What does equipment breakdown coverage protect for apartment buildings?

Equipment breakdown coverage (formerly known as boiler and machinery insurance) covers the cost of repairing or replacing building equipment and systems that fail due to mechanical breakdown, electrical arcing, motor burnout, pressure vessel explosion, or other operational failures. For apartment buildings, the covered equipment typically includes boilers and heating systems, HVAC units, elevators, electrical panels and wiring, fire suppression systems, refrigeration equipment, and water heaters.

Standard commercial property insurance covers damage from external perils like fire and storms but does not cover equipment that fails due to internal causes. A boiler that cracks from metal fatigue, an elevator motor that burns out, or an electrical panel that arcs and fails are all examples of losses that property insurance would not cover but equipment breakdown insurance would. Many jurisdictions require periodic boiler and pressure vessel inspections by law, and equipment breakdown policies typically include inspection services that satisfy these state and local requirements. OSHA's general industry standards (29 CFR 1910, Subpart H) also regulate the operation of boilers and pressure vessels in occupied buildings.

The coverage typically includes the cost of the repair or replacement itself, spoilage of perishable goods if applicable, extra expenses incurred to maintain operations during the repair period, and business income lost due to the equipment failure. For apartment owners, the business income component covers lost rental income if units become uninhabitable because of a heating system failure in winter or an air conditioning failure in summer.