Machinery breakdown insurance protects businesses against the sudden and unexpected failure of essential equipment. For many businesses, a single mechanical or electrical failure can cause costly downtime, lost revenue, and expensive repairs that standard business insurance does not cover.

This guide explains how machinery breakdown insurance for businesses works, what it covers, and when businesses should consider adding it to their insurance program.

What Is Machinery Breakdown Insurance?

Machinery breakdown insurance covers the cost of repairing or replacing machinery that fails due to mechanical or electrical breakdown. Unlike general property insurance, this cover applies to internal failures such as motor burnout, electrical faults, and pressure system failures.

What Does Machinery Breakdown Insurance Cover?

Machinery breakdown insurance may cover:

• Electrical motor burnout
• Power surges and electrical failure
• Mechanical failure of equipment
• Refrigeration and air conditioning breakdown
• Sudden and accidental internal damage

Cover applies to insured equipment essential to business operations.

What Is Not Covered by Machinery Breakdown Insurance?

Typically excluded:

• Wear and tear
• Gradual deterioration
• Poor maintenance
• Pre-existing faults
• Consumables and routine servicing

This is why correct policy structure matters.

Which Businesses Need Machinery Breakdown Insurance?

Machinery breakdown insurance is commonly required by:

• Retail and hospitality businesses
• Manufacturers and workshops
• Commercial property owners
• Medical and professional practices
• Food and beverage businesses
• Offices with critical equipment

Any business relying on powered equipment is exposed to this risk.

Is Machinery Breakdown Included in Business Insurance?

Machinery breakdown insurance is not automatically included in standard business insurance policies. It is usually an optional extension or separate section that must be specifically added.

A business insurance broker can review whether your existing policy leaves gaps in cover.

 

Machinery Breakdown vs Business Interruption Insurance

Business interruption insurance covers lost income resulting from an insured event.

In many cases, both are required to fully protect a business following equipment failure.

Machinery Breakdown Insurance FAQs

Does machinery breakdown insurance cover electrical failure?

Sometimes, but not always.

Machinery breakdown insurance can cover electrical failure, but only when the policy specifically includes electrical breakdown.

In some policies, electrical failure is a separate option or extension, meaning it is not automatically included and must be added to the cover.

That’s why policy wording matters, many standard business policies exclude electrical failure unless electronic breakdown is taken out separately.

How much does machinery breakdown insurance cost?

Premiums vary depending on the type of equipment, values insured, and risk profile of the business.

Is refrigeration equipment covered?

Refrigeration and cooling equipment can be insured under machinery breakdown policies, which is critical for many businesses.

Do small businesses need machinery breakdown insurance?

If equipment failure would stop operations or cause major costs, this cover should be considered regardless of business size.

Machinery breakdown insurance should be structured to work alongside your broader business insurance program. An insurance broker can identify coverage gaps and ensure your policy reflects how your business actually operates.