EDITOR'S NOTE

Equipment Breakdown Insurance: Few Coverages Create as Much Confusion and Misunderstanding

Even the most seasoned insurance professional will admit that the depth and complexity of equipment breakdown policies can be overwhelming. Yet the protection they afford can be crucial to a company's ability to recover from a serious accident stemming from an equipment malfunction.

Originally called boiler and machinery insurance, this topic was first addressed in an earlier issue of Adjusting Today authored by Paul O. Dudey, CPCU. For this new and updated edition, we welcome Donald S. Malecki, CPCU, who goes where few insurance writers dare to go by taking an in-depth look at this coverage, including how it has evolved, the latest definitions, what's covered and what's not—even deductibles and policy conditions. He also discusses how valuation differs from a standard commercial policy, as well as the importance of integrating equipment breakdown coverage with an overall commercial property insurance program.

From agents and brokers, to attorneys and managers, this piece will enlighten anyone with a need to know about reducing exposures from equipment breakdown losses.

—Sheila E. Salvatore, Editor

The term "boiler and machinery" insurance has become an anachronism—just like "fire and extended coverages of property" policies and "comprehensive general liability" policies. The new, modern term is "equipment breakdown" insurance.

This change did not happen overnight. Many insurers writing boiler and machinery insurance started using the new term in the late 1990s. One of the

last organizations to follow the leader and begin referencing the newer term is the Insurance Services Office (ISO), when it introduced its 2006 changes. The fact that the origin of boiler and machinery insurance dates back over 100 years, to 1866, means that it may be awhile before insurance veterans get used to the new term.

Equipment breakdown insurance is fairly straight forward, connoting coverage for explosion and/or