Equipment breakdown coverage covers your home’s appliances, and mechanical systems in the event of an electrical or mechanical malfunction. Typical homeowners insurance policies cover damage to household equipment caused by a covered event, such as a fire. Your home insurance does not usually cover electrical or mechanical failures. Some insurance companies offer a solution by providing equipment breakdown insurance to fill this gap.
What is Equipment Breakdown Coverage?
Equipment breakdown coverage is also known as boiler and machine insurance. It covers financial losses resulting from the breakdown of household equipment and appliances in your home. The exact system covered by each company will vary, but some examples of household appliances and equipment include:
- Back-up generator
- Computers and other equipment
- Dishwasher
- Panel for electrical power
- Furnace
- Heat pump
- Home automation and security systems
- HVAC system
- Freezer and refrigerator
- Stove and oven
- Sump pump
- Swimming pool equipment
- Water heater
- Washer and dryer
Most insurance companies offer coverage for equipment breakdown between $10,000 and $50,000, although higher amounts may be possible. Providers will differ in the equipment and systems covered by equipment breakdown. You may be able to increase your coverage by paying an additional premium with some companies.
Who has equipment breakdown coverage?
While homeowners, condo owners and renters might get value from equipment breakdown coverage, landlords and business owners may also benefit from this type of insurance. Unexpected mechanical or electrical failures can cause a company to close down or discomfort tenants, and could lead to income loss. Business owners and landlords have financial protection in the event of an unexpected mechanical breakdown with equipment breakdown insurance.
Business coverage for equipment breakdown
Equipment breakdown coverage can be included in business insurance policies for financial protection. Business equipment breakdown insurance often covers more than homeowners or renters, because businesses are more complicated than homes. It can even cover lost business income, mandatory inspections, repair costs, labor, and damaged inventory.
Businesses often have the following equipment breakdown insurance:
- Air conditioners
- Boilers
- Electrical panels and cables
- Computer systems
- Elevators
- Security systems and fire alarms
- Generators
- Heating systems
- Equipment for manufacturing
- Phone/voice mail systems
- Pressure equipment
- Specialized production equipment
- Transformers
- Water pumps
A transformer could blow outside a restaurant and cause a power surge or outage. The problem could cause the entire restaurant to be without power for several days before it is fixed. The restaurant might be shut down and food from the freezer and refrigerator would probably spoil. Equipment breakdown coverage may cover the restaurant’s loss of income, the cost of repairing the fridge and freezer, and the replacement cost for the spoiled food. Other covered equipment may also be covered if it was damaged by the power surge.
Landlords can get equipment breakdown coverage
Landlords have the same coverage as homeowners for mechanical breakdown. The equipment breakdown endorsement does not usually cover equipment failure. Equipment breakdown coverage is available for landlords and tenants. It covers items inside the rental home, such as:
- Panels for electrical power
- Elevator/lift/hoist
- Back-up generators
- HVAC systems
- Media equipment
- Freezer and refrigerator
- Stove and oven
- Smart home systems
- Sump pump
- Swimming pool equipment
- Water heater
You could lose your tenant and income if you don’t respond quickly to an electrical or mechanical problem. The following scenario is possible: A tenant calls you to inform you that the air conditioner isn’t working on a hot summer day. Your tenants do not have air conditioning in their 4-unit apartment complex. You may be eligible to file a claim if your landlord policy covers equipment breakdown.
Questions frequently asked
What is the cost of equipment breakdown coverage?
Equipment breakdown coverage costs vary depending on the insurance company you choose and the level of coverage that you buy. You may be able to add mechanical breakdown coverage to your existing insurance policy. Your insurance premium will likely increase if you add this coverage, but the cost of equipment breakdown insurance is less than the cost of a homeowners policy, a business insurance policy or a landlord insurance policy as a whole.
What’s the difference between an equipment breakdown coverage policy and a home warranty?
In a few ways, equipment breakdown coverage differs from a home warranty. An optional coverage that you can add to your insurance policy is equipment breakdown. A home warranty, on the other hand, is a separate policy typically purchased through a home warranty company. A home warranty is usually more expensive than adding equipment breakdown insurance.
A home warranty is not an insurance policy. This means that you might be limited in the services you can receive and how much coverage you will get from the warranty company. Each claim may require you to pay a fee. A home warranty can offer greater coverage than equipment breakdown insurance. It may include coverage for normal wear and tear, general maintenance, and other things that homeowners insurance doesn’t cover. You will not get universal home protection if you have neither insurance nor a home warrant. Although both insurance and a home warranty can protect your financial assets, it’s not enough to protect your home from all possible damage.
Equipment breakdown coverage does not cover certain items.
Equipment breakdown coverage doesn’t cover damage due to normal wear and tear, poor maintenance, mold, shrinking, expansion, or pest damage. You may have restrictions about the age and condition that appliances and systems are covered under your homeowners insurance policy. Ask your insurance agent to discuss the equipment breakdown endorsement.
