Not automatically. A standard business owners policy (BOP) excludes mechanical breakdown and electrical failure, so a burned-out compressor or a shorted control board isn’t covered unless your BOP includes equipment breakdown coverage. Many carriers offer it as an optional endorsement or build it into restaurant BOPs, but whether yours has it depends on your policy wording and declarations.
A restaurant runs on equipment: walk-ins and reach-ins, ice machines, fryers, combi ovens, dish machines, HVAC and the POS system. When one of them fails, the repair bill is only part of the loss — spoiled food, lost covers and rush repairs follow. That’s why it matters whether your BOP treats breakdown as a covered loss. For a primer on the policy itself, see what a BOP is and whether it’s enough.
Why the base BOP stops at breakdown
The property section of the ISO businessowners form (BP 00 03), like standard commercial property forms, excludes mechanical breakdown and artificially generated electrical current, including electrical arcing, unless a covered cause of loss such as fire results. It also excludes explosion of steam boilers and steam pipes, and loss from wear and tear, rust and gradual deterioration. Those exclusions describe exactly how most kitchen equipment fails.
The ISO BOP includes equipment breakdown protection as an optional coverage, and many carriers either include it automatically in restaurant programs or attach their own endorsement. If it isn’t listed on your declarations page or endorsement schedule, assume you don’t have it and ask. Compare the two approaches in equipment breakdown vs. commercial property.
What equipment breakdown adds, and what it still leaves out
What it covers. Sudden and accidental breakdown of covered equipment — mechanical breakdown, motor burnout, electrical arcing and surge damage, and pressure vessel or boiler explosion. Covered equipment typically includes refrigeration, cooking equipment, HVAC, electrical panels, dish machines and computers. Beyond the repair or replacement, the coverage commonly includes spoilage of perishables caused by the breakdown, expediting expenses such as overtime labor and rush-shipped parts, and business income and extra expense while you’re down, subject to its own limits.
What it doesn’t. Wear and tear, corrosion and gradual deterioration themselves are excluded, though a sudden breakdown that results from them is usually covered. Routine maintenance, cleaning and adjustments are not insured losses. Income loss from a breakdown may be subject to a waiting period expressed in hours, and spoilage is often sublimited. Valuation, and whether the policy pays to upgrade to more efficient equipment, depends on the wording.
How it differs from a warranty. A manufacturer’s warranty or service contract covers defects on a single unit for a limited time. Equipment breakdown covers sudden breakdown across all covered equipment, new or old, plus the spoiled food and lost income that follow.
Two breakdown scenarios
Scenario 1: the walk-in on a July Saturday. The compressor on a Tampa bakery’s walk-in cooler seizes early on a Saturday in July. By the time the refrigeration tech arrives, the dairy, cream fillings and prepped dough are over temperature. Under a BOP without equipment breakdown, both the compressor and the spoiled stock are excluded. With equipment breakdown coverage, the policy pays the compressor repair, the spoiled inventory up to the spoilage limit, and the tech’s overtime and rush-shipped parts as expediting expenses, less the deductible.
Scenario 2: the conveyor oven’s control board. A pizzeria in Hartford has an electrical arc in the control board of its conveyor oven during Friday dinner. There’s no fire, but the oven is dead until a replacement board ships. Equipment breakdown pays for the board and labor and, if the policy extends business income to breakdown losses, the lost weekend sales after any waiting period. Had the arc started a fire, the fire damage would have been covered by the base BOP.
Equipment breakdown checklist for your BOP
- Equipment breakdown listed — confirm it appears on the declarations page or endorsement schedule.
- Covered equipment definition — refrigeration, cooking, HVAC, electrical, dish machines and POS hardware.
- Spoilage sublimit — sized for a fully stocked walk-in on your busiest weekend.
- Business income for breakdown — whether it applies, and any waiting period in hours.
- Expediting expense limit — for overtime, temporary repairs and rush freight.
- Deductible — breakdown claims may carry a separate deductible from the rest of the BOP.
- Leased equipment — leased ice machines or dish machines may require you to insure them as property of others.
- Maintenance records — service logs help prove a failure was sudden rather than neglected.
Frequently asked questions
Does equipment breakdown cover older equipment?
Generally yes, as long as the equipment is in service and the breakdown is sudden and accidental. Wear and tear itself isn’t covered, and how older equipment is valued depends on the policy.
Does equipment breakdown cover a power surge?
Yes, surge and arcing damage to covered equipment is a core part of equipment breakdown coverage, even though the base BOP excludes it. Off-site utility outages are a separate issue; see does restaurant insurance cover power outages?.
Is equipment breakdown the same as spoilage coverage?
They overlap but aren’t identical. Equipment breakdown usually includes spoilage caused by a covered breakdown, while a separate spoilage endorsement can also cover food lost to power interruption or refrigerant contamination.
Should I buy a standalone equipment breakdown policy instead?
Most restaurants add it to their BOP or package policy. Standalone policies are more common for larger operations with boilers, extensive refrigeration or several locations.
Not sure whether your BOP includes equipment breakdown, or whether the spoilage limit is realistic? Provident Financial Group is an independent agency: you complete one application, we compare multiple carriers side by side, and you get live certificates of insurance to share with landlords and venues. Call (866) 964-6660 or Get Multiple Quotes within minutes.