Equipment – Offices

Equipment Breakdown Coverage for Offices

Offices and office buildings have a large variety of insurable equipment breakdown exposures. All offices have mechanical or electrical equipment that can be protected by equipment breakdown coverage. Interestingly enough, more than 75 percent of all office occupancy losses are mechanical or electrical in nature. The mechanical equipment most commonly found in office buildings are components of the air conditioning system. Large office buildings have centrifugal air conditioning compressors that are subject to significant property damage losses due to mechanical breakdown of the compressor or electrical breakdown of the driving motor. The loss of air conditioning in an office building may result in computer operation problems or tenant complaints. Many times, the building owner is compelled to refund rents, which is considered a business interruption loss. Other significant equipment breakdown exposures in offices include electrical components, such as transformers, switchgear and electrical distribution cables. Large office buildings are now equipped with emergency power generation systems, the components of which are subject to mechanical or electrical breakdown. Interruption of any supplied service may result in lost revenue or require the refund of rental income.

Typical Losses

A broken shaft in a centrifugal air conditioning compressor resulted in property damage and loss of rental


Property Damage: $34,800

Business Interruption: One Day

Extra Expense: $12,000

Rupture of an air tank supplying control air to the heating, ventilating and air conditioning system caused

a systems shutdown for one day. Computer operations were also impacted.

Property Damage: $1,150

Business Interruption: $17,480

Insulation breakdown of an underground electrical feeder cable occurred. Replacement required excavation of the parking lot, which significantly increased repair costs. Temporary service was run above ground to mitigate a potential business interruption loss.

Property Damage: $33,763


Boilers and Pressure Vessels: Boilers, Fired/Unfired Vessels, Air Conditioning Units

Mechanical Equipment: Compressors, Pumps, Gears and Gear Sets, Engines, Hydraulic Cylinders

Electrical Equipment: Motors, Emergency Generators, Transformers, Switchgear, Switchboards, Distribution Systems, Emergency Gas Turbines, Generators, Communications Equipment, Copiers Computers

Time Element: Business Interruption, Extra Expense, Service Interruption, Exposures

Be proactive! Develop a plan, and execute!