What does equipment breakdown insurance cover?

It covers the sudden, accidental mechanical or electrical failure of equipment such as boilers, HVAC, refrigeration, electrical panels, computers and production machinery. It pays to repair or replace the equipment and the property it damages, and can add spoilage, expediting expenses, and income lost while the equipment is down.

Doesn't my commercial property policy already cover this?

Usually not. Commercial property policies cover external perils like fire, wind, theft and water, and typically exclude mechanical and electrical breakdown. Equipment breakdown fills that gap. It is often added to the property policy as a rider, so check your declarations page or ask your broker whether it is already included.

Is wear and tear covered?

No. Equipment breakdown covers sudden and accidental failures, not gradual deterioration, rust, corrosion or equipment that has simply reached the end of its life. Maintenance records help show that a failure was sudden. Keeping a service contract and logging inspections is the most effective way to avoid a wear-and-tear dispute.

Is spoiled stock covered after a fridge or freezer fails?

It can be, if the policy includes spoilage. Spoilage pays for perishable goods lost because a covered breakdown cut refrigeration, power or process control, usually at cost and up to a sublimit. Some forms only include spoilage on higher tiers, so restaurants and grocers should confirm it is there and that the limit matches peak stock.

What are expediting expenses?

They are the extra costs of getting broken equipment working sooner, such as overtime for technicians, temporary repairs and express shipping of parts. Expediting expenses are usually a separate sublimit within equipment breakdown cover. They often reduce the overall loss by shortening downtime, which is why insurers include them.

Do I need equipment breakdown insurance for a boiler in Ontario?

Insurance itself is not mandatory, but under Ontario's boiler and pressure vessel regulation, every boiler or pressure vessel in use needs a current certificate of inspection. If it is insured, its insurer carries out the periodic inspection. If not, a TSSA inspector does, and the owner pays the inspection fee.

Does equipment breakdown cover power surges?

Many breakdown wordings treat electrical damage from a surge, including one that starts outside the premises, as a covered breakdown, but the wording varies by insurer. The surge must cause physical damage to covered equipment. Lost income from a utility outage with no damage to your equipment falls under a service interruption extension instead, if your policy has one.

Is my equipment covered away from my premises?

Usually not. Equipment breakdown generally applies to equipment at your insured locations. Tools, laptops and machinery that travel to job sites or clients need a tools and equipment floater or contractor's equipment policy, which can be written to include breakdown where the insurer offers it.

How much does equipment breakdown insurance cost?

For most small and mid-sized businesses it is added to the property policy and priced from the building and contents values, the occupancy and the coverage tier. Equipment-heavy businesses may be rated on a schedule of objects. Boilers, spoilage, electronic equipment and higher sublimits add premium, while documented maintenance helps.

Equipment Breakdown Insurance

When the compressor, panel or boiler fails, this pays for the repair, the spoiled stock and the lost days.

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In short

Equipment breakdown insurance pays to repair or replace equipment that suffers a sudden, accidental mechanical or electrical failure, along with the damage that failure causes and, if included, the income lost while it is fixed. It covers losses a standard property policy excludes, such as a burnt-out motor, an electrical arc in a panel, a failed compressor or a cracked boiler, and often adds spoilage, expediting expenses and inspections.

Last reviewed October 26, 2026

Canadian insurers we compare for property and breakdown risks: 17; Canadian insurers we compare for property and breakdown risks
Ontario deadline for a written report to TSSA's director and the insurer after a boiler or pressure vessel accident: 48 hours; Ontario deadline for a written report to TSSA's director and the insurer after a boiler or pressure vessel accident
Time an insurer has to upload a Record of Inspection to TSSA after a periodic inspection: 30 days; Time an insurer has to upload a Record of Inspection to TSSA after a periodic inspection
Canadian commercial property rates, Q3 2026 (Marsh): -8%; Canadian commercial property rates, Q3 2026 (Marsh)

A standard commercial property policy covers your equipment against fire, theft and water, but excludes it breaking down from the inside. Equipment breakdown insurance covers that: the sudden mechanical or electrical failure of boilers, HVAC, refrigeration, electrical systems, computers and production machinery, plus the damage it causes.

The repair is often the smaller part of the loss. We set spoilage, expediting and business interruption limits from your real stock and downtime, and for Ontario boilers and pressure vessels we confirm the insurer will carry out the inspections TSSA requires.

What's covered

Sudden mechanical, electrical and pressure breakdown
Boilers, pressure vessels, HVAC and refrigeration
Electrical panels, transformers, motors and power surge damage
Computers, phone, point-of-sale and diagnostic equipment
Spoilage of perishable stock after a breakdown
Expediting expenses for faster repairs
Lost income and extra expense while equipment is down
Insurer inspections of boilers and pressure vessels

What equipment breakdown insurance covers

A commercial property policy covers your equipment against outside events such as fire, theft and water. It excludes the equipment failing from the inside. Equipment breakdown, still called boiler and machinery insurance in some wordings and in Ontario's regulations, fills that gap. As one specialist breakdown insurer puts it, nearly everything that is mechanical, electrical or under pressure can be insured for loss due to breakdown.

Equipment typically insured under an equipment breakdown policy
Category	Examples	Typical breakdown
Pressure equipment	Boilers, hot water heaters, air receivers, autoclaves, pressure piping	Cracking, bulging or rupture; low-water burnout
Heating, cooling and refrigeration	Rooftop HVAC units, chillers, walk-in coolers, freezers, compressors	Compressor or motor failure, refrigerant leak from a failed part
Electrical systems	Switchgear, panels, transformers, motors, generators	Arcing, short circuit, insulation failure, power surge damage
Electronic equipment	Computers, servers, phone systems, point-of-sale and security systems, diagnostic equipment	Component failure or surge damage
Production machinery	CNC machines, presses, packaging lines, kitchen equipment	Mechanical failure, misalignment, operator error causing a breakdown
Building services	Elevators, pumps, fans, sprinkler pumps	Motor burnout, seized bearings, mechanical failure

Most policies pay for the damaged equipment, the property it damages in turn, and a set of extensions described below. What they don't pay for is the equipment simply wearing out, which is covered under exclusions.

What counts as a breakdown

Wordings differ, but the core idea is the same across Canadian insurers: a sudden and accidental direct physical loss to covered equipment that needs repair or replacement before it can work again. The breakdown has to be an event, not a slow decline.

That line is where most disputes sit. A bearing that seizes and destroys a motor is a breakdown. A motor that has run hot for years and finally stops may be argued as wear and tear. Maintenance records are what usually settle the question, which is one reason insurers ask for them.

Mechanical breakdown: rupture, bursting, seizing or failure of moving or rotating parts.
Electrical breakdown: arcing, short circuit, electrical surge or insulation failure that damages the equipment. Many wordings include surge damage from outside the premises, such as a lightning-induced spike on the grid.
Pressure failure: cracking, bulging or rupture of a boiler, vessel or pressure piping.
Operator error: a mistake that causes a sudden breakdown is usually covered, where the same mistake might be argued outside the property form.

Our explainer, the coverage between property and warranty, shows where breakdown cover starts and a manufacturer's warranty stops.

Who needs equipment breakdown insurance

Any business that would lose money, stock or customers if one piece of equipment stopped. That covers most businesses with a building, but the exposure is sharpest for:

Restaurants, cafes and grocers, where a failed cooler or freezer spoils stock within hours. See grocery store insurance and restaurant insurance.
Manufacturers and processors, whose production lines depend on motors, controls and compressed air. Our manufacturing and wholesaling program includes breakdown as standard.
Building owners, who are responsible for boilers, rooftop HVAC, elevators and electrical service. Owners usually insure them on a realty package.
Clinics, dental offices and labs, with expensive diagnostic and sterilisation equipment.
Hotels, gyms and pools, which run boilers, pool heaters and pumps every day. See hospitality and lodging.
Offices and IT-dependent firms, where servers and phone systems carry the business.

Spoilage, expediting expenses and the other extensions

The repair bill is often the smaller part of a breakdown loss. The extensions are what pay for the consequences, and they vary more between insurers than the main cover does.

Spoilage: perishable stock lost because a breakdown cut refrigeration, power or process control. Some forms include it only on higher tiers. HSB Canada's equipment breakdown rider, for example, includes spoilage only in its top Comprehensive Plus option.
Expediting expenses: the extra cost of temporary repairs, overtime and express freight to get the equipment working sooner.
Business interruption and extra expense: income lost and extra costs incurred while the equipment is down, usually following the business interruption terms on your property policy.
Service interruption: income lost when a breakdown at the utility, or at a supplier of electricity, heating, cooling or telecommunications, stops your business.
Hazardous substances: clean-up when a breakdown releases something like refrigerant or ammonia. The HSB rider sets this at up to $100,000.
By-law: the extra cost of replacing equipment to meet current codes when like-for-like replacement is no longer allowed.
Data restoration: the cost of recreating data lost in a covered breakdown of electronic equipment, usually with a modest sublimit. A cyber attack is a separate trigger covered by cyber liability.

Spoilage limits deserve the closest look. A single walk-in freezer can hold more stock than a default spoilage sublimit allows, so we set it from your peak inventory.

Ontario's boiler and pressure vessel rules

In Ontario, boilers and pressure vessels are regulated under O. Reg. 220/01 under the Technical Standards and Safety Act, 2000, and administered by the Technical Standards and Safety Authority (TSSA). The regulation gives breakdown insurers a formal role, which makes your choice of insurer a compliance question as well as an insurance one.

Certificate required: no person may operate or use a boiler, pressure vessel, fitting or piping unless the director has issued a current certificate of inspection to the owner or operator (section 5).
Who inspects: an insured boiler or pressure vessel must be inspected by its insurer at the intervals in the code adoption document; an uninsured one is inspected by a TSSA inspector, and the owner pays the fee (section 10).
Record and certificate: TSSA says insurers must upload the Record of Inspection within 30 days after a periodic inspection. The owner then has 30 days after receiving the record to apply and pay for the certificate (section 10.1).
Repairs: no one may repair an insured boiler or pressure vessel without the prior concurrence of, and later inspection by, the insurer (section 7).
Accidents: after an explosion, rupture or accident causing injury or property damage, the owner or operator must notify the director immediately and send the director and the insurer a written report within 48 hours (section 8).
Insurance changes: the insurer must notify the director if cover is cancelled, suspended or not renewed, and the owner must notify the director of a change of insurer (section 10.2).
Unsafe conditions: an insurer that finds an unacceptable condition must notify the director and may not issue a record of inspection (section 11). TSSA can then order a shutdown.

The practical effect: if your breakdown policy lapses, TSSA hears about it, and the inspection duty falls back on you. Other provinces run their own pressure equipment programs, such as ABSA in Alberta and Technical Safety BC, with their own inspection and certificate rules.

Inspection services: what you get besides the policy

Breakdown insurers employ engineers and certified inspectors, and much of the premium buys their time. Under O. Reg. 220/01, anyone conducting a periodic inspection on behalf of an insurer must hold a current certificate of competency, and can have no direct commercial interest in boilers or pressure vessels.

For a business, that means a regular, independent look at equipment that most owners only notice when it stops. Inspection reports flag the defects that lead to the largest losses: low-water conditions in boilers, overheating in electrical panels and failing controls. Combined with infrared scans of switchgear and a documented maintenance schedule, they are also among the strongest evidence you can give an underwriter. Our risk management service helps turn the findings into a maintenance plan.

Common exclusions, and how to close the gaps

Equipment breakdown fills one gap in the property policy. It has gaps of its own.

Typical equipment breakdown exclusions and where the cover comes from
Excluded or limited	How to cover it
Wear and tear, rust, corrosion, gradual deterioration	Not insurable; managed through maintenance and replacement planning
Fire, flood, theft and other external perils	Commercial property and business contents cover
Equipment away from your premises or in transit	Tools and equipment floater or contractor's equipment cover
Cyber attack, malware or hacking	Cyber liability cover
Defects covered by a manufacturer's warranty	The warranty responds first; breakdown cover may pick up resulting damage
Spoilage beyond the sublimit	Raise the spoilage limit to match peak perishable stock
Testing, or equipment under construction or installation	Builder's risk or installation floater during the project
Lapsed or failed boiler inspection	Keep inspections current; an insurer can decline to inspect or cover a vessel in unacceptable condition

Equipment breakdown vs. property insurance vs. warranty

Owners often assume one of these covers the others. They respond to different events.

How equipment breakdown compares with the covers it's confused with
	Equipment breakdown	Commercial property	Manufacturer's warranty or service contract
Triggered by	Sudden internal mechanical or electrical failure	External perils such as fire, wind, theft and water	A manufacturing defect within the warranty period
Covers resulting damage	Yes, including damage to other property	Yes, for insured perils	Rarely; usually the part and labour only
Lost income and spoilage	Available as extensions	Business interruption for insured perils	No
Older equipment	Yes, if maintained	Yes, for external perils	No, once the warranty expires
Inspections	Included, and required for boilers in Ontario	No	Sometimes, as scheduled maintenance

A breakdown claim, step by step

Hypothetical: a family grocer runs two walk-in coolers and a walk-in freezer from a shared condensing unit. On a Friday evening in July, the compressor seizes. By the time staff open on Saturday, the freezer is above safe temperature.

1Repair: the compressor and a damaged electrical contactor are replaced. The breakdown cover pays the parts and labour, less the deductible.
2Expediting: the refrigeration contractor works overtime on a weekend and the part is couriered overnight. Expediting expenses pay the premium over normal rates.
3Spoilage: frozen and chilled stock worth several weeks of sales is lost. Spoilage cover pays at cost, up to its sublimit.
4Rental: a temporary refrigerated trailer protects the stock that survived. This is claimed as extra expense.
5Lost income: the store closes its meat and dairy counters for four days. If BI extends to breakdown, the lost gross profit is claimed.

Under a property policy alone, none of this would be paid: the compressor failing is mechanical breakdown, and the spoilage follows from it. With breakdown cover at a spoilage limit sized to peak stock, the grocer recovers most of the loss. The same sequence plays out in a restaurant kitchen, a clinic's vaccine fridge or a manufacturer's chiller.

What equipment breakdown insurance costs

For most small and mid-sized businesses, breakdown is added to the property policy as an endorsement or rider and priced from the property values it applies to. Larger or equipment-heavy risks are rated on a schedule of objects. Either way, the price follows a few factors.

Total values: building and contents values for a rider, or the replacement value of each scheduled object.
Occupancy: a restaurant or manufacturer has more and harder-working equipment than an office.
Pressure equipment: the number and type of boilers and pressure vessels, which carry inspection costs.
Tier and extensions: electronic equipment, spoilage and higher sublimits add premium. HSB Canada's rider, for example, comes in Basic, Broad and Comprehensive Plus options.
Maintenance and loss history: documented service contracts, inspection results and previous breakdowns.
Deductible: often a flat amount for direct damage and a waiting period for income loss.

The wider property market is soft. Marsh's Global Insurance Market Index put Canadian commercial property rates down 8% in the third quarter of 2026, so adding or upgrading breakdown cover at renewal rarely moves the total premium much. Our guide to renewal season explains how to use that.

How we place equipment breakdown insurance

1Equipment survey: we list the equipment your revenue depends on, including boilers, refrigeration, electrical service and production machinery.
2Consequences: we estimate spoilage, downtime and lead times for replacement parts, which set the spoilage, expediting and income limits.
3Compliance: for Ontario boilers and pressure vessels, we confirm the insurer will carry out the required periodic inspections.
4Form choice: we decide whether a rider on your property policy or a standalone, object-scheduled policy fits better.
5Marketing: we compare wording, tiers and sublimits from the insurers on our panel of 17 alongside your property program.
6Review: we update the equipment list as you add or replace machinery, and every year at renewal.

If equipment breaks down

1Shut the equipment down safely and protect people and property. For a boiler or pressure vessel accident in Ontario, notify TSSA immediately and do not disturb the scene of an explosion or rupture without an inspector's permission.
2Save perishable stock you can: move it, rent refrigeration and keep receipts.
3Call your broker and insurer before ordering a full replacement; the insurer may want its engineer to inspect first.
4Keep the failed parts until the adjuster says they can go.
5Pull your maintenance records and service invoices; they answer the wear-and-tear question quickly.
6Track lost sales and extra costs from the first hour.

Our claims team coordinates with the insurer's engineer and adjuster through to settlement.

Good to know

Frequently asked questions

What does equipment breakdown insurance cover?: It covers the sudden, accidental mechanical or electrical failure of equipment such as boilers, HVAC, refrigeration, electrical panels, computers and production machinery. It pays to repair or replace the equipment and the property it damages, and can add spoilage, expediting expenses, and income lost while the equipment is down.
Doesn't my commercial property policy already cover this?: Usually not. Commercial property policies cover external perils like fire, wind, theft and water, and typically exclude mechanical and electrical breakdown. Equipment breakdown fills that gap. It is often added to the property policy as a rider, so check your declarations page or ask your broker whether it is already included.
Is wear and tear covered?: No. Equipment breakdown covers sudden and accidental failures, not gradual deterioration, rust, corrosion or equipment that has simply reached the end of its life. Maintenance records help show that a failure was sudden. Keeping a service contract and logging inspections is the most effective way to avoid a wear-and-tear dispute.
Is spoiled stock covered after a fridge or freezer fails?: It can be, if the policy includes spoilage. Spoilage pays for perishable goods lost because a covered breakdown cut refrigeration, power or process control, usually at cost and up to a sublimit. Some forms only include spoilage on higher tiers, so restaurants and grocers should confirm it is there and that the limit matches peak stock.
What are expediting expenses?: They are the extra costs of getting broken equipment working sooner, such as overtime for technicians, temporary repairs and express shipping of parts. Expediting expenses are usually a separate sublimit within equipment breakdown cover. They often reduce the overall loss by shortening downtime, which is why insurers include them.
Do I need equipment breakdown insurance for a boiler in Ontario?: Insurance itself is not mandatory, but under Ontario's boiler and pressure vessel regulation, every boiler or pressure vessel in use needs a current certificate of inspection. If it is insured, its insurer carries out the periodic inspection. If not, a TSSA inspector does, and the owner pays the inspection fee.
Does equipment breakdown cover power surges?: Many breakdown wordings treat electrical damage from a surge, including one that starts outside the premises, as a covered breakdown, but the wording varies by insurer. The surge must cause physical damage to covered equipment. Lost income from a utility outage with no damage to your equipment falls under a service interruption extension instead, if your policy has one.
Is my equipment covered away from my premises?: Usually not. Equipment breakdown generally applies to equipment at your insured locations. Tools, laptops and machinery that travel to job sites or clients need a tools and equipment floater or contractor's equipment policy, which can be written to include breakdown where the insurer offers it.
How much does equipment breakdown insurance cost?: For most small and mid-sized businesses it is added to the property policy and priced from the building and contents values, the occupancy and the coverage tier. Equipment-heavy businesses may be rated on a schedule of objects. Boilers, spoilage, electronic equipment and higher sublimits add premium, while documented maintenance helps.

Sources

O. Reg. 220/01: Boilers and Pressure Vessels, under the Technical Standards and Safety Act, 2000. Government of Ontario, e-Laws, Consolidated from July 1, 2018.
Boiler and pressure vessel insurers. Technical Standards and Safety Authority (TSSA), Accessed October 26, 2026.
Equipment Breakdown Rider. HSB Canada (Munich Re), Accessed October 26, 2026.
Canada commercial insurance rates fall for third straight year (Marsh Global Insurance Market Index, Q3 2026). Insurance Business Canada, October 21, 2026.

This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.

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