Boiler and machinery (BM) insurance is a type of insurance coverage that protects businesses from financial losses due to the sudden breakdown of equipment or machinery. This kind of insurance can cover a variety of equipment types, including boilers, air conditioning and refrigeration systems, electrical and mechanical systems, and computer systems (other than software).
Today, equipment breakdown insurance is more common than traditional BM insurance as its policy form provides more comprehensive coverage. More often than not, the two terms are used interchangeably.
Equipment breakdown insurance, which is traditionally known as boiler and machinery (BM) insurance, provides coverage for damage or loss resulting from unexpected mechanical breakdowns, electrical power surges, or other qualifying types of failure.
It will pay to repair or replace the covered equipment or machinery, and it also generally covers ensuing property damage and business interruption costs, including lost income and extra operation expenses.
Equipment breakdown insurance can help pay to repair or replace the freezer and grill, to rent the additional freezer, and to cover the lost income until the restaurant can open again – all up to the coverage limits.
This coverage can be added to a commercial property insurance policy, a business owner’s policy (BOP), or a commercial package policy (CPP). It can also be obtained as a stand-alone policy.
When a claim occurs, the process typically involves an investigation by the insurance company to determine the cause of the equipment failure and the extent of the damage or loss. The policyholder may need to provide documentation, such as repair invoices or proof of lost income, to support their claim.
