Is Equipment Breakdown Coverage the Modern-Day Boiler and Machinery Insurance?

The term “boiler and machinery insurance” doesn’t seem relevant to today’s commercial insurance industry, but the name pops up quite often. Boiler and machinery insurance has been around since 1866, providing coverage for physical damage to and financial loss from equipment breakdown. During that time, as the manufacturing industry in the United States was gearing up for the Second Industrial Revolution, catastrophic boiler explosions were occurring approximately once every four days.

The Birth of Boiler and Machinery Insurance

In response to these near-constant disasters that were resulting in loss of business income, property damage, injuries and deaths, Hartford Steam Boiler Inspection & Insurance Company (HSB) was formed. The founders intended to not only improve upon the design of the boilers that were being used, but also to develop a system to ensure that their boilers and respective machinery were being properly maintained and serviced. On top of these major improvements, boiler and machinery insurance was offered to back up this new system as well.

The boiler and machinery insurance of today has expanded to include coverage for a wider range of equipment on top of boilers, including HVAC systems, ovens, furnaces, refrigeration units, elevators and more. However, while boilers are still used in a number of businesses, structures and vessels, more modern companies are opting for equipment breakdown coverage. Though these two types of policies are very similar in nature, an equipment breakdown policy typically offers slightly more broad coverage than a boiler and machinery policy.

Equipment Breakdown Insurance is an Essential Business Coverage

Any business that relies on any type of electrical system as part of their operations can benefit from equipment breakdown coverage. Covered “equipment” can include not only machinery, but also nearly any type of equipment, including heating and cooling systems, refrigerators, fax machines, POS systems and computers. A policy typically covers the cost of repairing or replacing the equipment as well as any other property damaged by the breakdown.

Equipment breakdown coverage is typically offered as part of an insurance package, such as a business owner’s policy, but it can be purchased as a monoline policy through some companies, including through HSB. Much like the boiler and machinery insurance from 150 years ago, inspection and maintenance is an important component of equipment breakdown coverage. Written equipment usage instructions and maintenance logs are sometimes required by insurers in order to ensure proper equipment maintenance is being conducted.

With rapidly-evolving technology more businesses are subject to more frequent breakdowns that halt productivity and result in loss of income. Every single day, businesses are faced with situation such as power surges, short circuits, or machinery malfunctioning. Much like boiler and machinery insurance was originally created to do, equipment breakdown coverage helps keep businesses operating even in the face of mechanical or electronic failure.

About AmSuisse

Formed in 2013, AmSuisse, Inc. has quickly distinguished itself as a wholesale operation that specializes in working very closely with our agents and broker partners to develop responsive, individualized service for each client. Our unparalleled writing support, industry-specific expertise, marketing support, responsive proposals and quotes, strong customer service, and strong relationships with our carrier partners have all helped us to provide the best possible coverage for our clients. To learn more about our available coverage, contact us today at (800) 485-0229 to speak with one of our representatives.