What is equipment breakdown coverage?

A printer in a corporate building

Whether it’s added to a business or homeowners insurance policy, equipment breakdown coverage can help pay for the costs of repairing or replacing damaged equipment. This coverage type protects business and household systems, electronics and appliances that need to be repaired or replaced due to electrical or mechanical failure. Let’s learn more about the benefits of equipment breakdown coverage and why it can be a valuable supplement to your business or home insurance policy.

What Equipment Breakdown Insurance Covers

As additional coverage to a business insurance policy, equipment breakdown coverage can help pay costs associated with repairing or replacing damaged equipment after a covered incident. Coverage will vary based on the carrier, but there are five categories of equipment that this coverage type typically protects:

  • Mechanical, including generators engines, motors, elevators, water pumps and specialized equipment for production or manufacturing
  • Electrical, including cables, transformers and electrical panels
  • Computers and communications, including computer, phone, voicemail, security and fire alarm systems
  • Air conditioners and refrigeration systems, including HVAC and refrigeration equipment
  • Boilers and pressure equipment, including compressed air systems and boiler and steam heating systems

Equipment breakdown insurance often pays for the cost to repair or replace damaged equipment, including time and labor, lost income, spoiled inventory, and other expenses incurred while equipment is being repaired or replaced.

When added to a homeowners insurance policy, equipment breakdown insurance typically covers:

  • Mechanical breakdown: Loss of function or damage to home improvement equipment, like a riding lawn mower or power tools 
  • Electrical breakdown: Damage to the electrical system of your home
  • Pressure systems breakdown: Damage to pressurized equipment like a water heater
  • Breakdown due to improper installation: If certain equipment in your home was poorly installed and it’s damaged as a result, breakdown coverage may help with the costs

What Equipment Breakdown Coverage Doesn’t Cover

While there are many conditions under which equipment breakdown will cover certain items and systems in your home, it won’t cover damage that’s resulted from lack of maintenance, such as:

  • Wear and tear: Regular wear and tear that accumulates over time will not be covered
  • Rust: For example, if you store power tools improperly and that results rusting from water exposure, breakdown coverage won’t cover the damage
  • Mold: If moisture levels in your home go unchecked and causes mold to grow that compromises the function of certain systems, it’s considered lack of maintenance and won’t be covered
  • Pest damage: Damage like pests chewing through wires won’t be covered under breakdown coverage

Commercial Property Insurance vs. Equipment Breakdown Insurance

Commercial property insurance can often be compared to equipment breakdown insurance, as they both can provide coverage for business owners, but they both provide different types of coverage. Commercial property insurance covers external threats, such as a fire. Equipment breakdown insurance covers damage caused by internal forces, such as electrical shorts, mechanical breakdowns, power surges, operator error or motor burnout.

Have questions about equipment breakdown coverage? SelectQuote can help.

Home insurance and equipment breakdown coverage can safeguard your home, business and possessions if damage or loss occurs. Making sure you have sufficient coverage is an easy way to gain peace of mind. At SelectQuote, we’ll take the time to learn about your unique priorities and then quickly and easily search policies from trusted carriers, comparing plan details on your behalf to find you the right coverage.

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