What is 'Boiler And Machinery (BM) Insurance'

Boiler And Machinery Insurance (BM) provides coverage for physical damage to and financial loss from equipment breakdown. Boiler and machinery insurance, also called equipment breakdown insurance, covers the cost of repairing or replacing the damaged equipment and 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'

Boiler and machinery insurance covers the risk that equipment, used by a business to deliver goods and provide services, will not function properly. Companies purchase this type of insurance to protect equipment much in the same way as property insurance protects buildings and liability insurance protects workers from injuries. 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.

Repackaging of Boiler and Machinery Insurance

Rather than the BM coverage only being available as a monoline insurance policy, increasing numbers of insurance companies now offer it, either as an endorsement, or as an integral element of a package product, such as a business owners policy. In addition, because of an increase in equipment that uses some type of “electronic brain,” microprocessor or low-voltage circuitry, financial risk exposures are changing, which are causing changes in premiums. This trend towards more microprocessor-based equipment has significantly increased the risk of equipment failure due to power surges, power quality problems and other types of physical factors, including moisture, heat and cold.

 

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