Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Commercial LinesMedium
A large construction company owns a fleet of heavy equipment, including cranes, bulldozers, and excavators. They are seeking comprehensive coverage for these assets, specifically for risks like mechanical breakdown, electrical arcing, and boiler explosions, which are not typically covered by their standard Commercial Property policy. Which specialized coverage would best address these unique exposures?
- AInland Marine Equipment Floater
- BEquipment Breakdown Coverage
- CCommercial Property with Extended Coverage
- DCommercial General Liability
Show answer & explanationAnswer & explanation
Correct answer: B. Equipment Breakdown Coverage
Equipment Breakdown coverage (formerly Boiler and Machinery) is a specialized form of insurance designed to cover losses due to the sudden and accidental breakdown of machinery and equipment, including mechanical, electrical, and pressure system failures, which are typically excluded from standard Commercial Property policies.
Why the other options are wrong
- A. Inland Marine covers property that is portable or in transit, but not specifically mechanical or electrical breakdown.
- C. Extended Coverage on a Commercial Property policy expands perils like windstorm, hail, explosion, riot, etc., but not internal equipment breakdown.
- D. Commercial General Liability covers third-party bodily injury and property damage, not damage to the insured's own equipment.
Equipment Breakdown Coverage
Equipment Breakdown coverage (formerly Boiler and Machinery) insures against losses due to sudden and accidental breakdown of specified equipment, including mechanical, electrical, and pressure systems.
- Covers internal breakdown of machinery.
- Often includes business interruption and spoilage coverage.
- Excludes wear and tear, rust, and calibration errors.
Memory trick: When 'Equipment Breaks', it's 'Internal Damage' from 'Mechanical' or 'Electrical' stress.