Why Standard Property Policies Don't Cover This

Commercial property insurance is generally built around external perils like fire, wind, and theft. Damage that originates from within the equipment itself (a motor overheating, an electrical short, a boiler exploding from internal pressure) is a mechanical or electrical breakdown, not a covered external peril, so it's typically excluded unless equipment breakdown coverage is added.

What's Typically Included

• Repair or replacement of the failed equipment
• Spoilage losses (e.g., a walk-in freezer failure ruining inventory)
• Extra expenses to keep operating during repairs
• Business income loss if the breakdown forces a shutdown

Common covered items include HVAC systems, refrigeration units, electrical panels, boilers, and increasingly, computer and server equipment.

Why This Matters for Coverage and Cost

A restaurant that loses a walk-in freezer to a compressor failure faces both the repair bill and the spoiled inventory, and without this endorsement neither is covered by a standard property policy since there was no fire, storm, or theft involved. Given that this coverage is usually inexpensive relative to the equipment values it protects, it's one of the more common oversights that turns an otherwise routine mechanical failure into an uninsured loss.