Boiler & Machinery insurance covers direct damage to covered property when caused by a covered cause of loss. Covered property is any property that is owned by the named insured or is in the named insured's care, custody, or control and for which the named insured is legally liable. A covered cause of loss is a sudden and accidental breakdown of the insured's boiler and machinery equipment or any part of the equipment described in the policy. Boiler and machinery insurance is necessary because commercial property policies exclude explosion of steam boilers and breakdown of machinery
The standard Boiler & Machinery policy contains three extensions of coverage. The three extensions are:
Expediting Expense coverage - which pays the reasonable extra cost incurred to expedite progress after a loss;
Automatic Coverage - which covers accidents to objects at newly acquired locations for up to ninety days after the named insured acquires the property; and
Defense Cost and Supplemental Payments - which would apply when the insurer is defending the insured against claims or suits alleging liability for damage to property of others.
Defense Cost and Supplementary Payments are payable in addition to the policy limit. Expediting Expenses are included in, and not in addition to, policy limits.
In addition to the three extensions the policy has three interior limits of $5,000 each:
the cost of cleanup, repair or replacement, or disposal or hazardous substances;
damage resulting from contamination of covered property by ammonia; and
damage by water to covered refrigerating or air conditioning vessels and piping.
These limits are part of and not in addition to the limit specified in the policy. A benefit of boiler and machinery insurance is the inspection service that insurers provide to the insured. Endorsements can be added to the standard boiler and machinery policy to provide coverage for business income, extra expense, and consequential losses.
The following are samples of Boiler & Machinery loss claims (requires Acrobat Reader)
1. Transformer burnt out, caused power interruption at banquet hall. (333 kb)
2. Operator inadvertently added glycol to generator engines' oil system. (333 kb)
3. Service station hot water heating boiler overheats due to low water condition. (322 kb)
4. Operator error damages boring mill. (310 kb)