Chapter 10 - Equipment Breakdown Insurance

Mechanical Equipment Breakdown Equipment includeso Compressors/pumpso Engines/turbines Losses includeo Breaking of rotating elementso Destruction of gearso Failure of moving parts Causeso Maintenance (lubrication)o Overuse and stresso Metal fatigueAir Conditioning and Refrigeration Equipment Include electrical and mechanical componentso Fanso Compressorso Switchboards Similar breakdowns to electrical and mechanical systemso Often excluded under BPP Ammonia refrigeration includes contamination hazardOther Office Equipment and Systems Equipment breakdown insurance traditionally did not cover office equipment Modern technology has created sophisticated equipment that has elements of mechanical andelectrical equipmento Computer systemso Telephone systemso Copiers/fax As a result, they have similar types of loss exposuresHistory of Equipment Breakdown Coverage Used to be specific insurance on each and every piece of equipment Expansion to groups of equipments, e.g., “pressure vessels” or “mechanical equipment”o Thus the name “boiler & machinery” Eventually equipment breakdown coverage as it exists today which defines covered equipmentgenerally Coverage limits have switched from values of machinery to values based on building and contents Numerous coverageso Property damageo Business income, extra expense, and expediting expenseso Spoilage damageo Utility interruption fills gap of business income/extra expenseo Ordinance or law coverageo Brands and labels