Equipment breakdown
What pays when a mechanical system fails on its own, with no fire and no storm involved.
Equipment breakdown coverage pays to repair or replace equipment, from HVAC and electrical systems to office machines like photocopiers and computers, when it fails from a mechanical or electrical breakdown, not from fire or storm. It is a distinct insurance line, the modern successor to boiler and machinery coverage, not something general liability or standard property insurance automatically includes.
What counts as a mechanical breakdown
A breakdown loss looks different from a fire or a storm claim. A pump motor seizes. An electrical panel arcs and fails. A control board on the pool equipment fries itself. Nothing burned, nothing flooded, no wind involved, the equipment just stopped working the way it was built to work.
Equipment breakdown coverage is built specifically to insure that kind of loss, and its scope is written broadly rather than tied to one type of machine.
"Coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers."
Source: IRMI Glossary of Insurance and Risk Management Terms, International Risk Management Institute
Why your other policies do not already cover this
General liability is often the policy a board reaches for first when something breaks, but it responds to bodily injury and property damage claims involving common areas or the association's normal operations. It is not built to pay for damage the association's own equipment does to itself.
"usually does not cover damage to the HOA's own buildings, roofs, fences, signs, equipment, or other association property."
Source: HOA General Liability: What Premises and Operations Really Covers, StarNet Insurance Group
Equipment breakdown coverage exists as its own line for exactly this reason. It is the current name for what the industry used to sell as boiler and machinery insurance, renamed because the newer term describes the coverage more accurately than the old one did.
What to ask before your board assumes you are covered
Do not assume this coverage came bundled in with your master property policy. Whether equipment breakdown protection is built into the property policy, added as an endorsement, or sold as its own separate policy varies by carrier, so ask your broker directly which one applies to your association.
Two questions are worth bringing to your next renewal conversation: which pieces of shared equipment are actually scheduled under the coverage, and whether the limit is enough to replace the largest single system the association operates, not just its smallest.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
The clubhouse's rooftop HVAC compressor short circuits and stops running. No fire, no storm, nothing else damaged. Which policy is designed to respond?
Before it was commonly sold under its current name, this same protection was known in the industry as what?
A board assumes its master property policy will pay to replace a failed pool pump motor. What should the board actually confirm first?
Sources
- IRMI Glossary of Insurance and Risk Management Terms, International Risk Management Institute
- HOA General Liability: What Premises and Operations Really Covers, StarNet Insurance Group
Insurance
Want the fuller picture of how these coverage lines fit together? Start with HOA insurance 101.
Whether equipment breakdown protection is built into your master property policy, added by endorsement, or sold as a standalone policy varies by carrier and by association, so check your own declarations page and ask your broker directly.