While your organization may have coverage in place for commercial property, general liability as well as directors and officers, the breakdown of a critical piece of machinery has the potential to wreck havoc across multiple facets of your operations.
Just one event can quickly add up to a significant and costly amount of collateral damage to your organization. Here are two real world examples of equipment breakdowns.
The International Risk Management Institute (IRMI) notes that an object is “a boiler and machinery (BM) insurance term for equipment or machinery. BM coverage applies to losses or damages resulting from an accident (such as a breakdown or explosion) to a covered object.” 1
Examples of an object that could be covered under a boiler and machinery or equipment/machinery breakdown insurance policy include a roof top HVAC unit, manufacturing equipment, a pressure vessel or the actual boiler itself.
IRMI further defines equipment breakdown insurance as “coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well.
Equipment breakdown insurance is increasingly replacing traditional boiler and machinery (BM) insurance, in part simply because the title is more descriptive of the coverage provided. Also, today’s equipment breakdown policies typically provide slightly broader coverage than traditional BM policies, and they usually do not use the specialized terminology found in traditional BM policies.” 2
Source: 1, 2 IRMI
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