What is Equipment Breakdown Insurance?


Feb 26, 2021

What is included in equipment breakdown coverage?

Have you ever wondered what Equipment Breakdown Insurance is and why a business may need this coverage? Maybe you are even wondering if you need to consider this coverage for your business's equipment right now or if you may need it in the future. Either way, if you are looking to find out more about this type of coverage, you are in the right place! We are going to help provide some information that you may be looking for to find out about Equipment Breakdown Insurance such as what Equipment Breakdown Insurance is, why it may be essential for your business, what kinds of equipment may be covered, as well as defining what a “breakdown” is or is not in terms of Equipment Breakdown Insurance.

What is Boiler Insurance?

The evolution of Equipment Breakdown Insurance has come a long way since the industrial revolution in the 1850s. At that time, Boiler Insurance policies became available for the accidental explosion of boilers. The term “machinery” was added to Boiler Insurance when insurance companies expanded to include machinery used with a boiler. Boiler and Machinery Insurance is now referred to as Equipment Breakdown Insurance which is also known as EBI.

Why do I Need Boiler Insurance/Equipment Breakdown Insurance?

Adding EBI to your insurance policy can help cover any gaps that are excluded from a typical Commercial Property policy, such as:

  • Mechanical breakdown.

  • Electrical arching.

  • Explosions of boilers and pressure vessels.

  • Coverage for motherboards and microchips.

Let’s take a look at some of the types of equipment that would qualify as insured equipment:

  • Any boiler & pressure vessel.

  • Any refrigerated air conditioning vessel and its piping.

  • Any heat exchanger of forced air heating equipment.

  • Any electrical or mechanical equipment for transmission or generation of mechanical or electric power (electrical panels/circuit breaker, compressors, or generators.)

  • Electronic machines, devices or instruments (equipment used for communications, data processing, and diagnosis.)

  • Production machinery (CNC machines, hydraulic pressure, and paper machines.)

What is a Breakdown?

A “Breakdown” is a sudden and accidental failure of equipment resulting in physical damage which requires repair or replacement of the equipment or part of the equipment.

A “Breakdown” does not include – deterioration, corrosion, erosion, wear and tear, misalignment, or failure of the equipment’s structure foundation support.

When do you need Boiler Insurance/Equipment Breakdown Insurance?

A breakdown of a farmer’s bulk tank cooling unit results in the spoilage of $24,000 worth of milk. Since the farmer had the additional Equipment Breakdown insurance, there was coverage for consequential loss of the milk.

Extended warranties only cover the actual physical damage coverage of the direct damage of the equipment; it does not cover Business Interruption coverage or resulting damage, such as spoilage of stock.

Since July 2018, the TSSA has developed a schedule of fees for Certificates of Insurance which is now payable by the owner. Inspections must be done on certain boilers and pressure vessels every 1 to 3 years. Insured require a Certificate of Insurance - COI - for the operation of this equipment.

Not sure what is Business Interruption Insurance? Check out our blog to learn more!

If you are looking to find out more about Equipment Breakdown Insurance and whether or not it is right for your business, our Foxquilt insurance experts would be happy to provide you with more information. We are here to help you find insurance solutions that are tailored to your business' needs which includes finding coverage for your business' equipment. It's our Foxquilt mission to assist businesses in finding smarter insurance solutions, to provide you with the confidence that comes with having the right coverage. We can even work with you to provide exclusive savings as a member of the Foxquilt community! Get started on your online quote today.

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