A compressor seizes, a transformer arcs, a boiler cracks. None of that is fire, wind or theft, so the property policy in your file was never designed to pay for it. Equipment breakdown coverage fills that gap. Carriers used to call it boiler and machinery insurance and wrote it in technical language about “objects” and “accidents”; today’s forms say “equipment” and “breakdown” and reach almost anything that uses electricity or runs under pressure, from the walk-in cooler to the server rack. The coverage also addresses what a failure costs beyond the repair bill: spoiled inventory, income lost while you are down, and the extra cost of getting back up fast. And in states that inspect boilers and pressure vessels, the insurer’s own inspector may be the person who performs that inspection.
Where the name came from
For decades this coverage was sold as boiler and machinery insurance. Those policies covered an “accident” to an insured “object,” and the definitions of those objects were long and technical. ISO now files an equipment breakdown coverage form for the line, and today’s policies use everyday words, “breakdown” and “equipment,” and typically grant coverage for the breakdown of nearly all kinds of equipment, not just the boiler in the basement.
IRMI, the industry reference, describes the line as coverage for mechanical or electrical breakdown of nearly any kind of equipment, photocopiers and computers included: the cost to repair or replace the equipment and whatever else the breakdown damaged, with business income and extra expense often included.
What the property policy leaves out
The broadest of ISO’s three standard causes of loss forms, the Special Causes of Loss Form (CP 10 30), covers loss from any cause except the ones it specifically excludes. Three of those exclusions are the reason this page exists:
- Mechanical breakdown, including rupture or bursting caused by centrifugal force.
- Artificially generated electrical energy that interferes with an electrical wire, device, appliance, system or network. Arcing, short circuits and surges fall here; damage from lightning is the exception the property form keeps.
- Explosion of steam and hot-water equipment. Fire that results stays with the property policy; the explosion itself does not.
Those exclusions reach past the equipment. When the property form excludes the cause, it also leaves out the business income and extra expense that flow from it. Standard property policies do not include equipment breakdown, so if you buy a business owners policy or a commercial property policy, ask whether it is included or has to be added.
What it is designed to cover
Modern forms define covered equipment by what it does: equipment that generates, transmits or uses energy, including electronic communications and data processing equipment, and equipment that operates under vacuum or pressure during normal use. In practice that reaches electrical systems, heating, air conditioning and refrigeration (including the refrigerant), boilers and pressure vessels, production and mechanical equipment, and electronics and communication systems including computers.
The covered causes are the ones the property form excludes: short circuits and electrical arcing, power surges, mechanical breakdown, explosion, boiler breakdown, and bursting, cracking or splitting. The form responds to an accidental breakdown; routine service such as cleaning and adjustment belongs to your maintenance contract. What follows the failure is where the form earns its keep:
- Spoilage: perishable goods that spoil as a consequence of the breakdown.
- Business income and extra expense: income lost while operations are interrupted and the added cost of keeping the doors open.
- Expediting expense: the cost you take on to speed up restoring operations.
Forms also list what is not covered equipment; one public program’s form, for example, excludes building structure and foundations, buried vessels and piping, sprinkler piping, vehicles and anything mounted on them, excavation and construction equipment, products you manufacture for sale, and data.
Boiler and pressure vessel inspections vary by state
Governments generally require regular inspection of boilers and pressure vessels, and the rules vary by state. In each of the three states below, an inspector employed by the boiler’s insurer can perform the state-required inspection:
- Texas. Under Chapter 755 of the Health and Safety Code, every non-exempt boiler has to be registered with the state (TDLR) and carry a current certificate of operation. Boilers are inspected annually, biennially or triennially depending on the ASME code they were built to. Uninsured boilers must be inspected by a TDLR inspector; insured boilers by the insurance company providing the insurance, or its designee.
- Kansas. Under K.S.A. 44-920 the state fire marshal issues certificates of competency as special inspectors to inspectors employed by a company authorized to insure boilers and pressure vessels in the state, provided each holds a National Board commission. Special inspectors inspect all boilers their company insures, and the owner is then exempt from the state’s inspection fee.
- California. Cal/OSHA’s Pressure Vessel Unit permits power boilers operating above 15 psig, air tanks over 1.5 cubic feet and LP-gas storage tanks over 125-gallon water capacity under Labor Code sections 7620 through 7771. Permit inspections may be performed by a Pressure Vessel Unit inspector or by a qualified inspector employed by an insurance company.
If you own a boiler or a compressor tank, tell me which state it sits in and whether it has a current certificate. Underwriters will ask.
Who needs it
The honest answer is almost everyone with a building and a power bill: even organizations with no steam equipment have some exposure, because nearly every organization owns or operates some type of mechanical and electrical equipment. What a failure costs beyond the repair depends on the business:
- Restaurants and grocers: walk-ins, reach-ins and ice machines. The spoilage and the closed days can cost more than the compressor repair.
- Manufacturers: production machinery was the item that separated “standard” from “extended” comprehensive coverage under the old boiler and machinery forms, so confirm it is included. See manufacturing insurance for the rest of the program.
- Medical and dental offices: imaging, sterilization and lab equipment, and the panels feeding it.
- Apartment and office buildings: boilers, chillers and the electrical service, and tenants who expect heat the same day.
A tenant who owns the equipment inside a leased space has the same problem as the landlord who owns the building systems. The underwriting questions are straightforward: an equipment schedule with ages, your maintenance program, and whether anything is under a state inspection.
Common questions
Is equipment breakdown the same as boiler and machinery insurance?
Same line, newer name. Boiler and machinery policies covered “accidents” to insured “objects” under long, technical definitions; equipment breakdown forms say “equipment” and “breakdown” and typically reach nearly all kinds of equipment.
Doesn’t my property policy already cover this?
Generally no. ISO’s Special Causes of Loss Form excludes mechanical breakdown, artificially generated electrical energy and explosion of steam equipment, and with them the income loss that follows. Ask to see the form before assuming.
Does it cover my computers and phone system?
Modern forms are written around equipment that generates, transmits or uses energy, which includes electronic communications and data processing equipment. Data itself is not covered equipment, so keep your backups.
Who inspects my boiler?
Varies by state. In Texas and Kansas an inspector employed by the boiler’s insurer performs the inspection of insured boilers; in California a permit inspection may be done by a Cal/OSHA inspector or a qualified inspector employed by an insurance company.
Do I need it if I rent my space?
If you own equipment inside the space, yes, the exposure is yours. Industry guidance applies the coverage to any insured, whether a building owner or a tenant in a leased building.
Sources
- IRMI glossary: equipment breakdown insurance
- IRMI expert commentary: equipment breakdown, more than just boiler and machinery
- IRMI: go beyond the basics with equipment breakdown coverage
- IRMI glossary: special causes of loss form (CP 10 30)
- IRMI glossary: comprehensive boiler and machinery coverage
- Washington State Dept. of Enterprise Services: boiler and machinery (equipment breakdown) insurance FAQ
- Texas Dept. of Licensing and Regulation: boiler safety at a glance
- Kansas Legislature: K.S.A. 44-920, insurance company inspectors as special inspectors (2025-26 statutes)
- Cal/OSHA Pressure Vessel Unit: boiler, air tank and LP-gas tank permits
General information about equipment breakdown (boiler and machinery) coverage as of October 2026, not legal or tax advice; the forms and endorsements actually issued and each state’s boiler and pressure vessel law control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.