Property · Insurance Term
Equipment Breakdown (Boiler and Machinery)
Definition
Equipment breakdown insurance covers sudden mechanical or electrical failure of building systems and machines. Examples include HVAC units, boilers, electrical panels, coolers and elevators. Standard property policies usually exclude these breakdowns. This coverage fills that gap and often includes spoiled goods and lost income.
In Plain English
A property policy covers equipment hurt by outside causes, like fire. But it usually excludes damage from the machine's own breakdown or electrical arcing. Equipment breakdown coverage, once called boiler and machinery, pays to fix or replace the failed equipment. It also pays for other property the failure damages.
Many forms also include spoilage coverage for refrigerated goods and business income while equipment is down. Some add rush-repair costs and data restoration. Some extend to off-site utility outages, which overlaps with utility services coverage. Insurers often inspect boilers and similar equipment, and state law may require those inspections.
It doesn't cover slow wear and tear. So a worn-out compressor that simply quits is a gray area. The key test is a sudden, accidental failure.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: An electrical surge knocks out a convenience store's walk-in cooler and fuel dispenser controls. Repairs cost $30,000, $8,000 of inventory spoils, and the store closes for three days. Equipment breakdown coverage may pay the repairs, spoilage and lost income, subject to its deductible.
Why It Matters for Texas Property Owners
Texas summers push air conditioning and refrigeration hard, and Winter Storm Uri in February 2021 showed how a freeze can damage building systems. In TDI's data, commercial property was about 10% of Uri claims but about 53% of incurred losses. Equipment breakdown is worth reviewing alongside your freeze precautions.
What to Watch For
- Ask whether your property policy includes equipment breakdown or needs it added.
- Check the spoilage and business income limits within the coverage.
- List high-value equipment, such as rooftop HVAC units, elevators and chillers, for your agent.
- Keep maintenance records, which help show a failure was sudden rather than wear.
Common Questions
Isn't my equipment covered under my property policy?
It is covered for causes like fire or wind, but most property policies exclude mechanical and electrical breakdown. Equipment breakdown coverage fills that gap.
Does it cover old equipment that wears out?
Usually not. It covers sudden, accidental breakdowns, not gradual wear, rust or deterioration.
Sources
Last updated October 14, 2026 · Primesure editorial team · How We Write