Equipment Breakdown Insurance: What It Is & Why Homeowners and Businesses Need It

When most people think of property insurance, they picture coverage for storm damage, fires, or burst pipes. But what happens when the actual equipment in your home or business fails? That’s where equipment breakdown coverage comes in — a special endorsement many policyholders don’t even realize exists.

Equipment breakdown coverage is traditionally seen in commercial policies — protecting businesses, churches, multi-unit properties, and other facilities — but in recent years, it’s begun appearing in some homeowners and rental property policies as well. It’s designed to cover sudden, unexpected mechanical or electrical failures of critical systems, such as a furnace, boiler, HVAC unit, or other essential equipment.

I recently handled a case for a local church in the middle of winter. Everything stopped working. The HVAC company said the entire system needed to be replaced. Upon inspection, we found a crack in the furnace caused by a sudden weather change overnight. Thanks to the church’s equipment breakdown endorsement, the $30,000 replacement was covered — minus a $1,000 deductible — and repairs were completed within a week.

Without this endorsement, the story would have ended differently. Standard property insurance might cover the damage caused by a burst pipe, but it won’t cover the cost of replacing the failed pipe itself. The same goes for major equipment — without equipment breakdown coverage, you’re paying out-of-pocket.

It’s important to remember that every insurance company writes these endorsements differently. They’re not automatically included in your policy — you have to add them “à la carte” based on your needs. And when a failure happens, documentation is everything. Always have a licensed expert inspect the damaged equipment, identify the cause, and provide a written report. That narrative is the key to getting your claim approved.

When in doubt, bring in a public adjuster. At 21st Century Public Adjusters, we’ll assess your situation, work with the right experts, and ensure your claim is presented properly — so you’re putting your best foot forward when it matters most.