match your limits and endorsements to what your contracts actually require — across Nevada & California.