Equipment Breakdown Insurance

Equipment Breakdown Insurance

Equipment breakdown insurance coverage is vital for Canadian small businesses that use and operate expensive equipment, including contractors, restaurant owners, retail stores, and professional service providers.

Zensurance - Equipment Breakdown Insurance

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Claims examples


Problem: A refrigerated storage tank in your warehouse malfunctions after a sudden power surge, destroying the thermostat and damaging the tank.

Outcome: Your equipment breakdown coverage may pay to replace the thermostat and repair the damaged storage tank.


Problem: Your building’s boiler fails after a tube connected to it ruptures because of excessive oxygen in the feedwater triggered by low temperatures.

Outcome: Your boiler and machinery insurance coverage may pay for the cost to repair the ruptured tube.


Problem: A backhoe your company uses for excavation work won’t start because the engine unexpectedly seized and is inoperable.

Outcome: Your equipment breakdown coverage may pay for the cost to repair the backhoe’s engine.

Equipment breakdown insurance, explained.

What is equipment breakdown insurance?

Equipment breakdown insurance, also known as boiler and machinery coverage is designed to protect your equipment and machinery if they malfunction because of internal damage. Whereas commercial property insurance protects your equipment if damaged by an external event such as fire, flood, or severe weather, equipment breakdown insurance coverage provides financial support to repair or replace your equipment if damaged by power surges, electrical shorts, or a mechanical breakdown. It is applicable for nearly any equipment, including office equipment like computers and photocopiers.

Who needs equipment breakdown insurance?

All small businesses that own expensive electrical or mechanical equipment should consider protecting their property with an equipment breakdown policy. Examples of businesses that own equipment that may require protection:

  • Contractors and skilled tradespersons
  • Restaurants and bakeries with fridges and kitchen equipment
  • Property owners with alarm and security systems
  • Warehouses and manufacturers

What does it not cover?

Any loss or damage to your machinery or equipment that arises because of operator error, that’s due to wear and tear, or resulting from external events such as severe weather, fire, or a flood, is not covered by equipment breakdown coverage.

It will, however, provide financial support to repair or replace your equipment or machinery that’s damaged from an unexpected, sudden event like electrical arcing or mechanical fracturing, rupturing, and seizing.

How much does equipment breakdown insurance cost?

How much equipment breakdown coverage costs depends on the type of equipment you have and how its use. Insurance companies will consider several factors when calculating your premium, including: 

  • The type of equipment and the services you provide with it
  • How often the equipment is used and by whom
  • Where the equipment is used and if it is considered mobile equipment
  • Your company’s insurance claim history
  • Your annual and projected revenue

How much equipment breakdown coverage do I need?

The amount of coverage you require needs to be in tune with the type of business you run and the equipment you need to be insured. Don’t leave it to guesswork. Talk to one of our licensed brokers and let them help you determine what adequate amount of coverage is suitable for your business.

Does equipment breakdown insurance cover services?

No. Equipment breakdown insurance only covers loss or damage to your machinery and equipment resulting from internal sources such as an electrical or mechanical malfunction. To adequately insure your business’s services, you may need commercial general liability insurance, errors and omissions insurance, and commercial property insurance. Speak to your licensed broker about what your company’s specific needs are.

Frequently asked questions

What sort of equipment requires equipment breakdown insurance?

Equipment breakdown insurance applies to a broad range of machinery and equipment crucial to your business operations. It provides financial support for your equipment that malfunctions because of electrical or mechanical damage. That may include machinery such as air conditioning and refrigeration, boiler and pressure vessels, computers, production systems, and renewable and alternative energy equipment.

Is there a difference between equipment breakdown coverage and contents coverage?

Yes. Content coverage will protect your property, including premises, equipment, machinery, and computers in cases of damage due to external factors such as fire, flood, water damage or weather-related events. Unfortunately, any spontaneous electrical or mechanical breakdowns or those caused by operator error will not be protected by your content coverage. An equipment breakdown policy, however, may protect you in such cases.

Do I need equipment breakdown coverage if I already have warranty on my equipment?

Review your warranty policy carefully. Whether your equipment came with a warranty when you purchased it or if you had to buy the warranty protection as an add-on, there are specific conditions under which a warranty will apply. For example, warranties often do not cover operator error, so if any damage to your equipment were caused due to the mistakes of an inexperienced employee, it would probably not be covered by your warranty.

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