Business property insurance may cover a wide range of perils, but it does not pay for equipment failure and any resulting losses. Equipment and mechanical breakdowns have been excluded by commercial property policies since the time when steam boiler explosions were commonplace. However, after eliminating these risks from the standard policies, the industry created a separate product to address them. Today, “boiler and machinery coverage” is often referred to as machinery and equipment insurance, and it includes a wide range of devices. Most policies cover the cost of repair or replacement of equipment that breaks down suddenly and accidentally. They may also cover loss of income from property damage liability defense costs, as well as consequential damages.
NOTE: Business owners who own their buildings need at least boiler and machinery insurance for air-conditioning and heating systems. Business owners who rent are responsible for their equipment, although the landlord may cover the building systems.