Boiler / Machinery Insurance

The expression “boiler and machinery” insurance is a remnant of the early days of the Industrial Revolution, when trains, ships and factories depended on steam engines to power their efforts. In the 21st Century, these policies cover much more than steam boilers and heavy machinery.
Today’s insurers write numerous policies for insureds who have considerable mechanical and electrical liabilities, even if they do not own or use boilers or steam vessels. A more precise description of modern boiler and machinery insurance would be “equipment breakdown insurance”, as it involves insuring equipment that produces, employs or channels power.A typical commercial property insurance policy covers most normal threats, including fire, accident, and water damage. However, the standard policy does not cover the cost of equipment failure and the revenue losses that result from the lack of productivity. This type of policy was designed to protect structures and equipment from external perils, not from mechanical failures, and most commercial property policies contain clauses excluding damages due to electrical or mechanical issues. An equipment breakdown policy fills this gap by covering these substantial and costly risks.

Companies that rely on high-energy equipment to keep their business operational often fail to examine the warranties for that equipment. While these warranties can cover repairs due to mechanical failure, they do not cover damages attributable to operator error, nor do they compensate the warranty holder for lost productivity and revenue while the machinery is under repair. Equipment breakdown insurance covers these expenses and allows the business to recover some or all of its previous productivity levels.

Businesses that rely on refrigeration are often especially in need of equipment breakdown insurance. This type of policy can help the business cover the costs of repairing refrigeration units, recovering lost inventory due to spoilage and compensating for lost income during a business interruption.