For the machine that stops working.
Coverage for the boilers, compressors, electrical panels and computers a business runs on, when they fail from a mechanical or electrical breakdown, and for the spoiled stock and lost income that follow.
Quick answer Equipment breakdown insurance covers repairing or replacing equipment that fails from a mechanical or electrical breakdown, plus other property the breakdown damaged, and often the business income and extra expense that follow.
- Equipment breakdown insurance is built for equipment that makes, carries or runs on power, and equipment that holds pressure or vacuum.
- Standard commercial property forms exclude breakdown losses, so equipment breakdown coverage is added to the property policy or written separately.
- Equipment breakdown insurance excludes depletion, deterioration, rust, corrosion, wear and tear and faulty maintenance.
- Equipment breakdown forms commonly include spoilage of perishable goods, usually under a sublimit.
- A tenant in a leased building should consider equipment breakdown coverage as well as the owner, especially for equipment the tenant owns or is responsible for under the lease.
By Sam Alishahi · CA Insurance License #4348151 · Reviewed November 2026 · How this page is researched
What the property policy was never built for
A commercial property policy responds to things that happen to your property from outside, like fire or wind. A failure that starts inside the equipment is a different kind of loss, and property form exclusions take it out. Equipment breakdown insurance, the successor to boiler and machinery coverage, pays to repair or replace the equipment and other property the breakdown damaged, and often the business income and extra expense that follow.
My question page on equipment breakdown coverage explains the coverage itself. Here I focus on placing it: whether it's already on your property policy or needs adding, which sublimits to raise for your kind of business, and how it fits with the boiler and pressure vessel inspections your state requires.
- What's coveredAnything that makes, carries or runs on power, and anything that holds pressure or vacuum.
- Beyond the repairDamage to other property, business income, extra expense and expediting costs.
- Sublimits to checkPerishable goods, expediting expense, hazardous substances and ordinance or law.
- Not a service contractWear and tear, rust, corrosion and poor maintenance are excluded.
What underwriters will ask
Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.
- Equipment list: major systems with age and replacement value.
- Boilers and pressure vessels: type, size and current operating permits.
- Perishables: value of refrigerated or temperature-sensitive stock.
- Income: what a week without your key equipment would cost.
- Lease: who owns the HVAC and other systems if you're a tenant.
- Current policy: property declarations and any equipment breakdown endorsement.
How often California inspects boilers and air tanks
In California, boilers, air tanks and LP-gas storage tanks above Cal/OSHA's size and pressure thresholds need a permit to operate from the Pressure Vessel Unit. The Labor Code sets how often each kind is inspected and how long its permit can run:
- Fired boilers: inspected internally and externally at least every year (Labor Code 7682). The division may extend the interval between internal inspections to as long as 36 months where operating experience and the boiler's design show, to its satisfaction, that equivalent safety will be maintained. A boiler permit runs no longer than one year (Labor Code 7683).
- Most installed tanks: inspected at least every five years (Labor Code 7681), with a permit that runs no longer than five years (Labor Code 7683).
- Smaller air tanks and LP-gas tanks: air pressure tanks of 25 cubic feet or less that are not subject to more than 150 psi, and LP-gas storage tanks of 575 gallons or less that are not used for dispensing as part of a dispensing unit, are inspected when first placed into service, if they are built, inspected and stamped to the ASME Code or approved by the division as equivalent (Labor Code 7681).
For those smaller tanks, the permit stays in effect as long as the tank complies with the law and the Title 8 regulations. Labor Code 7683 still requires a new inspection and permit whenever there is a change in ownership and permanent location of the tank, or an alteration or change that affects the tank's safety.
If you buy a restaurant, a shop or a plant and move its compressor and tank into your own building, or a tank gets altered, plan the inspection before you need the equipment. Keep a copy of every current permit with your equipment list. Underwriters ask for them, and an expired boiler permit is an easy question to answer before it becomes a hard one.
Elevators run on a separate permit
If your building has an elevator, it has its own permit and its own calendar, apart from any boiler. Under Labor Code 7304, the division has every conveyance inspected at least once each year and, when one is found safe to operate, issues a permit for no longer than one year. If the conveyance is subject to a full maintenance service contract, the division may, after investigation and inspection, issue a permit for no longer than two years.
Cal/OSHA's page for building and elevator owners says annual reinspections are the owner's responsibility. You can request one up to 30 days before the permit expires by sending a Re-inspection Request Form to the elevator district office for the elevator's address, with the address and/or conveyance number from your current permit. If an inspection turns up items to fix, you get a Preliminary Order, and the written notice that the corrections are done is your responsibility, not your elevator company's. The same page lists four reasons the division can shut an elevator down: an imminent hazard, noncompliance with an order, nonpayment and an illegal device.
Two kinds of elevators sit outside the annual cycle. Private residence elevators are not under the state's jurisdiction. Elevators in a multiunit residential building that serve no more than two dwelling units and are not open to the public are inspected after installation or alteration, but not every year.
For landlords, send the current elevator permit and your maintenance contract with your property submission. Outside California, elevator and boiler inspection rules vary by state, so check with your state's agency.
Equipment breakdown insurance, answered
Isn't equipment breakdown covered by my property policy?
Not by the standard property forms. Their exclusions remove breakdown losses, which is what creates the need for equipment breakdown coverage, added to the property policy or written separately. I check your declarations to see whether it's already attached.
Does it cover old or worn-out equipment?
No. Depletion, deterioration, rust, corrosion, wear and tear and faulty maintenance are excluded. The coverage is for an accidental breakdown, not for keeping equipment in working order.
Do I need it if I lease my space?
Often yes. Equipment breakdown is something a tenant in a leased building should consider as well as the owner, especially for equipment you own or are responsible for under the lease.
Does it cover spoiled food or inventory?
Forms commonly include spoilage of perishable goods, usually under a sublimit. If refrigeration is central to your business, that sublimit is the first number I look at.
Does it cover lost data?
Computers can be covered equipment, but one widely used form excludes data-related defects and programming errors. Keep backups, and look at cyber coverage for the data itself.
Who inspects boilers in California?
In California, Cal/OSHA's Pressure Vessel Unit inspects boilers under the Labor Code, and permit inspections can also be done by a qualified inspector employed by an insurance company. Permits are required for power boilers above 15 psig steam pressure, LP-gas tanks over 125 gallons water capacity and air tanks over 1.5 cubic feet, with some air tank exemptions. In the City of Los Angeles, permits come from the Department of Building and Safety.
Do you offer equipment breakdown insurance outside California?
Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in all 50 states and Washington, DC and places policies there directly. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.
Official sources
- IRMI: Equipment breakdown insurance
- IRMI: Equipment breakdown, more than just boiler and machinery
- California Department of Insurance: Commercial insurance guide (Form 901)
- Cal/OSHA: Pressure vessels, boilers and tanks
- California Labor Code 7650: who may inspect; certified inspectors
- California Labor Code 7681: tank inspection intervals and exemptions
- California Labor Code 7682: boiler inspection intervals
- California Labor Code 7683: permit terms and reinspection triggers
- California Labor Code 7720: no fee when a certified inspector inspects
- California Labor Code 7304: conveyance inspections and permits
- Cal/OSHA: information for building and elevator owners
- IRMI: Accident (definition)
- IRMI: Expediting expense (definition)
List the equipment. I'll shop the coverage.
Your property declarations and a list of your major equipment are enough to start.
Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.
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