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Frequently Asked Questions
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What Is Equipment Breakdown Insurance?
Equipment Breakdown insurance (previously known as Boiler and Machinery (BM) insurance) is a type of property and casualty insurance specific to types of machinery. It covers any loss incurred due to the breakdown of faulty equipment as well as the costs to repair or replace any damaged equipment in question.
Who Needs Equipment Breakdown Insurance?
Any business that uses or relies on equipment or machinery for its operations needs Equipment Breakdown insurance. Whether it is the breakdown of a computer or the failure of an electrical system, all it takes is for one fault to disrupt business operations. This can result not only in expensive costs to repair the fault but the financial loss incurred during a service interruption.
Typical sectors that require Equipment Breakdown insurance include:
- office buildings
- municipal buildings
- healthcare facilities
- auto repairs
- information technology
What Types Of Machinery Are Covered By Breakdown Insurance?
Whether the machinery is located in a workshop or in a boiler room, Equipment Breakdown insurance protects a wide range of equipment types essential for business operations. This can include some of the following:
- computers and telecommunications equipment
- business equipment (photocopiers, fax machines, printers, etc)
- boilers and pressure vessels
- heating and ventilation systems (HVAC)
- air conditioning
- electrical equipment
- production machinery
- security systems (CCTV , fire alarms, etc)
- retail point of sale equipment
- escalators and elevators
- water pumps
- food processors
What Does Equipment Breakdown Insurance Cover?
Equipment Breakdown is primarily focused on the physical and financial losses created when a piece of machinery breaks down. As well as covering any financial loss caused during a halt or delay in business operations, Equipment Breakdown insurance will also cover the costs in repairing or replacing the defective machinery as well as inspections of the equipment.
A piece of equipment could breakdown for any number of reasons, including:
- moisture or high humidity
- overloaded circuit
- electrical surges or power interruption
- loose connections
- foreign materials
What Is Not Covered By Equipment Breakdown Insurance?
Equipment Breakdown insurance focuses on faults, breakages, damage and other risk areas related to machinery operation. However there are several causes of damage which are generally excluded by most Equipment Breakdown insurance policies. These are:
- general wear and tear
- gradually developing conditions
- rust, decay or general deterioration
- negligence or poor maintenance
- deliberate acts
How Is Equipment Breakdown Insurance Sold?
Equipment Breakdown insurance can be bought either as a monocline (or standalone) policy or as part of a Property insurance policy – included as part of the policy form or as an add-on endorsement to the overall policy
How Much Does Equipment Breakdown Insurance Cost?
The cost of Equipment Breakdown insurance is largely determined by two factors; the coverage of the machinery and the coverage of business operations. Depending on the number of pieces of equipment that need insuring, the cost to repair or replace them and any potential related damage will affect the amount of coverage needed.
The same applies to restoration costs for a business interruption which will compensate for any potential financial loss incurred during the halting of service.