DEFINITION of 'Boiler And Machinery (BM) Insurance'

An insurance policy that provides coverage for physical damage to and financial loss from equipment breakdown. Boiler and machinery insurance, also called equipment breakdown insurance, covers: (1) the cost of repairing or replacing the damaged equipment, and (2) business losses incurred from the equipment not functioning. This type of insurance can cover a wide range of equipment, including HVAC systems, ovens, boilers and furnaces, refrigeration units, elevators, and office equipment.

BREAKING DOWN 'Boiler And Machinery (BM) Insurance'

Businesses often purchase property insurance to protect its buildings, and liability insurance to protect its workers from injuries. Boiler and machinery insurance covers the risk that the equipment, used by the business to deliver goods and provide services, will not function properly. Property insurance policies may exclude coverage for common equipment faults such as overheating, electrical failures, and mechanical breakdowns.

Boiler and machinery insurance is a type of specialty insurance, and is not something that every business needs to purchase. It is most likely to be purchased by businesses involved in the manufacture of products, whether clay pots or concrete, because the equipment is being run constantly. In addition to providing coverage for damage to the equipment itself, boiler and machinery insurance can provide coverage for spoilage that may result from not being able to deliver or process goods in a timely manner.

While boilers and machines have been around for hundreds of years, this type of policy can also be used to provide protection for more modern pieces of equipment, such as computers, copiers, cash registers, and telephone equipment. Many modern technologies have not been around long enough to completely understand how the equipment can be damaged. For example, electricity surges can severely damage a computer’s electronics, rendering the machines useless for conducting business.

This type of insurance is most appropriate for businesses that need more specialized coverage than what is available through property insurance.

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