Boiler and Machinery Insurance—Archived Article

July, 2001

Introduction

Summary: Boiler and machinery insurance, viewed by many in the insurance industry as complicated and mysterious, has over the years undergone a transformation from a highly specialized and arcane coverage, underwritten and usually marketed by experts in the coverage, to a commonplace coverage sold along with other lines by many insurers and most general lines producers. This article offers an introduction to boiler and machinery insurance, briefly tracing its historical development and describing the coverage forms that provide the insurance.

History of B&M

Boiler and machinery, historically regarded as a “casualty” coverage although in many ways more closely resembling property insurance, had its beginnings in 1866—as an adjunct to boiler inspection service, the first intensive application in the insurance field of loss control to avoid accidents rather than the simple use of insurance to pay for the consequences of accidents when they occur. To this day—unique among insurance coverages—boiler and machinery underwriting and inspection expenses comprise a larger portion of the premium with most insurers than do loss payments and claim expenses.

For many years, boiler and machinery insurance was one of the most stable and unchanging lines of insurance. Because of the intensive loss control activities, claims experience remained stable even in periods of general underwriting unprofitability, and because of the esoteric nature of the coverage, there was little pressure for changes.

But in recent years, this has changed and the coverage has undergone a series of revisions. The changes have moved boiler and machinery insurance closer to property insurance in terms of coverage concepts, provisions, and terminology.

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