What’s the difference between equipment breakdown and commercial property?
Commercial property insurance pays when an outside force damages your building or contents. Equipment breakdown insurance pays when your own machinery fails from an internal cause. They cover different events, and most businesses need both because each fills a gap the other leaves open.
What does commercial property insurance cover?
Commercial property insurance responds to sudden, external perils: fire, storms, theft, vandalism, or a burst pipe. If a Georgia thunderstorm tears off part of your roof and rain ruins your inventory, that is a commercial property claim. The damage came from an outside force, not from the equipment itself.
What does equipment breakdown insurance cover?
Equipment breakdown insurance, sometimes called boiler and machinery coverage, responds when equipment fails from the inside. Covered causes include electrical arcing, a power surge, a motor that burns out, a mechanical part that seizes, or operator error that triggers a sudden breakdown. Standard commercial property policies specifically exclude these internal failures, which is exactly why equipment breakdown exists as a separate coverage.
How do the two coverages work together?
The two coverages address separate triggers rather than overlapping:
- Commercial property: external perils like fire, wind, hail, water, and theft that damage your building and contents.
- Equipment breakdown: internal failures like electrical, mechanical, and pressure-system breakdowns, plus the spoilage and downtime that follow.
For example, a Marietta restaurant has a $40,000 walk-in cooler. A power surge fries the compressor. Commercial property would deny the claim because no external peril struck the unit. Equipment breakdown would pay to repair or replace the compressor and can also cover the $6,000 of refrigerated food that spoiled and the income lost while the kitchen sat idle.
Because the line between an external peril and an internal failure can be hard to spot during a stressful claim, many Georgia business owners bundle equipment breakdown onto their business owners policy so both triggers are covered under one program.
How much does equipment breakdown coverage cost?
The cost is usually modest compared to the price of replacing a chiller, elevator, or HVAC unit out of pocket. For example, adding equipment breakdown as an endorsement to an existing commercial property policy often adds only a few hundred dollars per year, while replacing a commercial HVAC system can easily exceed $20,000 to $30,000. The math favors the coverage for most businesses that depend on mechanical or electrical equipment.
How do I know if my current policy covers an equipment failure?
Start with your declarations page. If equipment breakdown is listed as a covered endorsement, your policy likely has it. If the page shows only standard commercial property perils without a specific equipment breakdown line, the coverage is absent. Reading the exclusions section of the property policy will confirm what internal failures are carved out.
A free coverage review can identify whether your current policy leaves an equipment breakdown gap and compare options available through Olive Insurance Services to close it.