What is Equipment Breakdown Insurance?

Equipment breakdown insurance — also called boiler and machinery insuranceAn older industry name for equipment breakdown coverage, dating back to when the line originated insuring steam boilers against explosion; it now covers a much broader range of mechanical and electrical equipment. — covers the sudden, internal mechanical or electrical failure of equipment your business depends on, rather than the external perils like fire or wind that a standard property policy already handles. For a convenience store or gas station, that distinction matters more than almost any other line of coverage on the policy: a compressor burnout, a control-panel short, or a power surge through your POS system isn't a fire or a storm, so a standard commercial property policy is built to deny that claim outright. Equipment breakdown coverage is what actually pays for it — repairs, replacement parts, spoiled inventory, and the income you lose while the equipment is down.

What Does Equipment Breakdown Insurance Cover?#

A typical equipment breakdown policy is built around a few core components that work together to make you whole after a mechanical or electrical failure, not just the cost of a new part:

Repair or Replacement Cost

Covers the direct cost to repair or replace equipment damaged by a covered mechanical or electrical breakdown, up to your policy limit.

Business Income & Extra Expense

Reimburses lost income and reasonable added operating costs — like renting a temporary cooler — while damaged equipment is out of service.

Spoilage of Perishable Inventory

Pays to replace food, drinks, and other perishable stock lost when a compressor, thermostat, or refrigerant leak takes a cooler or freezer offline.

Expenses to Limit the Loss

Covers reasonable extra costs incurred to prevent further damage or get equipment back online faster once a covered breakdown occurs.

• Walk-in coolers, freezers, and ice machines
• HVAC and rooftop refrigeration units
• POS terminals and payment-processing hardware
• Fuel dispensers and pump control systems
• Backup generators
• Electrical panels and wiring
• Security, surveillance, and alarm systems
• Hot food and beverage equipment (roller grills, coffee stations, fountain machines)

Why Isn't This Already Covered by My Property Policy?#

Standard commercial property and Business Owner's Policies are written around external, sudden perils — fire, lightning, windstorm, theft. Nearly all of them carry an explicit mechanical breakdown exclusionStandard policy language that specifically removes coverage for equipment that fails from an internal mechanical or electrical cause, as opposed to damage from an outside event like fire or a storm., meaning a compressor that simply burns out from an internal electrical fault is treated the same as ordinary wear and tear: not covered. Equipment breakdown insurance exists specifically to fill that gap, and many property packages bundle a food-spoilage endorsement in alongside it so refrigeration failures are covered on both fronts:

What's Not Covered Under Equipment Breakdown Insurance?#

Equipment breakdown coverage is broad for internal mechanical and electrical failures, but it's not a maintenance plan or a catch-all. Standard exclusions include:

• Normal Wear and Tear: Gradual deterioration from age or ordinary use, absent a sudden breakdown.
• Neglect or Lack of Maintenance: Damage that a documented service schedule would have prevented.
• Fire, Lightning & Windstorm: Already the responsibility of your commercial property policy.
• Flood, Hurricane & Earthquake: Excluded and requires separate flood or earthquake coverage.
• Manufacturing Defects: Typically the manufacturer's or installer's warranty responsibility, not the insurer's.
• Rust, Corrosion & Mold: Long-term deterioration, not a sudden mechanical or electrical event.
• Pre-Existing Conditions: Any breakdown or defect that existed before the policy took effect.

How Much Does Equipment Breakdown Insurance Cost?#

Equipment breakdown coverage is almost always sold as an inexpensive endorsement added to your existing commercial property or BOP policy, rather than a costly standalone policy. For a small business like a convenience store, premiums typically run in the $300 to $800 per year range, scaling with the total value of the equipment being insured. Get a personalized quote to see your exact rate.

"Our walk-in freezer compressor failed on a Friday night. We assumed our property policy would cover the spoiled inventory — it didn't, because there was no fire or storm involved. The equipment breakdown endorsement our broker had added six months earlier covered the repair and every case of spoiled product without us paying a dime out of pocket."

Owner, independent convenience store

Who Needs Equipment Breakdown Insurance?#

Any business that depends on mechanical, electrical, or refrigeration equipment to keep operating carries this exposure — not just convenience stores. If a piece of equipment failing overnight would cost you inventory, income, or customers, this coverage is worth pricing out:

1. Convenience Stores and Gas Stations
2. Restaurants and Food Service Businesses
3. Grocery and Specialty Food Retailers
4. Laundromats and Dry Cleaners
5. Offices and Retailers with Server or IT Rooms
6. Healthcare Facilities and Pharmacies
7. Light Manufacturers
8. Hotels and Hospitality Businesses

Building an Equipment Maintenance Program: A Quick Roadmap#

Insufficient maintenance is behind the majority of equipment breakdown claims, which is exactly why carriers reward documented upkeep with better renewal pricing. A simple, phased maintenance program protects both your equipment and your premium:

How to Get Equipment Breakdown Coverage in 3 Easy Steps#

Adding equipment breakdown coverage to your policy is fast and fully digital. Follow these three steps to protect your store's equipment today:

Frequently Asked Equipment Breakdown Insurance Questions#

Equipment breakdown insurance exists because it covers what a fire and windstorm policy was never designed to: the sudden mechanical or electrical failure that takes down a cooler compressor or fries a control panel. Equipment failure accounted for 28% of FM Global's clients' global property losses in recent tracked data ¹, and insufficient maintenance was behind 62% of those breakdown losses ² — exactly why carriers reward documented service records with better renewal pricing. Because it's usually written as an inexpensive endorsement on the same commercial property policy that runs an average of roughly $108 a month for a small business ³, most c-store owners find the coverage costs far less than a single spoiled walk-in cooler.