Boiler & Machinery Equipment Breakdown Insurance
4 min

Boiler & Machinery Equipment Breakdown Insurance

Examining the insurance necessary to protect boiler and machinery breakdown risks.

Date: 08 Nov 2023

Equipment breakdown now rivals fire loss in both frequency and severity of claims. In fact, breakdowns in boiler equipment and other machinery now account for nearly one-third of all property-related losses. And it’s only getting worse due to two macroeconomic trends:

  • Lack of knowledgeable workers. Experienced workers are retiring or job-hopping to pursue new opportunities, leaving a knowledge gap that’s leading to human error. Nearly half (43%) of all equipment losses are attributed to operator training –meaning knowledge transfer is critical.
  • Supply chain issues. Procuring parts now takes much longer than many company leaders realize – making routine maintenance critical. Despite that trend, many companies are not following through, as three-quarters of equipment losses were due to lack of maintenance.

When equipment breaks down, it leads to downtime, financial losses, and a headache for plant operators. In many cases, it’s due to electrical and mechanical failures – but that’s typically excluded from commercial property insurance policies. That makes boiler machinery insurance critical – and should lead risk managers to consider boiler and machinery risk engineering to identify and mitigate unique risks.

What is boiler and machinery insurance?

Boiler and machinery insurance covers financial losses and physical damage resulting from equipment breakdown or failures. The coverage is critical for businesses to continue operations because the cost of purchasing new machinery – such as a boiler or transformer – can be devastating for many companies. Boiler and machinery insurance is critical because it is likely excluded from traditional business property insurance policies. Also, have business continuity plans to ensure that you have critical spares and can anticipate how to handle downtime due to machinery breakdown.

What does boiler and machinery coverage cover?

Boiler and machinery insurance covers losses incurred by equipment malfunctions or failures, typically the cost of repairing or replacing equipment. Boiler machinery insurance should also cover the resulting business interruption and downtime as you shut down to make repairs. Goods and products can also be damaged in a malfunction, and a boiler and machinery policy should cover that as well. One note: Boiler machinery insurance typically does not typically cover wear and tear, only incidents that lead to a sudden stop in operations.

Is equipment breakdown the same as boiler and machinery?

Equipment breakdown is generally treated the same as boiler and machinery. The two terms are typically synonymous, although some insurance companies may have a slight variation between them. No matter what, make sure the insurance you buy actually covers the equipment you’re hoping to insure.

What is boiler and machinery equipment breakdown?

Boiler and machinery equipment breakdown is the occurrence of a failure or issue with a critical piece of equipment. A boiler fails to set its water to the proper temperatures. A fire protection alarm has a short-circuit. Part of a machine burns out, grinding production to a halt. These are all examples of boiler and machinery equipment breakdown. While some fixes are simple, others require critical spare parts or even a full machinery replacement.

What is boiler breakdown?

Boiler breakdown is when a boiler malfunctions or incurs damage. The most severe consequence is a boiler explosion that can cause fire and worker injuries. Rust and corrosion build up over time can lead to leaks over time and breakdowns of boiler equipment. Another critical aspect of boiler breakdown is lack of hot water or heating. That can be due to failing temperature sensors, a motor that needs to be replaced, valves not opening and closing properly, or other factors. Age can be a critical factor in boiler equipment breakdown as well.

Commercial boilers are complex pieces of equipment and should be examined by trained professionals. Most U.S. states require annual internal and external jurisdictional boiler inspections for high-pressure boilers (15 psi or higher). Other equipment such as air and water storage tanks and low-pressure boilers likely have inspection requirements in one-year to five-year intervals.


Interested in learning how boiler and machinery risk engineering helps keep equipment running smoothly and leads to the best possible underwriting results? Watch our recent webinar to learn more.

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