Many businesses rely on expensive, specialized equipment to perform their day-to-day operations. If an essential piece of equipment were to break down unexpectedly, your financial stability and profitability can be at risk while you make repairs or purchase new equipment.

Serious breakdowns can even cause damage to other property, and can seriously interrupt your revenue stream until repairs are made and you’re back up and running.

Equipment breakdown insurance is an essential part of your comprehensive South Carolina small business insurance program for your South Carolina business. South Carolina independent insurance agents can help you get the best coverage for your needs and budget.

What Is Equipment Breakdown Insurance?

There are over 418,000 small businesses in South Carolina. In 2019, nearly $6 billion in commercial insurance claims were paid. The vast majority of these claims were property-related losses that were probably covered by standard commercial property insurance.

Commercial property insurance protects your business if a fire or a tornado damages equipment and other physical assets, but how can you protect your business if an essential piece of equipment suffers some type of mechanical breakdown? Luckily, there’s insurance coverage that can help you with that, too.

Equipment breakdown insurance in South Carolina is a commercial insurance product that pays for financial losses that occur after the sudden and accidental breakdown of equipment. Also known as "boiler and machinery" insurance, equipment breakdown coverage protects against breakdowns caused by power surges, motor burnout, boiler malfunction, and operator error. It covers all sorts of equipment, including new technologies. This may include electrical equipment, computers and communication equipment, air conditioning and refrigeration equipment, boilers, and other types of pressure equipment.

It does not cover the loss of equipment if it is damaged by perils like fire or vandalism, which are covered by standard commercial property insurance.

Does Business Property Insurance in South Carolina Cover Equipment Breakdown?

Traditional commercial property insurance in South Carolina does not cover equipment breakdown. Rather, commercial property insurance is designed to cover a wide variety of risks like fire damage, weather damage, smoke damage, theft, vandalism, and more. If you have expensive equipment that’s damaged in a factory fire, your commercial property policy will pay to repair or replace the equipment.

But if your equipment suddenly malfunctions due to something like a power surge, operator error, motor burnout, or some other type of mechanical failure, your commercial property policy will not cover the damage to the equipment, damage caused to other property on your premises, or any resulting lost income.

That’s where equipment breakdown insurance comes in. It complements your commercial property insurance by adding coverage for sudden mechanical breakdown of valuable equipment. It helps you get back on your feet by helping you pay for equipment and property repairs, and any related lost income, in accordance with the limits of your policy.

What Does Equipment Breakdown Insurance Cover in South Carolina?

Equipment breakdown insurance in South Carolina covers damage caused by breakdowns in equipment caused by covered internal forces, such as power surges, mechanical breakdowns, motor burnout, or operator error.

Typical types of covered equipment include:

Keep in mind that even though equipment breakdown insurance covers computers, it does not cover computer software.

If your covered equipment breaks down, your policy may reimburse you for the following costs (depending on the specifics of your policy):           

What Doesn't Equipment Breakdown Insurance Cover in South Carolina?

Most equipment breakdown policies have numerous standard coverage exclusions, and great care must be taken to understand what is covered and what is not.

In general, anything covered by your standard commercial property insurance will not be covered by your equipment breakdown policy in South Carolina. Here are just a few of the common coverage exclusions you might find in your equipment breakdown policy.

• Breakdowns caused by earthquakes or landslides
• Breakdowns caused by water events such as floods, mudflows, sewer backups, or water that leaks from a sprinkler system or domestic water piping
• Breakdowns caused by nuclear hazards
• Breakdowns caused by war or military actions
• Breakdowns cause by fungus, wet rot, and dry rot
• Breakdowns caused by viruses, bacteria, or other microorganisms that induce or are capable of inducing physical distress, illness, or disease.
• Breakdowns caused by the listed causes of loss if they are covered by another policy (typically a broad form commercial property policy), including aircraft, vehicles, freezing, lightning, sinkhole collapses, smoke, riots, civil commotion, vandalism, and weight of ice, snow, or sleet
• Breakdowns caused by windstorms or hail
• Breakdowns caused by neglect by the named insured to use all reasonable means to save and preserve the covered property from further damage at and after the time of loss 

It’s important to carefully read your policy and understand its limits and exclusions.

What Is the Difference Between Boiler and Machinery Coverage and Equipment Breakdown Coverage?

Boiler and machinery coverage and equipment breakdown coverage are essentially the same thing. Boiler and machinery coverage is an older term, and is in many cases considered to be outdated.

Boiler and machinery insurance has been available since the 1800s, and was originally intended to cover financial losses due to the breakdown of boilers and heating systems used in industrial environments.

But today’s equipment breakdown policies cover far more than just boilers and heating systems, including modern HVAC systems, ovens, furnaces, refrigeration units, elevators, and even photocopiers and computer systems.

Equipment breakdown insurance has over time offered broader coverage and has replaced the outdated term boiler and machinery coverage. Equipment breakdown coverage is considered to be more descriptive of today’s modern machinery and equipment and the broader coverage that is available.

South Carolina Equipment Breakdown Coverage Examples

Consider the following examples of how equipment breakdown coverage can help your South Carolina business.

Example 1: Wear and tear vs. power surge

The air conditioning unit for an ice cream shop fails due to loss of refrigerant. Coverage is denied because failures due to wear and tear or equipment that has reached its maximum life expectancy are not covered.

Meanwhile, the ice cream shop down the street has an AC unit that fails due to a power surge. Its losses related to the breakdown are covered because power surges are typically covered by equipment breakdown insurance.

Example 2: Dry cleaner can’t operate because of a boiler breakdown

A boiler at a dry cleaner overheats and cracks. The business is unable to operate for several days until the boiler is repaired or replaced. The dry cleaner’s equipment breakdown coverage will pay for the cost to repair or replace the boiler, and lost income related to the break may be covered as well.

Example 3: Refrigeration breakdown at a pizza restaurant

A refrigeration breakdown at any restaurant can be devastating. If a pizza shop loses its refrigeration unit due to a mechanical breakdown, a power surge, or another covered event, it will have a ripple effect on the business.

Losing refrigeration can essentially force the pizza restaurant to shut down until the unit is repaired or replaced, resulting in the inability to prepare and serve food, and even a significant spoilage loss. The owner’s equipment breakdown coverage may help pay for lost income, repairing or replacing the refrigeration unit, and spoilage costs.

How a South Carolina Independent Insurance Agent Can Help

Equipment breakdown coverage is an essential part of any comprehensive business insurance program for your South Carolina business. Local independent South Carolina insurance agents aren't tied to one insurance company, so they can get multiple quotes and help you choose the best fit for your needs and budget.