Topics covered:
Equipment breakdown protection coverage form declarations
Coverage
Exclusions
Limits of insurance
Deductibles
Equipment breakdown protection conditions
General conditions
Joint or disputed loss agreement
Definitions

Equipment Breakdown Protection
Coverage Form Declarations

The equipment breakdown coverage declarations page, in addition to noting the policy number, named insured, mailing address and policy period, provides spaces to show the limits of insurance for the various coverages offered through BM 00 20. Insurance applies only to a coverage for which a limit of insurance is shown on the dec page. The dec page also has spaces for listing optional coverages chosen by the insured, as well as for deductibles and additional insureds, mortgageholders, and loss payees.

For the boiler and machinery coverage to apply properly, it is necessary that the declarations page be completed fully and accurately, because throughout the coverage forms and endorsements there are references to information “shown in the declarations.”

Coverage

1.     Covered Cause of Loss

     Covered Cause of Loss is a “Breakdown” to “Covered Equipment”.

2.     Coverages Provided

     Each of the following coverages is provided if either a limit or the word INCLUDED is shown for that coverage in the Declarations. If neither a limit nor the word INCLUDED is shown, then that coverage is not provided. These coverages apply only to that portion of the loss or damage that is a direct result of a Covered Cause of Loss.

a.     Property Damage

     We will pay for direct damage to “Covered Property” located at the premises described in the Declarations.

b.     Expediting Expenses

     With respect to direct damage to “Covered Property” we will pay for the extra cost you necessarily incur to:

(1)     Make temporary repairs; and

(2)     Expedite the permanent repairs or replacement of the damaged property.

Analysis

The covered cause of loss under BM 00 20 is a breakdown to covered equipment. These terms are defined later in the policy, but a breakdown is basically direct physical loss that causes damage, and covered equipment is the boiler and machinery meant to be insured under this policy.

The insurer will pay for direct damage to covered property which is any property that the named insured owns, or that is in the care, custody, or control of the named insured and for which he is legally liable. So, nonowned property is given equal status under the property damage coverage agreement with the named insured's owned property. Note that the named insured need not directly assume the legal liability for care of the property of others; anyway that the named insured becomes legally liable for the care of another's property will suffice to make such property covered property.

The insurer offers expediting expense coverage. This coverage pays the expenses the insured necessarily incurs to make temporary repairs and to get the permanent repairs done as soon as possible. The goal here is, of course, to keep the insured in business or to put him back in business as soon as possible. So, for example, if this means calling a repairman to the place of business for quick service overnight or on a weekend, BM 00 20 will pay for that expense in order for the insured to keep his operations going.

Note that for these particular coverages, and for the ones that follow, a dollar limit or the word included has to be shown on the dec page next to the desired coverage or there is no coverage. Using the example of the expediting expense coverage in the previous paragraph, if the insured had not put a limit of insurance next to the expediting expense column on the dec page, the cost of the overnight repair would be borne by the insured himself.