Machinery Breakage Insurance or Equipment Breakdown Coverage

Companies hire insurance to pay for unexpected losses. If a company suffers a loss, it is at risk of losing customers, cash flow and profits every day if the business is not running. A variety of commercial insurance policies protect companies in the event of a loss to business ownership. If the company’s equipment is broken, machinery insurance repairs the equipment.

What is Equipment Breakdown Coverage

Machinery breakage insurance is also known as Equipment Breakdown Coverage which insured mechanical, boiler failure or any other kind of machinery breakdown. Equipment Breakdown Insurance is purchased by any industry or business that may experience an accidental breakdown of its machinery. This insurance normally reimburses for property damage and in some cases, the interruption of commercial activities. For example, if a key piece of equipment in a manufacturing plant were to stop working and causes production to come to a standstill, the policy pays to repair the equipment, as well as reimburses the company for the benefits that would have been obtained if the equipment was still running.

Equipment Breakdown Coverage Examples

  • Electrical Losses
  • Mechanical Losses
  • Air Conditioning and Refrigeration Losses
  • Boiler and Pressure Vessel Losses
  • Business Equipment and Systems Losses
  • Computer and Communications
  • Renewable and Alternative Energy
  • Production Systems

Is Equipment Breakdown Coverage Worth It

Machinery breakage coverage only applies to certain situations. The policy covers “accidental physical damage” to the equipment while it is in use or when the equipment is at rest. If the machine has been damaged while cleaning or moving, the coverage is extended under certain circumstances. If the machinery can be repaired, the insurance covers the expenses to restore the equipment. If the machine is beyond repair, insurance pays the actual cash value of the equipment before the loss less any recovery or freight costs.


Certain losses are excluded from coverage in a machinery breakdown policy. The general policy does not cover equipment failures caused by fires or related hazards. The policy does not cover machinery damage due to system overload or abnormal operating conditions. Normal wear and defects that naturally develop over time that cause mechanical damage are not covered by the policy. Coverage is not available for manufacturing defects or for parts that require frequent replacement.

Considerations while taking Machinery breakage coverage

Companies are free to add additions or modifications to a breakdown of machinery policy to adapt it to their needs. The policies offer extensions of liability coverage or property damage to surrounding businesses. Since machinery breakdown insurance only pays the actual cash value of damaged equipment, business owners may choose to increase coverage limits to adequately cover the cost of machinery if the loss occurred.