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Equipment Breakdown Insurance (often called Boiler and Machinery Insurance or machinery breakdown insurance) is a form of commercial property coverage that pays for sudden and accidental breakdown of pressure, mechanical, and electrical equipment. It can cover the cost to repair or replace the damaged equipment and the financial loss that results from the breakdown.
Standard commercial property policies usually focus on external hazards such as fire, theft, or wind. Internal failures, such as mechanical breakdown or electrical arcing, are commonly excluded, which leaves a serious gap unless you add equipment breakdown coverage.
In Ontario, where businesses rely heavily on HVAC, refrigeration, electrical systems, automation, and technology, this coverage is increasingly important. A single failure in a boiler, transformer, or refrigeration system can shut down operations and cause spoilage or lost income that far exceeds the repair cost.
In practice, Canadian insurers often use the terms Equipment Breakdown Insurance and Boiler and Machinery Insurance to describe very similar coverage. Historically, policies were called Boiler and Machinery and focused mainly on pressure vessels and large industrial equipment. Over time, coverage expanded to include modern electrical, electronic, and mechanical systems across many industries, and the term Equipment Breakdown became the more accurate label.
Today:
Boiler and Machinery Insurance is often used as another name for equipment breakdown coverage or as a legacy term in policy wordings.
Equipment Breakdown Insurance is the modern, broader form that usually includes a wider array of equipment such as HVAC, refrigeration, computers, and other electrical systems.
When we review your policies, we do not rely on the label. We read the wording so you know exactly which equipment and incidents are covered.
In most current commercial insurance programs, Boiler and Machinery Insurance and Equipment Breakdown Insurance refer to the same class of protection. Both are designed to respond when there is:
Older Boiler and Machinery policies may be narrower and may not automatically include all of the modern systems businesses now rely on. Modern Equipment Breakdown forms are generally written to address:
When we structure your program, we make sure that the broader, modern coverage is in place and that key equipment is not left out.
Every insurer uses its own definitions, but common examples of equipment that can be covered under Equipment Breakdown Insurance in Ontario include:
If your business relies on equipment that uses electrical power, there is a good chance that equipment breakdown coverage is relevant.
Equipment Breakdown Insurance is focused on internal failures rather than external events. Covered causes of loss often include:
Coverage can extend beyond the cost to repair or replace equipment. Many policies can also include:
At CommercialInsurance.ca, we help you understand which of these extensions your current policy includes and what options are available to strengthen them.
In most Ontario business policies, Equipment Breakdown Insurance is added as an endorsement or separate section. When covered equipment suffers a sudden and accidental breakdown that fits the policy definition, the coverage can help pay for:
The claim is adjusted according to the specific wording, deductibles, and limits in your policy.
Standard property insurance is usually designed for external causes of loss, such as fire, theft, wind, and some types of water damage. Internal failures, such as mechanical breakdown or electrical arcing within equipment, are often excluded. Equipment Breakdown Insurance focuses specifically on these internal failures and fills this gap by covering sudden and accidental breakdowns of insured equipment.
Although each policy is different, common exclusions may include:
There can also be sub limits for spoilage, data restoration, or specific items. We help you understand these exclusions and explore options to improve your protection where possible.
Coverage typically applies to pressure, mechanical, and electrical equipment such as boilers, pressure vessels, HVAC units, refrigeration systems, motors, compressors, electrical distribution, computer servers, telecom systems, and some types of production machinery. Some insurers also extend coverage to renewable systems like solar PV arrays and associated inverters and control equipment.
The cost of Equipment Breakdown Insurance in Ontario depends on several factors, including:
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