Boiler and Machinery Insurance
Boiler And Machinery Insight | Also Referred To As ‘Equipment Breakdown’ Insurance
While your organization may have coverage in place for commercial property, general liability as well as directors and officers, the breakdown of a critical piece of machinery has the potential to wreck havoc across multiple facets of your operations.
Just one event can quickly add up to a significant and costly amount of collateral damage to your organization. Here are two real world examples of equipment breakdowns.
- During a lightning storm, the roof of a food processing plant is struck. The company’s HVAC equipment is housed on the building’s roof and is destroyed. This leads to a chain reaction with $1,278,329 of finished product spoiling and being discarded.
- In a company’s boiler room, a pressure value suddenly explodes. The heating system is damaged as a result of the explosion that, in turn, leads to a $478,190 loss of perishable goods.
What Is Boiler And Machinery Insurance?
The International Risk Management Institute (IRMI) notes that an object is “a boiler and machinery (BM) insurance term for equipment or machinery. BM coverage applies to losses or damages resulting from an accident (such as a breakdown or explosion) to a covered object.” 1
Examples of an object that could be covered under a boiler and machinery or equipment/machinery breakdown insurance policy include a roof top HVAC unit, manufacturing equipment, a pressure vessel or the actual boiler itself.
Beyond Boilers: Coverage For Equipment Breakdowns
IRMI further defines equipment breakdown insurance as “coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well.
Equipment breakdown insurance is increasingly replacing traditional boiler and machinery (BM) insurance, in part simply because the title is more descriptive of the coverage provided. Also, today’s equipment breakdown policies typically provide slightly broader coverage than traditional BM policies, and they usually do not use the specialized terminology found in traditional BM policies.” 2
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Source: 1, 2 IRMI