This coverage is for the restoration of a “broken” covered equipment and possibly other properties affected by such event as a result of an accident. There are several important phrases in the previous statement. Let me go through a number of questions and answers to explain the coverage:
What are covered equipment?
At any given property, there are equipments that are powered. Common equipments include but not limited to refrigerators, boilers, air conditioning units, and heaters. Computers and other data equipments are parts of the lists but are usually covered by data equipment in a separate coverage. These equipments are considered covered when they meet the following requirement:
1. They should be in a covered location listed in the policy
2. They need to be owned or leased by the insured
3. They need to be operated by the insured
What is considered broken or breakdown?
When an equipment fails to perform.
What is an accident?
Accident is an event that causes direct physical damage to the covered equipment. The events should be one of the following:
1. Mechanical breakdown caused by centrifugal force
2. An artificially generated electrical current that damages electrical devices, appliances, or wires
3. Explosion in a steam boilers, steam piping, steam engines or steam turbines
4. An event inside steam boilers, steam pipes, steam engines, steam turbines, hot water boilers, or other water heating equipment that damages such equipment
5. Bursting, cracking, or splitting
What is the restoration of the broken equipment?
The insurance company can repair the equipment to its original working condition or replace the equipment after the deductible is paid.
What is the restoration of the other properties?
Other properties vary among different insurance companies. Some common ones are business income and perishable. For example, an insurance policy may pay for the business income loss when an ice cream shop lost its refrigeration unit under a covered event. Another policy may pay the grocery store for the vegetable that needs to be thrown away due to the failure of a refrigerator.