What Is Equipment Breakdown Coverage?

Equipment breakdown coverage is a common insurance coverage for businesses and sometimes homes. It can cover your equipment and monetary losses related to their malfunction.
Written by Marisol Pereira
Reviewed by Carrie Adkins
Updated on Jun 27, 2022
Equipment breakdown insurance is a popular coverage options for businesses that rely on certain equipment for their operations. In the case of a covered peril, the equipment can be repaired or replaced.
Businesses rely on equipment to be able to provide their goods and services, which is why having equipment breakdown coverage can be a lifesaving addition in case of any unexpected mechanical or
electrical malfunction
.
But did you know that equipment breakdown coverage is not exclusive to corporations? You can also add it to your home insurance to protect the equipment that you have at home.
Here's what you should know about this type of coverage, including what it is, in which perils are covered, the type of equipment it covers, and whether or not you should add it to your home insurance. 

What is equipment breakdown coverage?

Usually included in a standard businessowners insurance policy, equipment breakdown coverage protects the equipment used in your business in case of an electrical or mechanical malfunction. While many people talk about equipment breakdown coverage in terms of business, you can also add it to your home insurance policy for an additional price.  

When are you covered by equipment breakdown coverage?

Think of equipment breakdown coverage as something that protects your equipment from any internal trouble. This can include things such as:
  • Centrifugal force 
  • Improper installation
  • Electrical current 
  • Pressure systems breakdown 
However, suppose the damage is caused by not-so-unforeseen reasons such as wear and tear, rust, corrosion, deterioration, or defects. In that case, the coverage won't go into effect, and you'll have to cover the expenses out of pocket.

What does an equipment breakdown policy cover?

Equipment

A business is nothing without its equipment. Think of a pizza place without ovens, a retail store without registers, a supermarket without freezers, or a laundromat without washers.
That's why, in general terms, the policy covers the value of any mechanical, electrical, and computer equipment inside your business. This includes:
  • Motor
  • Engine 
  • Generators
  • Elevators 
  • Transformers
  • Electrical panels 
  • Cables
  • Computer systems 
  • Security systems 
  • Air Conditioners
  • Refrigerators 
  • Boilers 
  • Pressure Equipment
  • Washers and dryers 
  • Ovens and microwaves 
  • Gym equipment 
A similar coverage applies to homes, covering traditional electrical equipment such as TVs, computers, fridges, microwaves, blenders, among others.
Depending on your plan, your equipment breakdown insurance can also help you cover the loses or expenses related to the breakdown of the equipment, which includes things like:
  • Repairs 
  • Spoilage (in case of fridges and freezers)
  • Additional living expenses 
  • Lost income (for the sales you had to forgo while the equipment was down)
  • Time and labor related to replacing your equipment 

Should you add equipment breakdown coverage to your home insurance?

While some of your equipment is covered in traditional home insurance, many limitations apply in standard policies. Your home insurance will only kick in in case of things like a hurricane or a fire (think of external harms). Typical home insurance coverage does not include electrical or mechanical malfunctions.
For example, if there happens to be an electrical surge in your home and it damages several pieces of equipment at once, you would be responsible for absorbing any losses and expenses without equipment breakdown coverage.
Adding equipment breakdown coverage to your home insurance might not be as expensive as you expect. Equipment breakdown insurance can cost about $25 to $50 annually, and it can cover up to $50,000 worth of damages on average. 
If you can afford it, adding equipment breakdown coverage might be a good idea for those who want an added layer of confidence in case the unexpected happens.
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