Boiler & Machinery

Boiler and Machinery is a more old-fashioned name for Equipment Breakdown. This is a form of commercial coverage that needs to be purchased separately from the usual Commercial General Liability (CGL) or property and/or equipment.

Nearly every commercial business depends upon electrical, mechanical, pressure or electronic equipment to function. The breakdown of equipment can be quite costly and it can cause damage to your stock and other contents.

Most businesses depend on ever-changing technologies and have high production demands. To be without necessary equipment can impact the income, create a large expense to repair the physical damage, and result in extra costs or extra expense to maintain the service to your customers. Your business does not have to be a manufacturer to need this type of coverage.

Some of the equipment that can be covered by Boiler & Machinery policy would be found in a manufacturing plant or even on a farm. Examples could include pressure vessels and boilers; electrical equipment including transformers; mechanical equipment and machinery; pumps, fans, compressors, refrigerating and air conditioning equipment, and electronic equipment which could include communications, telephone systems, computers, copiers and data processing.

The equipment that breaks down might be the transformer down the street or some other form of dependent power for your business. You need to consider what possibly could go wrong. This is called a hazard. Then consider what you can do to control the hazard. What you cannot control then you might want to avoid completely. If you cannot avoid or control then you might consider insurance as an option. This is part of the Risk Management process.

Incidents which could result in a claim for this coverage would include an underground power surge; a boiler of a certain size exploding; a refrigerated unit such as a food cooler suffering a power failure; or the air conditioning unit failing in an apartment building. If you have failed to purchase this extension of coverage and you suffer a loss, then you will have to bear the financial burden without assistance from your insurer.

Some examples of claims that were paid under this coverage include, when a boiler which provided heat for an apartment building was totally damaged from overheating - costs for providing temporary heat and expediting the replacement totaled over $15,000; when the compressor motor burned out, specialty meats were spoiled in a walk-in type freezer . The cost to repair the compressor was over $8,000 and the consequential loss was almost $10,000.

Be sure to discuss your operation and the equipment used in your business with your broker, agent or risk manager. Turners Tips always recommends that you take control of your insurance.