Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Casualty InsuranceEasy
A Florida manufacturer utilizes several large, complex machinery components in its production line, including industrial robots and automated conveyor systems. These systems are critical to operations. Which type of insurance coverage is specifically designed to protect against financial losses due to sudden and accidental breakdown of such machinery, including the cost to repair or replace the equipment and resultant business interruption?
- ABusiness Auto Policy (BAP)
- BCommercial General Liability (CGL)
- CBoiler and Machinery (Equipment Breakdown) Insurance
- DCommercial Property Insurance
Show answer & explanationAnswer & explanation
Correct answer: C. Boiler and Machinery (Equipment Breakdown) Insurance
Boiler and Machinery (Equipment Breakdown) Insurance is specifically designed to cover sudden and accidental breakdown of mechanical, electrical, or pressure systems, including the cost of repair or replacement and associated business interruption losses. Commercial Property typically excludes such breakdowns.
Why the other options are wrong
- A. BAP covers vehicles and their use, not stationary production machinery.
- B. CGL covers liability to third parties for bodily injury or property damage, not damage to the insured's own machinery.
- D. Commercial Property Insurance typically excludes losses from mechanical breakdown or explosion of boilers and pressure vessels.
Equipment Breakdown Insurance
Specialized coverage for direct physical damage to covered equipment caused by a sudden and accidental breakdown, and often includes business interruption.
- Covers mechanical, electrical, and pressure systems.
- Fills a gap left by Commercial Property policies.
- Can include lost income and extra expenses.
Memory trick: Equipment Breakdown fixes the machine, saves the stream.