Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceMedium
A client operates a commercial bakery and is concerned about the financial impact of a sudden and accidental breakdown of their industrial ovens and mixers. Which type of commercial property coverage would specifically protect against losses due to mechanical or electrical breakdown of such equipment?
- ABusiness Income Coverage
- BEquipment Breakdown Coverage
- CCommercial Property Building and Personal Property Coverage
- DCommercial General Liability
Show answer & explanationAnswer & explanation
Correct answer: B. Equipment Breakdown Coverage
Equipment Breakdown Coverage (formerly Boiler and Machinery) is designed to cover direct damage to covered equipment from sudden and accidental breakdown, as well as business income and extra expense losses resulting from such a breakdown.
Why the other options are wrong
- A. Business Income covers lost revenue from property damage, but Equipment Breakdown is the primary trigger for mechanical failure.
- C. This covers direct physical damage from perils like fire or wind, not mechanical breakdown.
- D. Commercial General Liability covers third-party bodily injury and property damage, not damage to the insured's own equipment.
Equipment Breakdown Coverage
Insurance that covers direct damage to specified equipment caused by sudden and accidental mechanical or electrical breakdown.
- Covers internal equipment failures (e.g., motor burnout, boiler explosion).
- Can include business income and extra expense resulting from breakdown.
- Distinguished from standard property coverage which excludes internal breakdown.
Memory trick: When machines fail, breakdown coverage will prevail.