What does equipment breakdown insurance cover?

It covers repair or replacement costs when business equipment fails due to internal mechanical, electrical, or pressure-related causes. This includes motors, compressors, transformers, boilers, generators, computer systems, and production machinery.

Isn't this covered by commercial property insurance?

No. Standard property insurance covers external causes like fire, theft, and storms. Equipment breakdown covers internal failures — electrical shorts, mechanical breakdowns, motor burnout, and operator error. The two policies complement each other.

Does it cover spoilage?

Yes, many equipment breakdown policies cover spoilage of perishable goods when refrigeration equipment fails. This is critical for restaurants, grocery stores, florists, and pharmaceutical storage facilities.

Are computers and technology covered?

Yes. Modern equipment breakdown policies cover computers, servers, networking equipment, phone systems, and other technology. Power surges, overheating, and component failures are common covered causes of loss.

What about business income loss from breakdowns?

Many equipment breakdown policies include business income coverage for lost revenue while equipment is being repaired. This is separate from your standalone BI policy, which typically requires a property damage trigger.

How does preventive maintenance affect coverage?

Insurers reward businesses with documented maintenance programs through premium discounts. Additionally, good maintenance reduces claim frequency. However, coverage still applies even when equipment fails despite proper maintenance.

Equipment Breakdown Insurance Calculator

Estimate equipment breakdown (boiler and machinery) insurance costs based on total equipment value, age, type, and maintenance practices.

Total Equipment Value

Primary Equipment Type

Average Equipment Age

Preventive Maintenance Program?

Estimated Annual Premium

$638.00

Approximate calculation

Monthly Premium

$53.00

Planning notes, formulas, and examples

About the Equipment Breakdown Insurance Calculator

Equipment breakdown insurance (formerly called boiler and machinery insurance) covers the cost of repairing or replacing business equipment that fails due to mechanical, electrical, or pressure system breakdowns. Standard commercial property insurance excludes these internal equipment failures, leaving a significant coverage gap.

This calculator estimates equipment breakdown premiums based on the total replacement value of covered equipment, equipment age, type, and whether you have preventive maintenance programs. Modern coverage extends to HVAC, electrical panels, computers, production machinery, and refrigeration systems.

This is an educational estimate only. Actual premiums depend on specific equipment types, inspection requirements, and carrier guidelines. Consult a commercial insurance agent for accurate equipment breakdown quotes.

When This Page Helps

A failed HVAC compressor, electrical transformer, or production machine can cost $10,000-$100,000+ to replace, plus lost income during downtime. Standard property insurance only covers external causes (fire, storm) — not internal mechanical or electrical failure. Equipment breakdown coverage fills this critical gap.

How to Use the Inputs

Enter the total replacement value of business equipment to insure.
Select the primary equipment type.
Select the average age of your equipment.
Indicate whether you have a preventive maintenance program.
Review the estimated annual premium.

Formula used

Base Rate per $1,000 of Value by Type:
  HVAC/Mechanical: $2.50
  Electrical: $2.00
  Production/Manufacturing: $3.50
  Computer/Technology: $3.00
Age Factor: Under 5 yrs: 0.90, 5-10 yrs: 1.0, Over 10 yrs: 1.25
Maintenance Credit: Preventive program: 0.85, None: 1.0
Estimated Premium = (Value / 1,000) × Rate × Age Factor × Maint Credit

Example Calculation

Result: $638/year

Base: ($300,000 / $1,000) × $2.50 = $750. Age factor (5-10 yrs): × 1.0 = $750. Maintenance credit: × 0.85 = $638. Estimated annual premium = $638.

Tips & Best Practices

Equipment breakdown is one of the most affordable commercial coverages relative to potential payouts.
A documented preventive maintenance program can earn 10-15% premium credits.
Older equipment fails more often — consider increasing coverage or replacing aging systems.
This coverage often includes inspection services that can catch problems before they become claims.
Many BOP policies include limited equipment breakdown — check your existing coverage first.
This is an educational estimate only — consult a commercial agent for actual quotes.

The Hidden Gap in Property Insurance

Most business owners assume their commercial property policy covers all equipment losses. In reality, property insurance only responds to external causes of loss like fire, theft, and weather. When a boiler explodes, a motor burns out, or an electrical panel fails internally, only equipment breakdown insurance responds.

Modern Equipment Breakdown Coverage

Today's policies have evolved far beyond the traditional boiler and machinery coverage. They now cover HVAC systems, production equipment, computer hardware, data restoration, spoilage of perishable goods, and business income lost during equipment repairs.

Cost-Effective Protection

Equipment breakdown premiums are surprisingly affordable — often $500-$2,000 for small to medium businesses. When compared to the cost of a single HVAC compressor replacement ($5,000-$15,000) or a transformer failure ($10,000-$50,000), this coverage represents excellent value.

Sources & Methodology

Last updated: February 9, 2026

Frequently Asked Questions

It covers repair or replacement costs when business equipment fails due to internal mechanical, electrical, or pressure-related causes. This includes motors, compressors, transformers, boilers, generators, computer systems, and production machinery.