Equipment breakdown insurance, for the systems that keep your business running.

Standard commercial property insurance covers property damage from external perils: fire, theft, storms, vandalism, falling objects. It explicitly excludes mechanical and electrical breakdown of equipment, because those are considered different risks with different underwriting. Equipment breakdown insurance (sometimes called 'boiler and machinery' historically) covers the internal failures that commercial property excludes: boilers exploding, HVAC compressors burning out, electrical arcing, motor burnout, transformer failure, refrigeration system failure leading to spoilage. The two policies complement each other. A restaurant that has commercial property but no equipment breakdown is uncovered if the walk-in cooler compressor fails and the inventory spoils. Most modern commercial accounts carry both; equipment breakdown is often added as an endorsement to business owners policy or commercial property for $200 to $1,500 annually.

Spoilage coverage under equipment breakdown responds when a covered breakdown event causes perishable inventory to spoil. The typical scenario: a walk-in cooler or freezer compressor fails, the temperature rises, and the inventory inside spoils. Standard commercial property excludes this entirely because it's a mechanical breakdown, not a covered peril. Equipment breakdown coverage typically includes a spoilage sublimit, often $10K to $100K depending on policy structure. For larger food-service operations (grocery stores, restaurants with substantial frozen inventory, butchers, ice cream shops), the spoilage sublimit should be set thoughtfully against actual inventory values. Pharmaceutical and biotech businesses with temperature-controlled storage have similar exposure and may need higher sublimits.

Equipment breakdown pricing depends on equipment inventory, type of business, spoilage exposure, and the limits selected. Most small to mid-market businesses add equipment breakdown as an endorsement to a business owners policy or commercial property policy for $200 to $1,500 annually, with $50K to $250K in coverage limits. Restaurants and food-service businesses with substantial refrigeration typically pay toward the higher end because spoilage is a real exposure. Manufacturing operations with high-value production equipment may need standalone equipment breakdown policies with limits in the $1M+ range, which can cost $3,000 to $25,000+ annually. The pricing is generally inexpensive relative to the catastrophic risk it covers, so most carriers and agents recommend including it on virtually every commercial account.